I listened to the Minister of Finance and the Coordinating Minister of the Economy, Mrs. Ngozi Okonjo-Iweala, as she defended the implementation of the 2012 budget before the Senate live on television and the repeat broadcast on Nigerian Television Authority, NTA, a few days later.
All I could gather from the whole exercise were the following:
(i) The National Assembly threatened to impeach very soon the Nigerian President, Mr. Goodluck Jonathan, if budget implementation failed to meet up with 2012 budget plan and approval;
(ii) The National Assembly invited the Minister, Mrs. Okonjo-Iweala, to appear before a committee or panel set up to probe the degree of implementation of the 2012 national budget;
(iii) The committee asked various questions that bothered on the implementation overview of the 2012 budget and the overall or actual percentage implementation as a final means of measurement and assessment;
(iv) In response, the Minister reiterated that the implementation should be viewed from four perspectives:
• Recurrent expenditure that has been implemented as and when due as salaries have to be paid from January 2012 till July 2012;
• Capital expenditure that has to be implemented only after the budget approval from April 2012 till July 2012;
• The release for capital expenditure should have been N462 billion approximately for the duration of four months (April to July) out of which N404 billion has been processed, N322 billion cash backed out of which only 56% (N180 billion approx) has been used leaving a balance of 44% (N142 billion); and
• Monthly revenue sources that the government depended upon for budget implementation limited the availability of funds and ability of government on monthly spending;
(v) Capital expenditure will lag behind recurrent expenditure unless the budget is approved in earnest; and
(vi) The members of the committee accepted the Minister’s analysis in good faith.
The fact that the defense was repeated on national television channel, NTA, meant that the government was satisfied with it. But Nigerians have been misinformed and misguided in the whole exercise. Why?
The following are pointers:
(i) The total budget is N4.6 trillion out of which N3.2 trillion is for recurrent expenditure while capital expenditure is N1.4 trillion. The simple meaning of this arrangement is that N3.2 trillion will be used by public servants (including politicians) to bring about a general service of N1.4 trillion to the nation. As a percentage, resources valued at 69.56% are required to produce a finished product valued at 30.44%. No industry in the developed or developing world works this way where the value / cost of input far outweighs value / of output. It can only happen in Nigeria because Nigerians have been blindfolded by mediocrities who are rated as “Experts”;
(ii) The recurrent expenditure is perfectly implemented. In my opinion, this is 58.33% implementation by the end of July, 2012 and will be 100% implemented by the end of the year. The possibility that recurrent will surpass the 100% level cannot be ruled out! But for the capital expenditure, the cash used was 12.86%, cash released was 23%, and cash processed was 28.86% up till the end of July 2012. The variance in percentage implementation between recurrent and capital expenditures can be seen from above to be too wide;
(iii) The whole capital expenditure is for infrastructure. Some infrastructural projects can be fast-tracked and completed to meet up with their various deadlines. Fast tracking can mean splitting up projects into more manageable smaller fractions, financial support for contractors using performance and advance payment bonds as securities, increase in contractors’ operation time frames with day and night work possibilities and reduction in public holidays, increase in personnel strength, increase in materials strength, increase in equipment availability, ease of importation of materials and equipment, etc.
None of such projects were conceived to be in the pipeline for fast-tracking by the Minister or envisaged by the members of the committee that interrogated her.
(iv) If only N180 billion was used up with another N322 billion cash backed in four months, one can assert that N540 billion (i.e. N180 x 3 = N540) and N966 billion (i.e. N322 x 3 = N966 billion) will be used up and cash backed respectively by December 31, 2012. The unspent balance on the capital expenditure will range between N434 billion (i.e. N1,400 – N966 = N434) and N860 billion (i.e. N1400 - N540 = N860) billion. The optimistic value of N966 billion is only 69% of the capital vote and 21% of the 2012 budget.
