By Yakubu Dogara
- INTRODUCTION:
Issues concerning the Budget and Budget process in Nigeria have been in the front-burner of public discourse for some time now.
It is therefore a welcome opportunity for stakeholders to discuss matters concerning the budget and it is in this regard that I wish to appreciate Orderpaper, the conveners of this event tagged “Gallery Colloquium” with the theme: “Budget as a tool for accelerated Economic Development in Nigeria” for organizing this event. The theme of the colloquium is most apt and topical.
- THE LEGAL FRAMEWORK FOR BUDGETING:
As is clearly evident, the Legislature is unquestionably at the heart of the budget process, not only in Nigeria but in all countries practicing Presidential Democracy. The legal framework for Budgetary process in Nigeria would be found in the Constitution of the Federal Republic of Nigeria (CFRN) in Sections 4, 59, 80-82, and others. Some laws also have bearing on the matter, namely: Finance (Control and Management) Act, CAP F26, LFN 2004 and the Fiscal Responsibility Act, 2007.
Administrative Manuals and documents have also some bearing on budget matters. These include, the Annual Budget Call Circular and Federal Government Financial Regulations.
Judicial pronouncements are also a source of budget information and authority. For example, it was the Supreme Court decision in Attorney- General of Bendel State v. Attorney-General of the Federation that clarified the procedure for enactment of money bills, including the role and extent of the powers of the Joint Finance Committee of the National Assembly in the budgeting process.
The Procurement Act, 2007 has an impact especially with respect to actual budget implementation. While the Auditor General of the Federation and the Public Accounts Committees of the National Assembly play a major role in post budget scrutiny and audit.
- THE ROLE OF THE BUDGET IN ACCELERATED ECONOMIC DEVELOPMENT:
Mr. President is enjoined to provide an estimate of the revenues and expenditure of the federation which he prepares and lays before the National Assembly at any time in each financial year (S.81(1), CFRN). The Budget, in summary, is a compendium of “Who gets what, when and how”? It involves the allocation and distribution of available resources among competing sectors and demands. The Fundamental Objectives and Directive Principles of State Policy contained in Chapter 2 of the Constitution provides the philosophical basis that defines our budgeting process. It says in Section 16(2) that “The State shall direct its policy towards ensuring: 16(2) (a). ‘The promotion of a planned and balanced economic development’ and 16(2) (b). ‘That the material resources of the nation are harnessed and distributed as best as possible to serve the common good’.
The annual budget is thus, the vehicle provided by law for the acquisition, allocation and distribution of resources for socio-economic development of the nation. The government makes critical decisions on developmental objectives and priorities of the nation, with respect to poverty reduction, increased employment opportunities, relevant infrastructural development, like power supply, Mining and Solid Mineral development; Transportation Services such as road construction, provision of Rail services, Seaport and Airport. It provides for social and economic development services such as education, health, Food security, housing, security of lives and property, human capital development and social services. It ensures the economic growth and development of the nation through deliberate micro and macro economic policies embedded therein.
A Budget should reflect not just national priorities but also the priorities of the ruling party. As our democracy matures, elections would be based on contrasting visions of development which is submitted to the electorate to decide. Therefore, when a political party comes to power, it would be ready to govern from day one, based on the programmes and vision placed before the electorate. Of course, the new government must conduct a proper audit of the situation of things in various sectors to understand the system and recalibrate its policies, where necessary. The budget is one of the major means of achieving these objectives.
- THE ROLE OF THE LEGISLATURE IN THE BUDGETING PROCESS:
Recent events have brought to the fore the extent of the powers of the National Assembly with respect to the Budgeting process. Indeed many commentators, including Lawyers, have contended that the power of the National Assembly (NASS) is restricted to examining the Budget and making corrections where necessary. Some contend that the Appropriation power enables the National Assembly to reduce but not to increase expenditure and that it lacks power to introduce new items into the Budget.
However, a close examination of the Constitution shows otherwise. Section 4 grants general law making powers to the National Assembly; Section 80, particularly 80(2); 80(3) and 80(4) are unambiguous. Funds cannot be withdrawn from the Consolidated Fund of the Federation or other Public Funds of the Federation without legislative approval and or authorisation. The Constitution requires that all legitimate federal expenditure must be in the MANNER prescribed by the National Assembly not by the Executive. It is our firm view that the word ‘manner’ used in S.80(4) connotes some form of discretion on the part of the National Assembly.
Furthermore, S81(1) gives Mr President authority to “cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of the Federation for the next following financial year”. The President submits mere estimates and not a budget as such because the Budget itself is a law which is an Act of the National Assembly and not that of the Executive.
