Can Senate avert budget failure?

Members of the National Assembly, ministers and other professionals recently converged on Abuja, the Federal Capital Territory (FCT), for a two-day brainstorming on the review of the national planning and budgeting process. Assistant Editor ONYEDI OJIABOR reports.

 

IT is less than six months to the end of the year. Yet, the National Assembly and the Presidency are still locked in a war of wits over this year’s budget.

Though President Goodluck Jonathan reluctantly signed the 2013 Appropriation bill, the fiscal document was returned wholesale to the parliament over allegations by the Presidency that the lawmakers usurped the executive powers.

One area of dispute is the directive that the Accountant General of the Federation should furnish the National Assembly with the quarterly releases. The Presidency said this directive was against the spirit of separation of powers. The lawmakers, however, think thought.

The Chairman, Senate Committee on National Planning, Economic Affairs and Poverty Alleviation, Senator Barnabas Gemade, gave the synopsis of what led the Senate to begin the search for a new budgeting process that would be all- inclusive.

The need for national planning and budgeting process was described by the Senate President, David Mark, as “all important,” apparently in view of the slow pace of the country’s economy to respond to economic therapies.

The importance of national planning, Gemade said, cannot be overemphasized. According to him, it enables a nation to make conscious choice regarding the rate and direction of its growth.

He faulted the current budgeting process, which he said, makes the legislature less involved and to rely solely on the input provided by the executive arm of government, giving no room for the legislature to effectively exert its control over the fiscal priorities of the government.

He told the participants that the public hearing was not meant to witch hunt anybody, or to reduce anybody’s sphere of influence.

The discourse stemmed from a motion by the Action Congress of Nigeria (ACN) lawmaker, Senator Olubunmi Adetunmbi, whose scholarly touch to national issues, has often shaped deliberations in the Senate.

Adetunmbi in the motion, blamed the sharp disconnect between the multi-year development plans and the annual national budget under which the Federal Ministry of Finance prepares the budget with little or no regards to ministries, departments and agencies for the stunted growth of the country’s economy.

During the debate of the motion, the Senate agreed that a disconnect between the national plans and the annual budget is largely responsible for the slow shift from recurrent to annual capital budget in the country.

But opinions soon differed at the public hearing, with the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, leading those who think that the existing status quo should not be altered.

Observers said Okonjo-Iweala might have been influenced in her position by her Bretton Wood orientation.

Some observers said the minister might be apprehensive that the removal of budgeting from her ministry would amount to taking away the soul of the ministry.

But former the Chief Economic Adviser to President Olusegun Obasanjo, Ode Ojowu, disagreed.

In his presentation at the public hearing, Ojowu said that globally, planning is recognised as critical to growth and development.

Though accepted as the engine of growth, Ojowu admitted that in practical terms, the role of planning has continued to wane with the exception of a few countries where it has retained its primacy in driving the overall economic and social progress.

For him, Nigeria ’s experience with planning has been mixed: the earliest plans, in particular, the First to the Third national development plans, were quite successfully implemented with their targets mostly achieved, including some progress with structural transformation of the economy.

The Fourth and Fifth National Development Plans were, however, not as successful owing to the failure of revenue, Ojowu said.

The economist traced the beginning of crisis in planning to the failure of Fourth and Fifth national development plans.

He pointed out that General Ibrahim Babangida’s Structural Adjustment Programme (SAP) was actually a response to this failure.

SAP, Ojowu argued, meant the abandonment of the structural transformation, which the plans aimed to achieve in favour of adjustment of the structures that really never existed.

He posited that SAP generated even greater crisis leading to a return to planning in the twilight of the military era through the return of democratic rule in 1999.

Ojowu said that, the severance of Planning from the Ministry of Fnance and Economic Planning by the National Planning Commission decree of 1992, was intended to boost planning and enhance its impact on growth development.

He noted that though the measure was well intended and in line with best practices, the move nonetheless, witnessed some resistance and led to an amendment of the decree in 1993, which returned the capital budget function to ministry of finance.

