Presenting the N2.8 trillion 2009 budget proposal to the National Assembly on December 2, 2008, President Umaru Yar'Adua had made a serious pledge: That the 2009 Federal Budget will focus on delivering on the promises of his administration's Seven-Point Agenda by enhancing investment in critical physical infrastructure and human capital development, implementing socio-economic reforms and consolidating democracy. He also promised: “We are moving from a system where we spread our limited resources thinly across many projects that take several years to complete, to one where we concentrate and focus on fewer, highly prioritised projects, which we can bring to quick completion.
“Many of the 2009 Budget interventions adopt a multi-dimensional approach in addressing key challenges to our development as a nation. As our Public-Private Partnership policy is fully implemented, private initiatives are expected to complement the Government's interventions in key areas of our economy with the overarching objective of making a positive, tangible and enduring difference to the life of the ordinary Nigerian”.
Nine months into the year, not a few Nigerians are wondering whether Yar'Adua still remembers these words or whether he had wittingly chosen to ignore his pledge. The reality, observers say, is that the government's seven point agenda had turned out a mere campaign slogan while nothing appears to be happening as far as development of physical infrastructure, growth of the economy and bringing positive, tangible and enduring difference to the life of the ordinary Nigerian are concerned. “Nothing is happening in the economy. The nation is truly on a stand still. Manufacturing is dead. Power generation and supply are at the lowest level. Fuel supply is not guaranteed. The roads are in a terrible state than never before nationwide. The educational sector is about to collapse. The hospitals have truly become consulting clinics. Hunger is hitting hard on the people like never before. And money does not appear to be in circulation. The worse thing is that the government does not seem to notice all these or simply does not care,” lamented Reuben Otobo, a former production manager with Kewakall Limited, who allegedly lost his job when the textile company went under few years back.
Fitch Ratings, the international rating agency, in endorsing the Nigerian economy in July, affirmed the country's long term foreign and local currency Issuer Default Ratings, IDR, at 'BB- and BB' respectively. It also affirmed the short-term foreign currency IDR at 'B' and the country calling at 'BB'. “Nigeria's strong sovereign balance sheet is the main support to its ratings. Despite a reduction in reserves by USD44.8 billion in May 2009, since the peak of USD62.1 billion in September 2008, low foreign liabilities of both the public and private sectors mean that Nigeria's external balance sheet remains robust and is still one of the strongest in the 'BB' category”, it said.
Yet, by the government's own admission, it is really not at ease with the budget and its performance. Indeed, President Yar'Adua began to sound a note of warning on the budget as far back as May when he admitted that the budget projections were unattainable. He said the approved revenue projections were well in excess of what was considered to be realistically attainable in obvious reference to the projected oil production target of 2.29 million barrels per day and the benchmark oil price of US$45/barrel, which were far above the then actual daily crude oil production figure of 1.6 million barrels and the $34 per barrel price of oil in the international market. The president was responding to the outcry by National Assembly members that the Executive arm of government had dumped certain aspects of the 2009 Appropriation Act as passed by them, and was rather implementing the provisions of the Act selectively.
Mansur Muhtar, Finance Minister, put the performance of the budget at 20 per cent based on utilisation of first quarter releases. “In the first quarter of 2009, N200.37 billion was released, comprising N187.68 billion for ongoing capital projects and N12.69 billion by way of Authority to Incur Expenditures, AIEs. Despite the early releases of the first quarter capital warrants on 9th January 2009 for on-going projects, capital budget implementation averaged 20.68 per cent at N33.26 billion out of the N160.84 billion cash backed by the Office of the Accountant-General,” the minister said in a statement issued in July by Deborah Chinwe Okafor, his Special Assistant on Communications. He, however, added that the situation had improved in the second quarter of the year.
Dora Akunyili, Information and Communication Minister, on the other hand, pegged the performance at 21 per cent based on the assessment of the Federal Executive Council, FEC. The performance of the economy itself has also been far from exciting. The 2009 budget, for instance, projected real GDP growth for the year at about 7.5 per cent - compared to 6.6 per cent in 2008, but Akunyili as at July put the GDP performance at 4.85 per cent, claiming this was better than many emerging economies'. But, the latest estimates of the National Bureau of Statistics, NBS, say GDP growth in the first quarter of the year was in the order of 4.5 per cent compared with 4.64 per cent in the first quarter of 2008. For the second quarter, NBS estimated growth at a higher level of 6.73 per cent compared with 5.65 per cent in the second quarter of 2008. It said the growth in this year's second quarter figure over last year's was due to contributions from agriculture, wholesale and retail trade as well as growth in contribution of crude oil and natural gas production from -1.72 to 0.57 percentage point, but experts cite oil as the main source of the growth.