Section 81(2) provides that the estimates should be in heads of expenditure and included in an Appropriation Bill. Section 81 did not specifically say how the Appropriation Bill should be passed. It needs not say so since S.80 and S.4 had made elaborate provisions already. In any case, S.59 is specifically devoted to money bills and gives the National Assembly and not Mr President final authority over passage of the bill into law. The Constitution did not envisage that the National Assembly shall be a rubber stamp on budgetary matters.
Those who contend that the National Assembly cannot increase the budget but can only reduce it are trying to import the British parliamentary law into a presidential system of government. In the British parliamentary system, the Crown has prerogative over money supply and the legislature is specifically prohibited from increasing the budget. It should be noted that the critical difference is that Parliament under a parliamentary system includes all the Ministers unlike the presidential system where the Ministers are not part of the National Assembly. It is therefore the decision of the Executive that carries the day in Parliament as the Ministers are also leaders of Parliament. This position is therefore justified on the basis of separation of powers which is inherent in a Presidential democracy as practiced in Nigeria. In addition, if the Constitution intended that the National Assembly should not have power to increase a budget item it should have said so.
Nigeria’s budgeting system is closer to the model practiced in the United States of America, where Congress has authority to alter, increase, reduce or indeed introduce new budget items. Article 1, Section 9 of the United States Constitution provides that: “No money shall be drawn from the Treasury, but in consequence of Appropriations made by law”. This provision is similar to Section 80 of the Nigerian Constitution. The principles disclosed are that First, All monies are paid into the USA Treasury and in the case of Nigeria, all Funds are paid into the Consolidated Revenue Fund or other Public Funds of the Federation. Secondly, No money can be withdrawn from the Treasury of the United States of America except through Appropriation. In Nigeria, any withdrawal from the Consolidated Revenue Fund or other Public Funds of the Federation can only be made in pursuance of authorisation of the National Assembly.
‘The framers of the US Constitution, mindful of “taxation without representation” suffered by colonists under the British crown, took care to specify in the Constitution that the ultimate power to tax and spend resides in the hands of the legislative branch – which is closer to the people – not the executive branch’.
‘The power of the purse is the most important power of Congress. James Madison in the Federalist Papers called it “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people”. It checks the power of the President and gives Congress vast influence over American society, because federal spending reaches into the life of every citizen. Under congressional direction, the government funds a nearly endless list of programs and activities.’ (‘Congress and Power of the Purse’ by Lee Hamilton, Director of the Center on Congress at Indiana University).
This is also the position in Nigeria even though Mr President initiates a money bill in Nigeria. Since 1921, the US President also initiates a money bill. This was achieved with The Budget and Accounting Act of 1921 which requires the President to submit the budget to Congress for each fiscal year which is the 12-month period beginning on October 1 and ending on September 30 of the next calendar year. The current federal budget law in the USA (31 U.S.C. § 1105(a)) requires that the US President submit the budget between the first Monday in January and the first Monday in February.
- NATIONAL ASSEMBLY OVERSIGHT OF THE BUDGETING PROCESS AND NON IMPLEMENTATION OF APPROVED BUDGETS:
When Appropriation Bill is signed into law by Mr President it becomes an Act of the National Assembly. The Executive is enjoined to execute all laws made by the National Assembly. The Appropriation Act is the major instrument for delivery of services to the nation. It is akin to a social contract between the people and its government. If for any reason, such as revenue shortfall, it becomes impracticable to execute aspects of the Appropriation Act, the Appropriation Act has provided a mechanism for a resolution through consultations. A situation where the Executive branch picks and chooses which aspects of the Act to execute without consultation with the Legislature is untidy and undermines the foundation of the constitutional order. Appreciable Budget implementation will act as stimulus and help to reflate the economy.
The Legislature, consequently should rise up and conduct proper oversight on the activities of the Executive with respect to the budget to ensure that projects and programmes contained in the Budget to improve the economy, fight poverty, provide infrastructure, education, health services and enhance socio economic development of the nation is carried out. I have consequently, recently directed relevant Committees of the House to conduct oversight of MDAs on the level of implementation of the 2016 Budget. The Constitution assigns the role of acting as a check on the Executive by monitoring and supervision of projects and using the power of investigation provided in S.88 and 89 of the Constitution, to the National Assembly.
- BUDGET REFORM:
A review of how annual budgets or Appropriation Bills have been prepared and executed in Nigeria since 1999 will reveal an unsatisfactory state of affairs.
