As Nigeria faces a fiscal crisis caused by COVID-19 pandemic and the measures to contain it, the Buhari administration has conducted a review of the 2020 budget, which, if carried out, may be the first step required along governance reforms to cut waste and direct revenues for development.
According to a memo PREMIUM TIMES exclusively obtained, the planned review affects federal lawmakers’ constituency projects, and may require political will to deliver.
The COVID-19 containment measures have affected mobility and business operations globally, thereby causing a record fall in oil demand and consequently oil price. As an oil-dependent economy, this adverse public health-economic situation is aggravating Nigeria’s fiscal crisis, having already planned to approach the debt market to finance some 26 per cent of the 2020 budget.
The government has already indicated plans to slash the budget but the actual expenditures the government intends to cut have just been revealed in a finance ministry memo exclusively obtained by PREMIUM TIMES. The budget, as already passed by the National Assembly, is N10.59 trillion. There have been reports that the proposed cuts could be between N350 billion and N1.5 trillion but the actual sum is not yet officially disclosed.
Spokesperson for the finance ministry, Hassan Dodo, did not comment on this detail Tuesday night. Also, total sum of the cuts is redacted in the memo we obtained but sources said it could amount to hundreds of billions of naira.
“The drastic fall in the price of crude oil below the 2020 budget benchmark, which was triggered by the global Covid-19 (coronavirus) pandemic has negatively impacted the FGN’s revenue projections,” stated the memo, dated March 17 and signed by minister Zainab Ahmed, to government bureaucracies and enterprises.
According to the memo, President Muhammadu Buhari had directed the finance ministry to revise the 2020 budget, which was passed by the National Assembly in December. “In doing so, we are to prioritise growth-enhancing, pro-poor expenditures and social sector investments generally,” the memo added.
The memo indicated that expenditures that are non-critical would be eliminated from the budget.
“In this regard,” the memo continued, “we will be eliminating as much as possible non-critical capital expenditure, especially those classified as Administrative Capital Expenditure”
The cuts include provisions for computer software acquisition, and purchases of computers and printers, buses, trucks and vans, motor vehicles and motor cycles, office and residential furniture and fittings, photocopying machines, scanners, and shredding machines, residential and office buildings, and land.
The budgeting for these so-called administrative capital expenditure are recurrent in nature as they are included for appropriations annually in a manner that raises question about the use and availability of the ones acquired in any previous year. But public service watchers and critics believe such curious budgeting for computers or utility vehicles or office furniture every year is an avenue for corruption.
However, according to the memo, ambulances, fire-fighting trucks, and construction as well as rehabilitation of buildings for schools and hospitals will be exempted from the cuts.
Although the adjustments would not affect the personnel cost budgets, as currently provided, the memo indicated that “new recruitments are generally suspended.” This may affect calls for job applications made before the COVID-19 pandemic by the Civil Defence, Immigration Service and INEC . Also, except for the security, armed forces, and health institutions, overhead costs “will be reduced by 16.7% across-board,” the memo added.
“All Government Owned Enterprises (GOEs) will be required to cut their capital expenditure and overhead budgets by 25%, even where their budgets have already been approved by the National Assembly,” the memo further stated.
“Empowerment” programmes – Lawmakers’ projects affected
In every appropriations round, Nigerian lawmakers nominate ‘constituency’ projects for inclusion in the budget. These are formally called Zonal Intervention Projects, which are domiciled in various MDAs. A review of the activities of Nigerian civic initiatives such as Udeme and Tracka shows many of the projects are perfunctorily delivered or not done at all.
Although the lawmakers do not directly receive contract awards for the projects, they nominate to the MDAs cronies as contractors, with some believed to return proceeds to the patron lawmakers. The system underscores patronage and cronyism.
Many of the these projects are passed off as “empowerment” and “capacity building” programmes for constituents. For an example, Degi Wangagra, the Bayelsa East senator – whose inconsistent records cost APC last year’s Bayelsa governorship victory – nominated three “strategic empowerment for youth (men and women” programmes totaling N54.2 million under the 2020 budget of the agriculture ministry.
The programmes are vague, just as Ebonyi North’s Sam Egwu’s “training and empowerment of youth and women in Ohaukwu LGA” is listed without any specific objective or what the purported participants are to be empowered with.
If the adjustments sought by Mr Buhari succeeds, these projects will be cut from the budget. In the memo obtained by PREMIUM TIMES they are listed among “non-essential” expenditures to be eliminated from the budget.
Yearly, a sum of N100 billion is appropriated for the Zonal Intervention Projects of the lawmakers but not all the projects fall under “empowerment” and “capacity building” programmes the finance ministry’s memo categorised as “non-essential” expenditures for elimination.
Former finance minister Kemi Adeosun had wanted to stop funding for the projects entirely but there was no will for action because of her forged NYSC certificate which the Bukola Saraki-led Eight National Assembly knew of and blackmailed her with. A PREMIUM TIMES’ investigation exposed Ms Adeosun’s forgery, which caused her forced resignation in 2018.
The budget cuts, including the affected constituency projects, requires legislative passage, which sources within the executive fear may prove daunting since the lawmakers are affected.
“It is a blackmail and gratuitous to say we won’t approve (the budget cuts) because certain projects are removed or we want some rewards,” Ajibola Basiru, spokesperson for the Senate, told PREMIUM TIMES. “In considering the adjusted budget, we will act in accordance with the oath of office we took and based on realities.”
Spokesperson for the finance ministry, Mr Dodo, did not confirm the transmission of the proposed adjustments Tuesday night.
The Buhari administration has also indicated a plan to implement the nearly eight year-old Steve Oronsaye report on the restructuring and rationalisation of government establishments.
“There is a time in the affairs of men that things become imperative,” said economist Bismark Rewane, who told PREMIUM TIMES that the current circumstances compelled reforms.
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