Also, Central Bank of Nigeria, CBN, figures show year-on-year inflation at 11 per cent as at July as against government's single-digit expectation for the year. While the CBN is hoping that inflation would moderate later in the year and that any possible rise could be curtailed with policies to be adopted at its next Monetary Policy Committee, MPC, meeting, experts warn that further increase in the rate of inflation could come with higher oil prices, the proposed removal of subsidies with effect from November as said recently by Mansur and the usual growth of spending around the Christmas festive season.
But, of far greater worry to observers is that of low budget implementations by Ministries, Departments and Agencies, MDAs, meaning that all funds budgeted for are not being released by the federal government while released funds are not being fully utilised by the MDAs to give a boost to economic activities. Otobo, who refers to this as one of the major problems facing the economy, noted that most of the funds meant to have been expended at the beginning of the year were not spent even after the president had signed the budget into law on March 10 and such funds were released. “This is a bad development for a country that is desperate for improved delivery of government promises,” he said. Akunyili admitted this much when she disclosed that during the budget review by the FEC, it observed low budget implementation of the Ministries of Agriculture and Water Resources, Transport, Niger Delta, National Planning and Finance. Except for the Ministry of Niger Delta where the additional reason of insecurity was adduced for its low pace of performance, reasons adduced for the low implementation of the budget by other affected ministries include lack of understanding of the relevant regulations and undue delay in the processing of payments for projects executed by government.
Akunyili that for the Ministry of Agriculture with a total budget allocation of N138.93 billion, about N46.69 billion was released. And for the crop sub-sector-land cadastre programme of the ministry, the budget performance was just 10 per cent. But the Ministry projects 85 per cent performance by December. For reclamation of silos with a total allocation of N455.5 million, the implementation was only 10 per cent though, according to the minister, this is projected to be 100 per cent by the end of the year. On the livestock sub-sector with a total allocation of N3.49 billion, the implementation was 36 per cent. On dams and irrigation programmes, the projected implementation was 10 per cent.
For the Ministry of Niger Delta with a total budget allocation of N48 billion, four of the six projects with a budgetary provision of N28.42 billion are for the construction of the East-West roads while two are for conservation projects. The percentage completion on this project is 26.4 per cent for East-West Road Section I, six per cent for East-West Road Section II and 22.7 per cent for East-West Road III. For the East-West Road, Section IV, 10 per cent completion has been recorded, she further said as she assured that by December, the East-West road projects would have reached 35 per cent completion while the Niger Delta coastal road would have attained 10 per cent completion.
The result of such delay in the release of funds and low budget implementation by MDAs as witnessed so far in the year, according to Otobo, is that it impedes economic growth. Chris Itsede, former director general, West African Institute of Finance and Economic Management, WAIFEM, agrees, arguing that lack of growth had in turn brought about unemployment and poverty. “Talk about production, income, poverty. Why are people poor? Poverty is basically an income-driven phenomena, it is lack of income that gives birth to poverty. Why are people not working? It is because the economy is not growing the way it should grow either in the right sectors or in the appropriate numbers. When the economy is growing, everybody perceives that growth and shares from it,” he told The Business Eye.
Many observers believe the 2009 budget has failed to power the economy. And this is understandably so because of the inherent disadvantage of the budget from conception. Experts point to the budget's inbuilt, all-time deficit of N1.09 trillion, which represented about 37 per cent of the entire budget as a problem that marked the budget out for failure. Maxwell Oyeyele, chief executive officer, MaxOil Limited, an indigenous oil services company, describes the level of deficit as “unprecedented in the history of the nation” while Itsede pointed out that “at 3.95 per cent of GDP, the deficit exceeded permissible threshold of three per cent by the Fiscal Responsibility Act.” The situation was made worse for the budget in especially in the first seven months of the year when actual crude oil production and prices tumbled to as low as 1.2 million barrel per day and $34 per barrel. Oyeyele believes the recent resurgence of prices to above $70 and daily production to 1.7 million barrels have put the budget on a sounder footing. But he also believes the earlier scenario in the year has also done an incalculable damage.
