The Shadow Cabinet of Nigeria in Abuja today released a statement pointing the expectations of the group and Nigerians on what is need in the 2016 budget.
The statement signed by the Secretary of Finance of the group, Mr Onunka Kanyidi raised critical issues of what is expected.
The statement reads:
The importance of careful, proper, continuous and timely preparation of budgets in any endeavor – personal, organizational or government – cannot be over emphasized. Budgeting is a planning mechanism of income and expenditure estimation and how they can be exploited for value creation – economic and social wealth as is the case for a country.
Budgeting can also be a roadmap towards actualizing the dreams, goals, aspirations and vision of an organization. In Nigeria, proper budgeting entails prioritizing projects that have the largest impact on the citizenry.
Also important in the budget process is a measure of monitoring the performance of budget implementation – ensuring that the maximum gain is achieved.
Critical appraisal factors to be considered in the preparation of a budget are ensuring that due processes are followed in the award of contracts, blocking of loopholes in revenue generation, best value for projects are only considered to be executed, transparency and accountability are encouraged and enforced,.
Over the years, the Nigerian income component of the budget has always been centered on the price of crude oil; the attendant consequences have always been devastating as with other countries whose budgets are based on the prices of commodities.
The forces of demand and supply have affected these income expectations, the recent being a devastating sharp, continuous and prolonged decline of these crude oil prices from second quarter of 2014.
The fact is that it is not the inability to meet budgetary expectations in capital projects but the failure to take appropriate steps towards ensuring timely and focused planning of a budget and the continuous ignorance to improve on previous budget preparation processes, taking into consideration the volatile risks prevalent in the commodity markets.
The 2015 budget was benchmarked on a crude oil price of $53/bbl and today, the average price of crude oil is $45/bbl down 15%. On the other hand, the expenditure component has always been tilted in favour of recurrent expenditures stripping availability of funds for the development of critical sectors of the economy. The dependence of crude oil also limits the income expectations and this can be seen as another reason for low allocation of funds for capital projects.
A timely and well focused budget in today´s Nigeria, especially with the prevailing condition is long overdue. Having been hit by the wave of crude oil price decline, we have seen our GDP decline to 2.84 percent in the third quarter compared to 6.02 percent in the same quarter of 2014.
We have seen continuous increase in inflation leading to increased cost of business activity, increase in unemployment and near stagnation of the economy with no clear policy direction or expectation from the government.
More so is the concerted effort of the CBN using monetary instruments to protect the naira and ensuring adequate liquidity in the economy thus placing a huge burden on its shoulders.
The expectations from all Nigerians, irrespective of tribe, political affiliations, economic, religion and social inclinations, is for a budget that is geared towards improved standard of living, wealth and value creation and safety of life.
Our expectation is for a budget that is focused on creatively developing ways for improved revenue generation with minimal associated costs through ensuring tax compliance by individual and corporate organizations.
The budget should be focused on continued and sustained use of information technology to ensure accountability, efficiency, flexibility and transparency in the entire budget process. From the payment of salaries, management of pension, to the payment for projects and subsidies. We demand for a budget that contains executable projects that are bankable.
During the two-day retreat held by newly appointed Ministers of the Federation, Vice President, Professor Osinbajo proposed a budget of 7 – 8 trillion naira laying emphases on a 2.5 trillion naira capital expenditure component with no about how it is to be funded.
While it is encouraged for extensive and massive capital projects to be executed, reckless spending and abuse must be avoided. The budget must be in line with ensuring that the tempo of national development as initiated by the past administration is sustained.
The CBN via the Monetary Policy meeting it held on the 23rd and 24th of November recently voted to reduce the CRR from 25% to 20% and reducing interest rates from 13% to 11% with a caveat that the liquidity arising from these decisions will be used for employment generating activities such as agriculture, infrastructure and solid minerals.
This is a welcome development as this will inject more funds into the real economy stimulating local economic activity and growth their by contribute towards improving the collective quality of life. The CBN should however, ensure strict compliance through continuous monitoring of these disbursements to ensure its intended purposes.
The budget should also focus on the continuous drive towards diversification of the economy, shifting away from the sole reliance of crude oil commodity to a basket of other income generation streams.
The budget must focus on significantly reducing recurrent expenditures irrespective of political, social and religious sentiments. Government must in the overall interest of the Nigerian people strengthen for maximum and effective impact, the Civil Service.
Redundant staff must be encouraged to retire while benefits are given to them. Departments and agencies that carry out duplicate activities should be merged while organizations without proper and clear objective, especially if such objectives have been overtaken by event should be scrapped.
Actions should be taken to discourage the idea of one working in a government organization as the best because this can stifle the effectiveness, productivity, capacity and profitability of an organization; boomeranging into the national economy.
The Management of government organizations should be encouraged to be self sustaining and equipped with clear targets and mandates including milestones that must be achieved. Government must be seen to mean business but with a human face.
The Budget Office must be revamped, restructured and motivated with a clear focus on monitoring, ensuring compliance and implementation of budget deliverables. This team should be under the direct supervision of an Economic Coordinator.
In addition, for excellent result and impact, Budget Offices should also be set up in each Ministry, Department and Agency of government. This team should coordinate with the Bureau of Public Procurement to further improve on their mandate. A healthy relationship between the National Budget Office and the State Budget Offices should be encouraged.
Most importantly, independent relationships, devoid of political affiliations must be fostered and nurtured, between the Federal Government and Local Government for maximum impact.
In other to build public acceptance and encourage healthy discussion, the budget properly detailing income generation and expenditure profile, budget benchmarks and milestones must be published in easily acceptable formats and disseminated.
Budget documents must be easily obtainable through the internet and an independent monitoring by interested organisations should be encouraged by the government. A robust engagement and discussion with the government at all levels must be promoted.
Finally, accountability and transparency must be encouraged and seen to be done.
Secretary for Finance, Shadow Cabinet of Nigeria