Interview: Poverty level in Nigeria very worrisome — DG, Budget Office
The Director-General, Budget Office of the Federation, Ben Akabueze, in this interview with journalists speaks on the challenges of budget implementation and efforts by the government to get the country back to a predictable budget year.
To what extent has the expenditure of government been tied to the recently launched Economic Recovery and Growth Plan in terms of sectoral allocation?
The ERGP is a medium term plan spanning 2017 to 2020 and it highlights the need for priority funding for basic healthcare. Just because you don’t see that provision in one year out of the entire period doesn’t just mean that it’s not consistent.
The only thing you should note is that in the 2018 budget, we are now capturing funding by development partners in the budget. So it is not good to say the budget does not have anything provided for it. As regards allocation to some sector, you will see there is significant improvement in allocation and it has doubled over the last two years.
The 2018 budget is christened budget of consolidation. In 2016, we had the budget of change, and in 2017 we had budget of recovery and growth. Is the government happy with the performance of the budgets of 2016 and 2017 that we are now consolidating on what we have achieved?
A budget is a reflection of not just expenditure items but underlining policies. The policies are what we are consolidating. The 2016 budget was based on the strategic implementation plan which was the administration’s short term plan and the pre-cursor to the ERGP.
So, most of what was in the SIP flowed into the ERGP and even though the ERGP was still in the works when the 2017 budget was done, it was fully aligned to the budget and so what the 2018 budget is consolidating is the policy direction and not the level of performance or non-performance of the budgets for those years. The level of performance of the budget is something we want to see improving.
In a recent report of the African Development Bank, the bank said that about 152 million Nigerians now lived below $2 a day which means poverty is on the increase and that Nigeria may have the highest number of poor population by the end of 2019, overtaking India. How has the 2018 budget tied itself to the level of poverty in the country?
The issue of poverty is of concern to the government but it’s debatable whether poverty is actually on the increase.
The government speaks to poverty through the budget from 2016 when the government has sustained the provision of N500bn for the social investment programme which has a lot of components including skills development, support entrepreneurship, conditional cash transfer and the home grown school feeding and now a social housing scheme.
These are all programmes directed at reducing poverty. In most of the Ministries, Departments and Agencies of government, there are programmes targeted at poverty. One of the most effective ways to reduce poverty is to create jobs and so any job creation initiative is a poverty reduction programme.
Why does the service wide votes take a huge chunk of about 30 per cent of the 2018 budget as against the six per cent back in the era of former President Olusegun Obasanjo?
If you look at the service wide vote, what are the main components? There are provisions for pensions; there are huge arrears of pension obligations not created by this administration that dates back even to the Obasanjo years.
Thankfully, by 2004 which is early in the Obasanjo’s second term term, the Contributory Pension Scheme was introduced but they didn’t clean up the arrears of unfunded liabilities. And so, we had to start making provisions for those liabilities.
There wasn’t any social investment programme of N500bn which is the largest component of this service wide vote that you are counting. In the service wide vote back then, they were not fighting Boko Haram. This government has included N75bn provision for Operation Lafiya Dole and included N45bn for rebuilding the North East. These were cases that didn’t exist back then.
The personnel costs take close to 30 per cent of the budget and many people are concerned about this. Specifically, how many people are working for the Federal Government to warrant this huge vote for personnel cost?
We are just as concerned and that is why we are making efforts to ensure that at least only people who are validly engaged by government are being paid. At the time when the economy is just emerging from recession and growth is still fragile, that’s not the time to contemplate reducing personal head count. You will only exacerbate the economic problems.
The number of people employed and catered for in this budget which includes the police, military, healthcare workers and the rest is a little over a million people. While that is a little over five per cent of the population, the public servants have a lot of people they cater for and to do that you have to multiply that by five to ten people.
There are claims that the people are not being carried along during the budget formulation stage and this is seen as not promoting transparency in the budget process. How do you respond to this?
The law requires the budget to be based on the Medium Term Expenditure Framework and we do engage with Civil Societies Organisation and take their inputs. Perhaps, that engagement needs to be more robust.
At the time we were working with the MTEF for 2018 and 2020, one of the outcomes of that engagement was that we should go back and take another outlook because most people pushed back on the 4.8 per cent growth rate and we went back and adjusted it. So we always take into account observations made during that engagement.
There are several Ministries, Departments and Agencies of government that generate revenue which are supposed to be paid into the Consolidated Revenue Fund account such as JAMB and others. But most of them don’t remit these revenues; what is being done in that regard?
I agree with you and I can assure you that it’s one of the major areas of focus as we go forward. We are working to design a new performance management framework for Ministries, Departments and Agencies that will see them contribute to the CRF. We have refused to take the path of reducing the revenue projection from them.
You will see for instance in the 2016 budget, we projected a very ambitious N1.5tn for these agencies and by the time the year was over, we recorded about N400bn. In 2017, we took a hard look and reduced the projection to N847bn. The full year fiscal figures are not out yet, but I know that there is significant underperformance on that.
The sum of N847bn from the agencies isn’t too ambitious in which cumulatively, the government had invested over N40tn over the years and therefore a budget of N847bn is simply asking for a two per cent return on investment. That is not unreasonable.
So, rather than take the approach of lowering the target just because they haven’t met it, we have chosen to hold fire on the target and to engage with these agencies to drive performance and say this is not acceptable.
Over the years, there has been this regular provision for computer, computer software and vehicles among others in the budget and this is being repeated every year. What is responsible for this?
This has to be so. Take the budget office, for instance. We have 450 personnel and if everybody is to have a computer and we bought 50 computers in a year, it will take several years before you can get a computer to every employee. And even if you take a ratio of two employees per computer, it would take you five years to buy enough computers for everybody.
Again, given the rate at which these things go obsolete; within three years you have to replace them. So it’s inevitable that you see an agency providing for computers and this is being done within the limits of the resources available to them that year. It doesn’t mean that their needs have been covered.
The same thing goes for vehicles. The Budget Office didn’t buy vehicles for seven years and in 2017, we provided for the replacement of some of the vehicles. Also, in 2018, you will again see budget for vehicles. It’s not feasible to replace all the vehicles in one year.
The private sector relies on the budget of the Federal Government for planning but the non-predictability of the budget year is making it difficult to have an effective plan. What is being done in this regard?
There is need to bring predictability into the timing of the budget and if as a country we decide that January to December doesn’t work for us; then let’s pick another date but whatever date that we pick should be able to allow people to plan.
That is one of the reasons why we are kicking the agenda to get back to January to December budget year because we believe that for the private sector, they work on a January to December cycle.Punch