SATURDAY SPECIAL: Security vote for governors is an abuse and an aberration – BudgIT founder

5
412

9 JULY 2016-The activities of BudgIT have been quiet recent. Would you blame this on the delay in signing the 2016 budget?

We have been working a lot around the states because we are trying not to focus on the federal government alone. We are looking at how we can also engage states. You will agree with me that a lot of attention is on how the FG manages its own funds; but now there is a lot of attention we are giving to the states. Most of the states can’t pay salaries of civil servants and meet their monthly needs. So, we did a report last year which we call ‘The State of States’ and we are following up on conversations around that.

Yes like you rightly assume, the delay in the passage of the budget also did not allow things to move on as we expected it to be. But now that the budget has been passed, we conveyed an event last week in Abuja when we had the honourable Minister for State and Budget and Planning; Director General from the budget office; Director General for the Bureau of Public Procurement; where we sat down to brain storm on how we can do all inclusive monitoring of the 2016 budget.

One of the things that came at the event was that we need more transparency. These are the things that can trigger citizens’ involvement in accountability when it comes to usage of public funds. That is what we have been up to. But going forward in 2016, we want to track public projects and we believe that this is a very germane area where people are not putting attention; tracking government projects, ensuring that they are executed. This is why we have a lot of abandoned projects in the country. These are the kind of things we want to follow through.

Now that you are talking about more attention be given to how states’ funds are spent, in our recent article issues were raised on the sustained security vote for Nigerian governors and their flamboyant lifestyle despite economic crunch, what is your take on this?

Security vote for governors is an abused and an aberration; and unfortunately it’s unconstitutional. The Nigerian constitution does not provide un-appropriated and unaccounted funds as security vote for governors.  But sadly, a lot of people think that the government of Buhari is going to be a radical departure from the past for such waste of public funds. A lot of time the governors just discretionary decide what they take as monthly security vote. On what basis are governors taking security vote because the security of the country is entirely on the shoulder of the FG? The institutions that drive security in this country are funded by the FG. When you can’t pay salary, you now go ahead and appropriate funds for yourself, it is abuse of office; and that is why a lot of times, the FG is given another N90 billion loan to states governors with a lot of law of transparency, which is great, these are things the governors are supposed to do without being compel. If you are sent a message, you are supposed to properly account for it. Most of these states governors have turned themselves to lords; they just use public funds as they like and nobody is saying anything. Nigerians are not asking enough questions.

Some of the governors have been shouting for state police. Now that they have huge security money at their disposal, shouldn’t the FG listen to them?

I don’t support state police in this current structure because most of the states can’t even pay salaries. Now if you give guns to people you can’t pay their salary that is an invitation to chaos. Most of these states are not viable and sustainable. So, it will be criminal to put police in their hands. I will rather support will restructure Nigeria; let us talk true federalism first before any other thing. A lot of the state governments need to look inward and say ‘what do I have and how am I going to make use of the opportunity’. Like Nasarawa call itself ‘the home of solid minerals’; the question is how much of revenue does it get from solid minerals? You have limestone in Kogi and Ogun states respectively but how much of it do we see in their revenue? In the US, all the states depend on their own natural resources. In California, what they are known for is tech, Boston is education, Detroit is known for auto manufacturing and there is a state whose focus is on Boeing manufacturing. Nigerian states should focus on their competitiveness and attract revenue from it. There has to be radical change when it comes to mining in these states. But the way to start is accountability. Let every state governor properly account for the funds at his disposal.

There are also arguments in some quarters that since states are now perpetually broke, some of them should be merged together for greater efficiency. What is your view on this?

That is the argument of regionalism which is also there; going back to the way we were in the 60s. I think I support that in a way because most of the states are not looking at the advantage of the things that bind them together as a region. For example, the southwest had the developmental agenda for western Nigeria and unfortunately, the states have not done enough to find a bonding solution. There should be a common rail line that runs the entire southwest. The biggest market for this region is Lagos. So, why are the entire states around Lagos not benefiting? Why can’t they support one another in terms of agriculture and manpower? I also support the merger call. Why can’t Ekiti and Ondo state be one state? Ogun is even appearing to be able to stand on its own because of its proximity to Lagos but Ondo and Ekiti are both frailty, why can’t them merge together?

But some groups like Afenifere are actually canvassing for the creation of more states. Their argument is that if the governors are not lazy to till the grand and bring out what is in it to generate revenue; they should be able to survive independently. Do you share this sentiment?  

