Budget Padding? Why we inserted N1.7 trillion projects in MDAs budgets – Minister

The Minister of Finance and National Planning, Zainab Ahmed, on Tuesday confirmed including a total of N1.7 trillion in the budgets of some federal ministries, departments and agencies (MDAs) in the 2023 budget.

Mrs Ahmed, who spoke while appearing before the House of Representatives Committee on Appropriations, said it was the amount of loan-tied projects her ministry decided to include in 14 implementing agencies to improve transparency.

She refuted allegations that the budgets of the MDAs were padded.

The committee called for the hearing in reaction to media reports that some MDAs accused the ministry of finance of inserting projects in their budgets without their consent.

Daily Trust newspaper had reported that the National Universities Commission (NUC), Ministry of Defence and Ministry of Humanitarian Affairs, Disaster Management and Social Development accused the finance ministry of inserting the projects in their budgets.

These allegations, it said, were made during budget sessions at the Senate.

Responding to the allegation of padding, Mrs Ahmed explained that the federal government now domiciles project-tied loans in concerned MDAs.

“These loans were previously not fully captured in the FGN budget; only the provisions for counterpart funds and debt service were included in the FGN budget.

“To improve transparency and the comprehensiveness of the FGN budget, consistent with global best practice, we decided to fully capture these project-tied loans in the FGN budget,” she said.

She stressed that “all these projects which are now the subject of controversy were included in the budgets of these MDAs which were transmitted to the supervising ministers for their review and feedback on 4 October, 2022 before the presentation to both the FEC and NASS.”

Humanitarian Affairs budget

Reacting to the insertion of N206.2 billion in the budget of the Ministry of Humanitarian Affairs, Ms Ahmed said the money is for the National Safety Nets Project financed with $435.57 million from the World Bank.

“The World Bank is the funding source for the project, with the projected drawdown of $473,500,000, which is equivalent to N206,242,395,000, using the N435.57/USD exchange rate applicable to the 2023 budget,” she said.

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She, however, stated that there was confusion because of the labelling of the projects in the budget proposal.

“Regrettably, a wrong code was inadvertently used in the process of inputting it, which resulted in it being captured as Purchase of Security Equipment in the GIFMIS Budget Preparation System (BPS), which has a limited dropdown range of project descriptions/codes,” Ms Ahmed said.

Ministry of Defence

The minister also explained the Safe School Initiative that has been domiciled in the Ministry of Defence. According to her, the project which is for providing security for schools is a multi-agencies project, hence the choice of the Ministry of Defence.

“The Defence Headquarters submitted its un-costed requirements under this programme. The SSI Secretariat, Federal Ministry of Finance, Budget & National Planning (FMFBNP), however, submitted a request of N4.5 billion for MoD, of which only N2.250 billion [50 per cent] was provided in the 2023 budget.

“The Safe School Initiative [SSI] is a coordinated multi-agency initiative to enhance security in FGN-owned educational institutions. The agencies involved are the Defence Headquarters/Ministry of Defence; the Department for State Security, Nigeria Security & Civil Defence Corps, Federal Ministry of Education and the Federal Ministry of Finance, Budget and National Planning,” she stated.

In addition, Mrs Ahmed said there is also the refurbishment and procurement of Harris RF-5/7800 military communication equipment which President Muhammadu Buhari approved N8.6 billion for the first phase.

Ministry of Power

Ms Ahmed also clarified the inclusion of N195.4 billion in the budget of the Federal Ministry of Power. According to the minister, the sum is for funding four projects.

She stated that N76.55 billion is for the Zungeru Hydro Electric Power Project funded by Export-Import Bank of China, N70 billion for Power Sector Recovery Operation (PSRO) funded by World Bank, N23 billion for Nigeria Electrification Project (NEP) to be executed by the Rural Electrification Agency (REA), funded by World Bank and Africa Development Bank, and N24.3 billion Nigeria Electricity Transmission project to be executed by Transmission Company of Nigeria (TCN)) funded by the World Bank.

Consequently, the committee resolved that the Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Farouq, should appear before the committee.

However, the Chairman of the Committee, Muktar Betara (APC, Borno), did not give the exact date Ms Farouq is to appear before the committee.