The unspent balance of N434 billion is 31% of the capital expenditure vote and 9.43% of the 2012 budget. What happens to the unspent balance of N434 billion on the capital expenditure in this optimistic value? As usual, it will be rolled back to finance the 2013 budget deficit (Of course, if it were the pessimistic value, the N860 billion would be rolled into 2013 budget deficit); and
(v) Undoubted, revenue into the country is aggregated monthly as stated by the Minister. But this revenue takes into account both recurrent and capital expenditures. During the time lag when budget awaits approval from the National Assembly, the vote for capital expenditure should accumulate. Thus between January and July, the capital vote should have swollen to N808.5 billion (January to July) as against the N462 billion (April to July) presented by the Minister. Where then was the surplus fund and why would the Minister mislead and misinform the whole nation through the sitting at the National Assembly that the revenue could only have been N462 billion and that government had no other extra revenue?;
(vi) The Coordinating Minister of the Economy should be someone vast in project implementation not mere economics theory. Such a person is, in my opinion, an Engineer or Architect depending on which higher percentage of Engineering or Architecture is involved in the capital projects conceived. I am sure that Mrs. Okonjo-Iweala has been saddled with a Herculean task far above her capability, experience and understanding. This is the truth. Of course, her inability to response adequately to a simple question asked by one of the committee members on the overall percentage implementation of the budget meant that she was swimming in a very deep water and was struggling to against being drowned;
(vii) Since 1999 when the civilian government came on board, budget implementation has been problematic from year to year in spite of assurances that the succeeding budget would correct the lapses and inadequacies of the one being implemented. Nigerians must ask questions why this should be so for more than a decade. I wondered why it did not worry the Minister, the committee members as well as Nigerians that nothing has changed in the area of budget implementation since all these years! and
(viii) I mentioned 1999 in item (vii) above to draw out a point. Mr. Jonathan was not the Head of State between 1999 and 2009, a whole decade. Yet all past budget implementations for these years (a decade) were woeful. Who caused it? Definitely, not Mr. Jonathan. The problem is therefore not Mr. Jonathan’s but that of the mediocrities assembled as Economic Team / Advisers. If Mr. Jonathan is impeached, what happens to the mediocrities in the Economic Team / Advisers? In subsequent articles, I hope to show how the Nigerian Economic Team has plunged the country into economic crises one after the other since 1999 till date.
As usual, I welcome criticism(s) and comment(s) either publicly or privately or both. Those criticizing must arm themselves with facts lest they become targets for another critical review. My email address remains jaomotayo2 (at) yahoo.co.uk. .
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OMOTAYO, J. A. Lagos, NIGERIA August 17, 2012
Thanks very much Mr. Joshua for your comment. We all cannot see everything the same way. But I can let you recollect the events of the past to be able to imagine the efforts of today on our collective tomorrow. I was not there when Mr. Obasanjo appointed Mrs Okonjo-Oweala as his finance Minister in 2003. I was not there when the then PDP chairman, Mr. Audu Ogbe, said publicly that the economic theories put in place by both Messrs Okonjo-Iweala and Charles Soludo were not working sometimes in 2006.
In fact he described the situation as "ill-digested theory". I was not there when Mr. Obsanjo relieved her of her position as the chairman of the Economic Team and Finance Minister. If she had anything to offer, then you should ask why those things happened to her. I was not there when the late Mr. Gani Fawehinmi went to court to challenge the exorbitant pay package in US Dollars paid to her and one Mr. Adeniji. I was not there when the court gave judgment that the duo paid in foreign currency should make a refund.
All the above should point to something to you. You can read my articles on Bank Consolidation that both Messrs Okonjo-Iweala and Soludo championed and the mistakes inherent in their assumptions even while she was in office. I sent privately a typed 23-page document on the inadequacies of the Bank Consolidation policy separately to Mrs Okonjo-iweala, Mr. Soludo, the President of NLC, among others. the document had 45 references. There was no response from any of your "Experts", among whom Mrs Okonjo-Iweala is one.
I cannot hide my displeasure that mediocrities in high public places and positions have taken all of us Nigerians for granted. I have no reason to hate anybody. But I have a calling to expose misinformation, mismanagement and deliberate desire of a few to sell Nigeria to themselves all in the name of pursuing all the failed and continuously failing policies of the IMF and World Bank.
If Nigeria is good, it will be for all of us, not Omotayo alone. If it is bad, as these mediocrities are making it to be, most of us will suffer while only a few of them, perhaps less than 1% will enjoy. That to me is not second slavery but a third category slavery.
Imagine the unemployment, the un-motorable roads, the inadequate water supplies, etc and yet somebody would come and tell us that the payment of their salaries and allowances were up to date while the capital projects that would benefit the majority would have to wait for unjustifiable reasons. If I may re-conclude again, this woman is empty and has nothing to offer Nigeria and Nigerians.
God save Nigeria.
Joshua Lagos, Nigeria August 15, 2012
Piling the woes of budget implementation on the economic team is really unfair. Especially the one headed by the current minister of finance. She has ensured that Nigeria's fiscal policy is moving back to an enviable position.
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