Yes, our governors are lazy and short term minded. They get into government and are talking about four years and most of things that will turn the finances of the states around will not happen in four years. If the western region for instance is going to go back the era of cocoa is not going to happen in four years. There must be a sustained policy integrated with the FG export plan; with the ease of doing business. There used to be a company in Kano that supplies shoes and bags, what has happened to it? Why can’t Abakaliki be the place where we eat all the rice? Why can’t Kebbi and Nasarawa supply all the wheat we eat in this country? Why is a place like Osun not the paragon of Agriculture? We are suffering in the midst of abundance because our states governors have short time mindset into revenue growth; and when they can’t do that, the only thing they know how to do again is to go and borrow or wait for oil revenue. But oil is already out of it because the refineries are in bad shape, oil installations have been blown up, oil price is not where we wanted it to be. This is the time for critical thinking.

BUDGETIT

How long shall the FG continue to bail states out of financial mess?

I am not in support of bailout. There is a fundamental flaws and structural defects within the states; solve them first. Every state should be thinking ‘what do we have to offer the FG?’ ‘What do I have to sell?’ Giving them bailout will not solve the problem. We have already given N1 trillion to bail states out in the last one year. When are we going to stop throwing money at them? When are we going to draw the line? We are just kicking can down the road. The solution is let look at the structure of states. Let each state comes with its own agenda of being self-sufficient and self-sustained. That is the way we can get out of this.

But there is the bottleneck, or what legal experts call ‘legislative loopholes’ because mineral exploration and exploitation is on the exclusive list which gives the FG sole power to mined resources. What legislation would you recommend concerning this?

You are very right. There has to be movement from how we are currently doing things. Let’s put accountability first. Look at the Niger Delta region for instance; some states have received up to N5 trillion in the last ten years. The question is that if you look into any state in the region can you see the impact of N5 trillion there? The issue is not more money but that of recklessness and wastefulness. Why should you have gold in your backyard and wait for the FG to mine it for you? Extract it and pay the adequate rent. The FG should strengthen its tax base. Ideally, the FG lives of taxes; not going into commercial production and taking the rent of the people. That is how we need to structured this economy and we can get the best out of it.

Nigerians are yet to feel the impact of the 2016 budget since it was passed three weeks ago. Where do you see the problem?

The 2016 Budget came in late and it was so unfortunate that President Buhari did not see that urgency to present it early. However, Nigeria grapples with cash challenges. GDP growth is negative, inflation is on 15.6% and Niger Delta pipeline attacks were on a rise recently. In an event organized by BudgIT, the Minister of State for Budget and Planning stated that N280 billion has been released to Ministries. I think this is not enough but I understand there is a rigorous process in place to access the funds by Ministries. I think if we go bullish with more funding of capital infrastructure, we might be looking at Q3 before we can see the impact. It will take time before the funds finally trickle in. What we have in Nigeria is a fiscal supply gap as contracting has stalled in the last one year.  It is like parking a car for one year, it will take more than pouring fuel to keep it going.

It took President Buhari 6 months to constitute his cabinet. Tell us your deep understand of how this delay contributed to Nigeria’s worsening economic situation and what is your advice to the government ahead of 2017 budget?

President Buhari did not approach his term as someone in a hurry. In fact, in one of his speeches, he said that “order is better than speed”. I just hope he understands that if you discount the time for politicking, he has two years left. The delay in forming cabinet portrayed a sense of un-readiness and had a direct impact on the budget. Our major problem with the economy is the adjustment of the FX markets and such signal has stalled investments. I am happy that we floated the currency and now we can accept full market discipline. I see that the 2017 calendar for the budget has been approved. I can see that FG has taken the lessons. The first step is to start early and keep the fiscal injection going with more accommodative monetary policy. There is also the need for improved capacity building at the Ministries. Most of them can’t still adapt or understand the new budgeting approach.

Now that we are already in mid-2016 and the implementation of this year’s budget is yet to really commence, do you think the FG can still achieve full implementation and what are the economic implications for Nigerians if they could not?  

The National Assembly has put in a clause that the budget will be valid for one year. This means the 2016 budget will run from May 6, 2016 to May 5, 2017. If that is not amended, we can achieve better implementation. The implementation we worry about is not of the recurrent expenditure. Those are already liabilities – salaries, overheads and debt servicing. We can only be more efficient with fiscal reform such as IPPIS and Efficiency Unit; we can’t run away from them. We need more focus on capital component of the expenditure. That is where implementation usually lags and has averaged 30% in the last five years. I think we can do better this year but we also have to accept that revenue challenges impact the capital projects more.

