The budget is perhaps the most important instrument for the development of any modern state apart from the constitution. It can be argued that it is only through the instrumentality of the budget that the state can allocate resources to deliver services to the people especially the poor and excluded. The focus on budget has assumed greater prominence in recent years with increasing democratization, civil society participation and the desire to respond to the development challenge of poverty.
In Nigeria, the return to civilian rule in May 1999 after many years of military rule not only put issues of budget in the public domain but brought out the role of parliamentarians and citizens in the budgetary process. More importantly, although budgets were prepared and read during military regime, there was neither participation by civil society nor input from parliament.
In fact, during the 29 years of military rule in Nigeria, the legislature was completely absent. In the past 16 years after return to civil rule, the reality of budgeting in Nigeria is changing. Citizens, civil society organisations and parliament are engaging more with the process. But there are still a lot of problems besetting the budgetary process in Nigeria.
First and foremost, the budgetary process is not participatory. Citizens and communities do not participate in formulating policies and agreeing on projects that go into the budget. Meanwhile, it has been documented that wherever participatory budget is implemented, it has expanded citizenship, empowered excluded groups, redefined rights, deepened democracy and stimulated civil society.i
Secondly, the budgetary process is not open. Corruption in any country starts from the budgetary process. In very corrupt countries, the budget is done in secret. Releases are done without the knowledge of citizens. Procurement information is not made available to citizens and corruption is guarded and protected.
This is why civil society organisations in Nigeria have been advocating for an open budget system. A budget is regarded as open if citizens have access to the key budget documents; have high level of involvement in the budgetary process and have access to procurement information. As a matter of fact, democracy will be meaningless if the citizens do not participate in how government raise and spend money.
This is why the tool (Open Budget Survey Tracker) developed by the International Budget Partnership (IBP) is a very useful instrument. It surveys the availability of eight key budget documents to members of the public: pre-budget statement, executive budget proposal, enacted budget, citizens’ budget, in-year report, mid-year review, year-end report and audit report. The Pre-budget statement is meant to disclose the parameters of the budget proposal including macro-economic assumptions. The enacted budget is the budget that has been passed into law by the legislature. The Citizens’ budget is a simplified version of the budget proposal that the average citizen can understand and relate with.
The in-year report is a monthly or quarterly report of budget implementation. The mid-year review is a comprehensive update of implementation in the first half of the year. The year-end report is the annual report of implementation. The audit report is the audited annual account of the government. A budget transparency survey of 15 states in Nigeria carried out by CIRRDOC indicates that citizens in Nigeria generally do not have access to key budget documents.
Only a few states are beginning to make effort to expand the access to budget information especially Ekiti, Lagos and Cross River states. It is, therefore, not surprising that the level of corruption and poverty is very high in Nigeria. Anyone interested in the accelerated development of Nigeria must deal with the issue of corruption by increasing access of citizens to budget documents.
Thirdly, the priorities of the budget are not in accord with the development challenges of the country and there is no synergy between plans, policy and budget. We have always argued that there is the need for better public finance management across the world because of increasing inequality and non-inclusive growth. The past five decades have witnessed monumental changes in the world. Global economic wealth has increased sevenfold and average incomes have tripled.# Yet, poverty has increased to record high levels.
The major problem is that wealth is concentrated in the hands of a few people while majority of the people live in abject poverty. The UNDP in its 1998 report documented that the three richest people in the world have assets that exceed the combined Gross Domestic Product of the 48 least developed countries. A recent report by Oxfam indicates that the 85 richest people in the world have wealth more than half of the world’s population (3.5 billion people). In Nigeria, for the past 10 years, there has been increasing economic growth. But at the same time, poverty is increasing. The budget must, therefore, prioritise pro-poor programmes and the challenges of poverty.
Fourthly, there are several frivolous expenditures in the budget that will not stand any reasoning and logic. For instance in the 2015 Federal Government budget, over N732 million was budgeted for food in the presidency; over N826 million for rehabilitation of villa facilities; over N27 million daily for newspapers in the Office of Secretary to the Government of the Federation and several security and welfare packages for various ministries, departments and agencies.
Finally the institutions and mechanisms for oversight of the budgetary process are weak. In any modern democracy, the legislature, civil society and media are expected to play oversight functions in addition to the internal control system put in place by the executive.
A few days ago, the Vice-President, Prof. Yemi Osinbajo announced that the Federal Government would start using zero based budgeting for its 2016 budgeting.ii According to him, zero based budgeting entails careful planning anchored on the needs and costs. It is different from the current envelop budgeting or traditionally incremental budgeting whereby the planning is based on existing income and expenditure as the deciding factor in national planning levels, which often incurs waste and assumes previous costs as constant. The Vice President stated that with the zero based budgeting, the Federal Government will also focus on a bottom up approach to development.
Zero-based budgeting is an approach to planning and decision-making that reverses the working process of traditional budgeting.# In traditional incremental budgeting departmental managers justify only variances versus past years based on the assumption that the “baseline” is automatically approved. By contrast, in zero-based budgeting, every line item of the budget must be approved, rather than only changes.# Zero-based budgeting requires that the budget request be re-evaluated thoroughly, starting from the zero-base; this involves preparation of a fresh budget every year without reference to the past. This process is independent of whether the total budget or specific line items are increasing or decreasing.
There is no doubt that zero based budgeting has a lot of advantages including efficient allocation of resources, as it is based on needs and benefits rather than history; drives managers to find cost effective ways to improve operations; detects inflated budgets; increases staff motivation by providing greater initiative and responsibility in decision-making; increases communication and coordination within the organization; identifies and eliminates wasteful and obsolete operations; identifies opportunities for outsourcing; forces cost centers to identify their mission and their relationship to overall goals and facilitates more effective delegation of authority.# But there are some challenges with the adoption of zero based budgeting. First and foremost, it is very time consuming and it is doubtful whether it is possible for the Federal Government to do a proper zero based budgeting just with two months to the end of the year.