“What followed was a simmering conflict that endured. As a fallout of this conflict, in 2004, the department of planned budgets and programmes with its entire staff was transferred to the ministry of fiancé. This, largely personality driven conflict between the national planning commission and ministry of finance, has deepened at the expense of institutional and national development,” Ojowu said.

functions and perhaps relevance.

Ojowu said over time, though the laws setting up the national planning commission have not changed, they have been counteracted by other laws like the Fiscal Responsibility Act and the creation of such institutions like the Budget Office in the ministry of finance.

“Either way, the economy bears the ultimate burden of the absence of clarity of role around budget coordination, the absence of linkage with national planning and the shrunken role of the legislature in the process,” he said.

Ojowu was of the view that the absence of a strong national planning function denies the budgetary process of a robust analytical contributions and effective partnership with the international community and development organisations.

The way forward, he said, would be to address subsumed role of the national planning function in the budgetary process and prepare national plans that allow the government to develop a holistic perspective among other concerns raised in the Adetunmbi motion will require a honest and open discussion of the ideological undertone for or against formal planning in the country since the mid 1980s.

Ojowu was not alone in this postulation. Mike Kwanashie, a professor of Economics and Vice Chancellor, Veritas University , also said that planning was abandoned in the country following the adoption of SAP as a national economic policy.

Kwanashie said to make matters worse, that with the introduction of SAP planning infrastructure was relegated to the back seat while the manpower was scattered throughout the civil service.

He was of the opinion that the absence of long term planning to drive growth and development reflects in the current underdevelopment of many aspects of economic life of the country.

For him, the country had developed from independence until the mid 1980s a core of planning officers that were trained in the act of planning, project evaluation and analysis involving project circles and costing.

He believed that the absence of these skills in public management of the budget, after the introduction of SAP, greatly undermined the integrity of the capital budget.

The Vice Chancellor also believed that Vision 20-2-20 was articulated to restore the country back to the path of long-term planning.

He said that one major lesson learnt is the need to better interface the annual budget with the medium term plan.

Kwanashie identified a major disconnect between the national integrated projects and the Medium Term Expenditure Framework that drives the annual budget.

He expressed worry that the country is yet to achieve the harmony between plans and budget, which he sees as critical for the attainment of the objectives of the national vision.

Kanashie isolated two major components of the budget critical in the growth trajectory of an economy.

One is that the relationship between the current and capital budget is critical to the ability of the budget to create growth potential in an economy.

Planning, he said, imposes a strict discipline on the selection of projects and increases the chances of project success.

He posited that with the passage of the Fiscal Responsibility Act in 2007, it has become necessary for Medium-Term Expenditure Framework to be presented to the National Assembly prior to consideration of each year’s budget.

jjHe insisted that the restoration of planning in the country is a major step forward for driving the growth and development process and should be solidly entrenched in the management of the country’s economy.

He did not forget to stress the fact that the major role of the budget within the planning/budgeting context is to implement the plan.

“You have the plan first then the budget. The budget takes its cue from the plan. There is need to ‘de mystify’ budgets and to increase particip ation in the budget-making process.

“A major medium for ensuring effective participation is first full engagement of the legislature as the elected representatives of the people,” he said.

Okonjo-Iweala opposed any fiscal policy aimed at removing budgeting as part of the functions of the Ministry of Finance.

The minister said that the stunted growth of the country’s economy should not be blamed on fact that budgeting and planning are not done under one roof.

According to her, through the initiative of the envelope system of budgeting, MDAs are made to set priorities. She noted that the envelope system, prior to the time she came to office, MDAs did not have ownership of the budget.

She advised that the partnership between the Finance Ministry and National Planning Commission should be sustained and strengthened.

“We strongly believe that a country needs a strong budgeting process and a strong planning process. We believe that strong planning process gives a country vision, direction and focus. Planning shows the direction a country is going,” she said.

On the independence of the budget office as it is practiced in the United States , she said that the location of the budget office is based on the structure of the economy. She added that where the economy is heavily driven by the private sector, to move the budget office out of the Ministry of Finance may be desirable.

On the need to restructure the budget circle to reflect the country’s weather condition, she said that she has an open mind on the issue.

The minister said that structuring the budget circle from January to December is a matter of convenience.

 

 

 

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