There is therefore an urgent need for Budget Reform in Nigeria. It is axiomatic to note that any realistic, credible and lasting Budget Reform process will involve:
i. A review of the Legal Framework to ensure that the Annual Budget is submitted on time. This will lead to amendment of S.81(1) CFRN, which gives the President authority to present the estimates of revenue and expenditure ‘at any time’ within a financial year.
ii. The imperative necessity to ensure that the Budget is passed on time, before the commencement of the next financial year. This may, if necessary, require that a budget time frame be included in the Constitution to bind both The Executive and Legislature.
iii. A clear development plan with broad national consensus should be put in place that deals with short, medium and long term plans of the nation.
iv. We must ensure that yearly budgets follow the development plans as much as possible, except emergencies arise. MTEF should be detailed enough to contain major projects contemplated in a three year period with approximate costings.
v. Projects that are admitted to the National Budget are not properly thought through and based on actual need with relevant spread to reflect federal character of Nigeria. This entails that project selection process must be more transparent, need based and technically driven with justification. Discretionary and whimsical selection of projects must be downplayed.
vi. That the Technical capacity of both the bureaucracy and Members of both the Executive and legislative branch on budget matters is deliberately beefed up. We must as a legislature ensure during this session that the National Assembly Budget and Research Office, Bill (NABRO) is finally passed and signing into Law, to provide timely and accurate financial and economic information to the Legislature.
vii. There should be extensive stakeholder consultation at the executive level during preparation of the Budget.
viii. There must be a robust Pre-budget interface between the Executive and Legislature, to reduce areas of friction during the Appropriation process. Indeed the National Assembly should be consulted on issues of project selection. In any case, even though there is both constitutional and practical need and imperative for the National Assembly to work in a cooperative manner with the Executive on Budgeting matters, nevertheless, it cannot give up its constitutionally assigned responsibilities in the budget process in the guise of seeking cooperation with the Executive branch. The watchword is cooperation not abdication.
iv. Clear Budgetary objectives and government targets to be achieved in the Budget should be clearly stated. Government must set out clear objectives and targets it intends to achieve during the budget year, which should be widely disseminated to all stakeholders and the Nigerian people.
v. Reform of the process of the passage of the Appropriation Act in the National Assembly that encourages more openness and transparency especially at the Committee levels. The plenary of both House should be more involved in the Schedule to the Appropriation Act.
vi. Subjecting Budget Defence exercise to stakeholder involvement in a form of public hearing. Subjecting the annual budget to public scrutiny at National Assembly will give stakeholders opportunity to make their inputs and challenge incorrect assumptions in the Budget. This process will involve the Civil Society Organisations (CSOs) and other professional bodies. The National Assembly will benefit from the research skills of various CSOs and the technical expertise of professional bodies at the enactment stage of the Appropriation Bill. I am aware that many CSOs scrutinise the Budget yearly and usually point out areas of duplications and wastages. We need to institutionalise this mechanism.
xii. Amendment of Section 82 of the Constitution to reduce the time the previous year’s budget will continue to run in the event that the Appropriation Act is not passed at the beginning of the Financial year from 6 months to 3 months as this distorts the Budget process.
xiii. A critical look should be taken at the operation of Financial Year as defined in S. 318 of the Constitution. A situation where an approved budget is not allowed to operate for 12 months is constitutionally unacceptable. This is the main reason for failure of budget implementation every year and the cause of abandoned projects that litter the Nigerian landscape. When projects are not completed, the nation is terribly shortchanged as the money and effort invested in it is lost. In this regard, we must institute a compulsory mechanism that rolls over major projects that is not completed in one budget year into the following years budget. The current practice of not including on-going projects in the following year’s budget is a huge waste of resources.
xiv. I wish to draw attention to the existence of the problem of lack of full disclosure of the appropriate size of the National budget and the actual revenue and expenditure of the Federal Government of Nigeria. It is recommended that the Executive should look into the possibility of having just one National Budget that captures the revenues and expenditure of all MDAs, such as NNPC, CBN and other revenue generating government agencies. This should be included in the yearly Appropriation Bill. I must commend Mr President for formally sending the Budget of these Agencies to the National Assembly this year. The budget of these agencies should not just be an ‘attachment’ to the Appropriation Act but an integral part of the National Budget.
- HOUSE BUDGET REFORM COMMITTEE:
It is as a result of all these observed anomalies and need for change and reform that I recently announced that the House will set up a Budget Reform Committee to undertake a thorough and holistic review of all issues relating to the Budget to ensure due process, more transparency, better accountability ,openness and value for money. This Committee will comprise experts and professional organisations and will work in liaison with the Senate and the Executive branch. - CONCLUSION:
I have made suggestions on the way forward for budget reforms but I have no doubt that the array of experts gathered here will make appropriate recommendations to guide us all as we sanitize our budget process thereby ensuring that our annual budgets contribute its quota to the economic recovery and revival of Nigeria, which is the most urgent task facing us.
Thank you all for listening as I wish us successful deliberations.
God bless the Federal Republic of Nigeria.
REMARKS BY THE SPEAKER, HOUSE OF REPRESENTATIVES, RT. HONOURABLE DOGARA YAKUBU, AT A COLLOQUIUM ON BUDGET MATTERS AT SHERATON HOTELS AND TOWERS, ABUJA, ON SEPTEMBER 26, 2016.
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