Indeed, as far back as March, Muhtar and Remi Babalola, Minister of State for Finance, had hinted of the hardship that awaited both the budget and the nation in the face of dwindling production due to the Niger Delta crisis and the then declining crude oil prices. “The actual oil production recorded so far in 2009 currently averages about 1.6 million barrels per day. Oil prices, on the other hand, have hovered around $40 since the beginning of the year. This indicates that the key assumptions underpinning the budget may not materialise,” Muhtar said in reference to the 2.29 million barrels per day production target and the projected oil price of $45 per barrel for the year. Although Babalola, maintained that "implementation of the budget is non-negotiable," he predicted that the development would put the precarious situation of the 2009 budget in a far greater stress. The minister, for instance, calculated that if the unimpressive scenario were to persist till the end of the year, it would open up a $6 billion (about N696 billion) gap in the budget which projected total revenue at N2.26 trillion.
Babalola's calculations became reality given the fact that for only the first quarter of the year, the level of budget deficit was N249.10 billion, well over 30 per cent of his prediction for the entire year. The situation was made worse because income from other sources expected to support revenue from crude oil sales, did not come in as planned. Between January and March, for instance, N979.25 billion was generated by the revenue generating agencies of government, including the Federal Inland Revenue Service, FIRS, Customs and Nigerian National Petroleum Corporation, NNPC, as against the budget target of N1.228 trillion. “A deficit of 249.10 billion or 10 per cent of the budget has already occurred”, the minister said. As at May, the International Monetary Fund, IMF, estimated that Nigeria's budget deficit would likely widen to around 8.5 per cent compared to the 3.95 per cent envisaged by the budget.
Funds have also not been forthcoming from other sources where Budget 2009 expected succour. The federal government, for instance, had expected to raise N125 billion from oil contract signature bonuses, $200 million (or N25 billion) from the recall of the Nigerian Trust Fund, NTF in the African Development Bank, N500 million (N62.5 billion) from issue of international bond, N100 billion from privatisation and N449 billion from domestic borrowing, to fund the budget deficit. But as predicted by experts at the first Business Eye Round Table on “Nigeria in 2009” in January this year, government has been unable to draw funds from these sources as the effects of the global economic meltdown and lack of action by the government at the local scene combined to make this impossible.
But it is not only at the federal level that the budget is not performing. A report by the non-governmental organisation, Niger Delta Citizens and Budget Platform, NDCBP, cited fiscal irresponsibility and lack of accountability as characteristic of budgets of the Niger Delta states of Bayelsa, Akwa Ibom, Delta and Rivers. The Citizens Report on State and Local Government Budgets in the Niger Delta, tagged 'Carry Go”, reviewed the 2008 budgets of the states, alleging that “lack of clarity in budgeting and misappropriation of funds on the part of Niger Delta governments was impeding the performance” of their budgets. The NDCBP reported in the case of Delta State, for instance, that the government allocated the sum of N1.875 billion being 50 per cent of the entire capital vote for education in 2008 budget for the renovation and reconstruction of the post-primary schools in the state. But, as at the end of 2008, it said, almost all the schools were in a state of disrepair, raising question as to where all the budgeted funds must have gone. It also reported that of N6.504 billion was budgeted for infrastructure, the sum of N2.077 billion was set aside for the provision of boreholes across the state, yet the budget was silent on the particular places where the water projects were located. NDCBP saw such silence as a “deliberate ploy by the state government to forestall effective monitoring of the budget to give room for the embezzlement of the budgeted funds.” The NDCBP discovered that only one water project was built at Akumazi-Umuocha in Ika North local government area in the 2008 fiscal year at the cost of N20 million. Apart from the fact that the project was not functioning at the end of the year, the real value of the project was put by evaluators at N3.9 million as against the N20 million budgeted for it. More worrisome to the body is the allocation of N7.644 billion (representing 5.08 per cent of the entire budget) to the Government House. This was against N4.192 billion (2.78 per cent of the budget) allocation for Health and N3.75 billion (2.49 per cent of budget) for Education - two important sectors, which cater for millions of Deltans. Oma Djebah, the state commissioner for Information, could not respond to these allegations when contacted on phone and email.