Larger percent of the Nigerian budget is spent on government officials with little left for capital projects. How has this scenario affected our development as a country and what are your suggestions for ways out of this quagmire?  

Nigeria needs to redefine its revenue matrix. Ideally, for a perishing product such as oil, we should have been saving the funds or strictly use it for infrastructure. We should be using taxes to fund salaries, benefits and other recurrent items. This should be our target. Let oil revenue and debt for capital expenditure and other funds go to recurrent expenditure. This way we can guarantee funds for capital projects. However, in the Nigeria of today, this is not realistic. We have not cracked our tax system just because we have not fixed a proper identity system for Nigerians and its businesses. Until we do this, there will be gaps. Using oil rent to fund expensive lifestyles for our leaders and run bureaucracy has hampered development. When you add corruption and inefficiency to the mix, you can understand how we came to this low level.

What is your take on the new CBN forex policy?

Most policymakers will agree that we left this too late. We kept on doing demand management till we landed in a ditch with negative growth, inflation and dual exchange market with great differential. When oil prices dipped and with our defective structure of depending on oil for foreign receipts, it was clear that we need to take currency adjustment. Rather than explain these ideas to the President, we had leaders who allow sycophancy to triumph. It is not a matter that we don’t produce and we won’t benefit from a cheap currency, it is that we cannot keep up foreign investments with such uncertainty. I am glad we have learnt but we have taken a step towards that. President Buhari also needs to have a team of rivals who provide him ideas based on facts. Most of his generation are haunted by ghosts of SAP but the price of a currency has nothing to do with IMF or your personal opinion. It is more about your domestic productivity and competitiveness. What do we have capacity to produce that we import? Think of crude oil and petrol, timber and paper, petrochemicals and plastics and others. We need to address these questions. What will Nigeria competitively export to the world and what will its internal efficiencies enable us to stop importing? If we don’t fix this, we will be at the mercy of gyration of oil prices and our vulnerability will continue to be laid bare.

What can you tell us about the reaction of your local and foreign partners since the policy was introduced?

The stock market has picked up by 10%. Interbank rate is still at N280 to the Dollar corridor. We are going to see more activity in the stock and debt market and this will have impact on liquidity and pricing. It is too early to judge and the entire markets are observing and it is better to keep up transparency and not fix currency trading. This is the only way to instil confidence.

We know that good forex policy is not only what we need to attract foreign investors and a sound economy. What are other economic components you think government should also now focus on?

I have said that we need to do more work on domestic productivity and this is where ease of doing business, access to credit, export processes and other things that strengthen competitiveness come to play. We also have to instill a system of respecting contracts. Look at the TSA issue with SystemSpecs; rather than government being humbled to negotiate considering the volume, they cancelled the contract. These are the things that weaken investor appetite and also dampen spirit of entrepreneurship in this country. We need to do more on capital spending and put in more fiscal stimulus that can raise money. The issue of unpaid salaries at the state level is also there and it has severely affected retail markets in such regions. FG needs to end the bailout cycle and focus on tightening the efficiencies of these states or even trimming the workforce with a single pay-off for senior workers. FG needs to sit with states to restructure and ensure they are also contributors of revenue, not just net takers. It is a conversation that requires action but we need to accept that accountability and transparency has to start first and then we accept federalism as our way to fully restructure.

The Nigerian economy is largely dependent on oil at the moment. With bombings of oil installation by militants in the Niger Delta how best would you have handled these risk factors if you were president of Nigeria?

Nigeria is in a hard place on this issue. We have tried the amnesty and spent nothing less than N300 billion and yet we are still in this mess. This means we did not fix the inherent issues. The Niger Delta also needs a post-oil agenda that puts its people to work. We have not done enough of that. We only gave money to governors to built fancy state capitals and lined their pockets. Dialogue is the way to go for the bombings. The terrain of the Niger Delta is so convoluted and if we approach this with force, ordinary citizens will be the victim. It requires wisdom and we need to show that their legitimate yearnings matter. We have depended on oil for years but this has not done enough for the people of that area. President Buhari needs to change the narrative of how we responsibly invest in the Niger Delta and its people.

 

DCSL 90X780

5 COMMENTS

  1. Our problem is not the fact that we depend only on oil. I have always disagreed with this. Our problem is corruption in high places. We must gather the courage to attack this monster. Besides oil, what other major source of income does Saudi Arabia have?
    Security vote is legalised looting. We must all stand against it.
    Fred Ehikioya

  2. Sir, we have known this security vote fluke to be a legalised national looting. I dare the National Assembly to abort it.

LEAVE A REPLY