News Post

1. As at today, Nigeria is faced with enormous socio-economic challenges, including declining/negative economic growth, high incidence of poverty, inequality, unemployment, particularly among the youths, parlous state of infrastructure, among others. The low development indicators and lackluster performance of the economy in general are not unconnected with inefficient and ineffective public financial management and budgeting in particular. 

2. Aware that the government budget is a very important tool of   economic  management and for promoting growth and development,  His Excellency, the Senate President (Dr) Abubakar Bukola Saraki on the 25th of July, 2016 inaugurated the Main and Technical Committees on Budget Reforms to produce a budget reform strategy paper and draft Budget Reform Bill. The broad objective is to address the pitfalls and challenges in the budget process and significantly improve budget formulation, enactment, implementation, and monitoring and evaluation with a view to improving budget performance and development outcomes.

    

3.   The Terms of Reference of the Technical Committee is as follows:

• Review relevant laws and literature on budget reforms;

• Develop a detailed strategy  paper covering the challenges and opportunities in the budget process entailing preparation, enactment and implementation; and

• Draft a budget reform bill. 

4. The Main Committee and the Technical Committee met several times to consider the draft reports of the working groups. At the last meeting of the Main and the Technical Committees held on 11th October, 2016 by the Main Committee which had in attendance Hon. Ben Akabueze, Director-General of the Budget Office of the Federation, myself (Senator Ali Ndume) and members of the academic community; the draft report of the Technical committee was adopted. 

5. Your Excellency, the details of the findings are contained in the report. The following were the key findings from the report, for which legislative action can be taken, were structured to reflect the stages of the budget circle:

• Key Reform Strategies for Budget Preparation 

• Key Reform Strategies for Budget Enactment

• Key Reform Strategies for Budget Implementation

6. Key Reform Strategies for Budget Preparation  

i. Alter Section 81(1) of the 1999 Constitution and amend Sections 11 and 14 of the Fiscal Responsibility Act to provide for a fixed and realistic budget calendar by which the President will present the budget to NASS by the first week of September, considered and passed by NASS by 30th November and assented to by the President by the second week of December. Repeal and re-enact the 1958 Act to check the anomalies in relation to the fiscal year.

ii. Provide legal backing for development plans to serve as basis for the annual budget and ensure continuity of development plans. In this regard, complete the legislative actions initiated for the enactment of laws: “Development Planning Act” and “Project Implementation and Continuity Act”, pending in NASS.

iii. Amend Sections 13-18 of the FRA to link MTEF with a development plan. Then:

• have a long-term 15 year development plan to be implemented with three-year MTEF and Medium-term Sector Strategy (MTSS);

• NASS to support the development plan with a resolution and ensure that the annual budget is linked to it.  

iv. Amend the FRA to enlarge the list of stakeholders to be consulted during the budget preparation process. Then, there should be pre-budget consultation between NASS and the executive and between the executive and the public. And during the budget defense by the MDAs before the Committees, relevant stakeholders should be invited.

v. Enact an organic budget law that puts together all laws relating to the budget, including a fixed and realistic budget calendar and a pre-Budget Statement.

vi. Alter Section 162 of the Constitution to recognize saving by the three tiers of government through the Federation Account and provide legal backing for Excess revenue savings to enable the country save revenue windfalls and stabilize government expenditure during fiscal crisis.

vii. Develop a budget manual which would include the procedure for public participation in the budget process and public access to budget information during the budget preparation process.

viii. Amend Part III of the FRA to include outcome budgeting. NASS should ensure that the budget is outcome-based.

ix. Amend Section 19 of the FRA to include project documents in the list of budget documentation, including performance appraisal of current budget.

x. Amend Part III of the FRA to provide for reporting standards for MDAs and information sharing arrangements of budget provisions and quarterly implementation status reports.

xi. Provide effective timelines for monthly and quarterly financial and non-financial reports.

xii. Enact a law to compel all MDAs to upload their budget-related information on a dedicated website

xiii. Develop and publish criteria or methodology for determining the aggregate expenditure estimate and its allocation to sectors and line items.

xiv. Expand the information content of the Budget Call Circular to include the modalities for public participation in the budget preparation process.

xv. Develop the capacity of MDAs and other relevant stakeholders to effectively apply the zero-based budgeting technique or any other performance-based technique that may be adopted.

7. Key Reform Strategies for Budget Enactment

i. Have an agreed budget enactment Time Table that must be adhered to by all stakeholders in the budgetary process. 

ii. The proposed organic budget law should provide that:

• The President presents a Budget Speech to the nation through NASS;

• The Minster of Budget and National Planning, in not more than one week after the President had laid the budget in the Plenary, present the details of the budget/report to public.

iii. Include in the proposed organic law definite timelines for the enactment process:

• presentation of the budget by the President by the 1st week of September of the current fiscal year and to be passed by NASS by November 30th while the President assents to it latest 2nd week of December. Specific timelines for the activities in the enactment process could be captured in the Senate/House Standing Order.

• Within two weeks of the budget presentation by the President, NASS should pass a joint resolution on key issues in the budget which both chambers of the legislature should agree to and which will be binding

iv. To promote transparency in the enactment process, amend the Senate/House Standing Order to provide: 

• that sub-Committee and Appropriations Committee reports are endorsed by not less than two-thirds majority of the members. This will make the report a true reflection of the Committee’s decisions.

• that sub-committees’ recommendations should not be altered without due consultation with the sub-Committee and provided that it does not exceeded the agreed expenditure limits.

• reports of  sub-committees should go to the plenary in sectoral batches after which the Appropriation Committee would do the collation.

• for strengthening of the Ethics and Privileges committee to be able to sanction infringements on laid down rules. 

v. Strengthen the capacity of NASS sub-committees to scrutinise and analyse the budget by:

• Equipping members of Committees with the minimum capacity in budget scrutiny. To this end, there is need for a programme to develop the capacity of Committee members and staff on the economy and budget appraisal.

• Strengthening the research and analytic support base. To this end, strengthen Institutions such as NILS and NABRO to be able to effectively assist Committees with sound budget analysis.

• NASS leadership should consider ring-fencing Committee’s support staff to enable them develop expertise in the subject matter of respective MDAs

8. Key Reform Strategies for Budget Implementation

i. Amending the FRA to require MDAs to deposit at least 25 percent of their revenue into the CRF instead of 80 percent of their operating surplus which they arbitrarily determine. This will improve availability of funds for budget implementation

ii. Use borrowed funds, in particular, external loans, to finance productive projects, especially capital projects that can contribute to the repayment of borrowed funds either in naira or foreign exchange. For example, major road projects that contribute to the productivity of the economy can be financed with loans and should attract toll payment.

iii. Timely release of funds for project implementation will speed up completion of projects, other things being equal. Where funds are available, sanctions may be considered for non-release / delays of funds.

iv. Avoid admitting into the budget new projects that are not designed so as not to undermine the MTEF/MTSS/development plan framework and overstretch the implementation capacity of the MDAs. 

v. Strengthen the capacity of MDAs to implement projects, monitor and evaluate projects. Adequately empower MDAs with funds, human capacity and logistics to carry out effective monitoring of projects. Also strengthen their capacity with appropriate training programmes. Impose sanctions against compromise of M & E processes.

vi. Conduct proper evaluation of budgets. Proper evaluation of plans and budgets can be done through evaluation studies that will provide insights into project and programme outcomes and impact.

vii. Significant improvement in legislative oversight of programmes and projects is required in order to minimize the negative perceptions of the public on oversight performance. Importantly, the conduct of oversight should be guided by an approved manual and code of conduct.