On Bayelsa, the report indicated that NDCBP monitored the Cottage Hospital and the Motherless Babies Home at Opolo-Epie, Yenagoa. In addition, it monitored local government projects, including a Health Centre at Gbarain-Toru and the proposed Motor Park at Igbogene-Epie. At the state level, the Motherless Babies' Home was allocated a budget of N200 million. However, by the end of 2008, NDCBP discovered that there was nothing to show an attempt or intention to build a motherless babies home at the proposed area. On enquiry, officials of relevant government ministries claimed lack of knowledge of the project even where it was clearly spelt out in the budget for 2008. Investigations by the group also showed that the execution of the Cottage Hospital which got an allocation of N1.3 billion was already on-going and at the roofing stage. However, implementation was slow leading to inability to complete plans during the fiscal year. The group alleged that further findings from the Due-Process office revealed that sometimes amount quoted in the budget were not fully released thus causing delays in project completion. Practices in the states have often involved upfront payment of contractors. At the local government level, the team monitored the Health Centre project at Gbaran-toru which got a budget of N28 million, a project that was earlier in 2006 allocated N18 million and N10 million in 2007. On a visit to the project site, NDCBP said its officials “were confronted with an abandoned structure which in itself was a carryover from an existing substandard building. An attempt to value the structure showed a property worth no more than N5.7 million standing.” While monitoring the Motor Park facility for Igbogene community valued at N35 million (2007 fiscal year), the group discovered that no such project existed in the area. Executive members of the local branch of the National Union of Road Transport Workers, NURTW, approached on the matter said the union, which should be the major beneficiary of such project, knew nothing about the planned motor park. Ola Doifie, Chief Press Secretary to Bayelsa State governor, Timipre Sylva, told The Business Eye he was not in a position to comment on these allegations, including those directly affecting the state government.
In Akwa Ibom State, investigation by NDCBP showed that N200 million was budgeted for the provision of street lighting in major streets in the following semi-urban centres: Aka/Obot Idim road, Mbak Atai, Ikot Edibon, Odot, Idu, Afagha Ikot Ebak, Ibiaku Ntok Okpo, Ikot Akpan Nkuk, Mkpat Enin, Uquo, Oruko, Okopedi, and Abak. By the end of 2008, NDCBP found only old and dilapidated streetlights when it visited Aka/Obot Idim road. “There was no sign of renovation or provision of new streetlights in the area. Discussion with locals revealed lack of knowledge and information about the streetlight project. At Ikot Edibon, NDCBP found no streetlights. Discussion with the people revealed that a road project was completed in the community in 2008. They were not sure if there was provision for streetlights,” the report said. Aniekan Umanah, the state Commissioner for Information, was not forthcoming when his views were sought on these and other allegations listed in the report.
As for Rivers State, projects monitored included: expansion and provision of books at Rivers State Central Library at Bernard Carr, Port Harcourt which got N150 million allocation; renovation and rehabilitation of hostels at School for the Handicapped, Port Harcourt; building of health centre at Mgboshimini Community, Port Harcourt; purchase of helicopter by the Rivers State government; establishment of Specialist Heart Centre. NDCBP found that the expansion of the library, which involved a two-room extension, had been commissioned earlier in 2007, while provision of books had in 2007 got N300 million. Library officials told NDCBP monitors that no new books were provided during the period. On renovation and rehabilitation of hostels at School for the Handicapped, Senior Secondary, Creek Road, Port Harcourt, for which N10 million was earmarked, it was discovered that the hostel, built by the Family Support Programme, FSP, of previous administrations, was never renovated at any point during the period under review. There was no construction of health centre at Mbgoshomini area, in Port Harcourt, despite the budgeting of N100 million for the project in the 2008 fiscal year, the group also alleged. Ogbonna Nwuke, the chief press Secretary to Rivers State governor, Chibuike Amaechi, dismissed these allegations as “a figment of the imagination” of the group. “They did not ask questions, they did not visit us, they stay in their offices and craft reports. It is not enough for them to stay in their offices and write baseless reports,” he said as he informed that the mere allocation of amounts in the budget did not mean such amounts had been spent.
Allegations of fiscal irresponsibility are also rife in other states of the Federation. For instance, Civil Society Legislative Advocacy Center, CISLAC, has expressed worry over disturbing report in Kebbi State indicating that former governor of the state and current Federal Capital Teritory Minister, Adamu Aliero, was in firm control of the budgetary process in the state. Auwal Musa Rafsanjani, leader of the group, said the allegation, which is causing quite some disquiet in Kebbi, is also a problem in several other states across the country where past governors manipulate the system. CISLAC also claimed that in the Northern states, there are incidence of projects being commissioned four or five times, adding that “this is so because governors do what they like with state funds and relevant stakeholders are not involved in making the budget.” CISLAC also alleges connivance between state governments and contractors in budget formulation. “Usually what happens in most instance is that there are no value for money in project executed”, it also alleges. Observers say these are also the cases as it concerns states in the South-West and South East parts of the country.
To get around this problem, Itsede proffers a solution. “The way out is a political way. You may have a brilliant economist and the right economic plan, but you require the right political choice for those technical plans to come to reality,” he says.

By Chuks Isiwu