Is budget padding a good thing for Nigeria?

Author: Chris Adejo

UPDATED: A YEAR AGO

VIEWS: 67634

Category: Ask Legit

In each profession, there are the unique languages thanks to which people involved in a profession understand special terms. As the understanding is the key to success in any business, it is necessary to know them to achieve a lot in any communication. Legislative and executive powers of the government often talk in language unclear for other people. Therefore, they call it a plot. They act and tell words, which we can understand, but we don't understand their essence.



What is budget padding?

Padding the budget means to make the budget proposal bigger than the project actually demands. It is either increase in expenses of its projects or reduction of the expected incomes. The purpose of such addition consists in forcing committee on approval to provide the high level of financing to this or that offered project. There are some disagreements concerning this term and different types of budgets according to some people. Some people claim that budget padding is created to accept the expected inflation and is responsible anticipation instead of addition. Other people consider that budget padding is an addition.

At planning the budget heads face several incentives to add their budgets. First, they want to consider economic factors. It works in a situation of the budgetary increases which expect inflation or, in the case of the international projects, fluctuations of exchange rates. Secondly, they want to avoid bureaucracy. If the unexpected expense arises, addition gives the chance to cover this expense. Thirdly, they want to impress the chiefs. If they offer the bigger budget and then affairs will go well, then the group will be favorably considered by bosses. At last, they are afraid of reductions of the budget. Some people fight against reductions which they consider unfair.

In the theory, projects have to spend the actual sum of money to avoid misunderstanding. In practice, budget padding has specific consequences. Projects with the additional budget tend to use it. Projects spend spare cash to absorb all money from budgets that they have. Then the committee on approval doesn't reduce their budgetary appropriations next year.

Except for financial consequences, many people believe that such practice is a fraud. They say that it generates the bad corporate atmosphere. Defenders of such method approach its wide use as a justification. They also claim that unfair actions from bosses, such as reductions in the budget, lead to the budgetary inflation.

Budget padding definition in Nigeria

In 2016, the National assembly has added the new word to the political dictionary of Nigeria – the padded-budget. It was thought up by the group of people who were in search of the viable budgetary system for Nigeria. Having studied all available books and materials, nobody has found the exact definition that this word means. Even some residents of Nigeria can't precisely tell what means this term. Apparently, it is impossible to give accurate definition to this phenomenon, it can only be described. Such term demands explanations: first, the meaning of budget padding assumes that the National assembly has to adopt the bill of allocations. Also, it means that if the National assembly increases presidential estimates on N100, the Nigeria budget has to be added on N100.

Budget padding in Nigeria

According to section 81 of the constitution of the Federal Republic of Nigeria adopted in 1999, the president is obliged to send the annual Bill of allocations to National assembly for consideration. After obtaining the Bill of allocations the National assembly has the right to stop the presidential order. If the president doesn't like what the National assembly has made on the Bill of allocations, he can veto the Bill, having returned it to National assembly, having stated the basis of his objections. The president can use the veto also. In each of these cases, the National assembly can also reject the presidential veto if two-thirds or more participants don't agree with him. Then the president is obliged to carry out the budget as it is necessary.



Missing budget in Nigeria

But what about term budget padding? The matter is that the problem of padding budget belongs to the area of morals as officials have disproportionately allocated large sums to the constituencies. Now people call it padding the budget. Anyway, why people want to become the main official if they don't derive the additional benefit of other participants? The conspiracy theory indicates more and more that such tangled situation could be an excuse of National assembly to hide obvious failures. The national assembly always fights for independence and the right to check Executive power. But where it was when serious scandal with the weapon has run high? Maybe members of parliament are the same participants of APC who have come to the power by means of unfair methods and words about hostility to corruption? When do these people stop deceiving Nigerians?

The only thing which Nigerians desperately need today is protection against surplus, recklessness, and extravagant corruption in the National assembly. One question of Nigerians consists in whether the National assembly has experienced the full value. There is even an opinion that padding the budget in its absurd form includes cases where the leadership of chamber secretly takes smuggling in the budget without the knowledge of other participants. It is a criminal offense. Such criminals with their accomplices have to be pursued by the law.

Conclusion

As you can see, the term is used in different meanings. Many people believe that padding the budget is illegal use of resources. However, there are also supporters of this phenomenon believing that such practice is absolutely normal including in Nigeria and comes from the project management area.

https://www.google.com.ng/amp/s/www.legit.ng/amp/1088363-what-budget-padding-nigeria.html

National Assembly replies Buhari on budget padding allegations

June 22, 2018Kemi Busari



Senator Abdullahi and Rep Namdas addressing journalists

The two chambers of the National Assembly on Friday addressed a joint press conference to push back on allegations made by President Muhammadu Buhari that federal lawmakers smuggled frivolous projects into the 2018 budgets.

The conference was addressed by the duo of Senator Aliyu Sabi Abdullahi (spokesperson for the Senate) and Abdulrazak Namdas (spokesperson for the House of representatives).

President Buhari had on Wednesday accused the National Assembly of tampering with the 2018 budget sent to them by cutting essential projects and inserting non-essential ones.

Mr Buhari stated this while signing the 2018 budget into law.

“I am concerned about some of the changes that the National Assembly has made to the budget proposals that I presented,” he said.

“Many of the projects cut are critical and may be difficult, if not impossible, to implement with the reduced allocation. Some of the new projects inserted by the National Assembly have not been properly conceptualized, designed and costed and will therefore be difficult to execute.”

But responding to the allegations, the lawmakers said, “We appreciate the fact that the 2018 Appropriations Law which was passed by the National Assembly on May 16th, 2018 was signed by President Muhammadu Buhari on Wednesday, June 20th, 2018.

“In his speech at the signing ceremony, certain observations were raised about the work of the National Assembly and its Constitutional responsibility to modify and amend the budget estimates submitted to it by the Executive.

“You may recall that when the National Assembly passed the 2018 budget, it gave reasons why the budget was increased and why certain projects and programmes had to be provisioned for. However, due to recent developments, it is once again necessary to let Nigerians know …the justification for our actions on the 2018 budget, which were based on our Constitutional responsibilities.

“Adjustments and reductions in the locations, costs and number of projects approved were made in order to address geo-political imbalances that came with the Executive proposal. The introduction of new projects was done to ensure the promotion of the principles of Federal …Character as contained in Section 14, subsection (3) of the 1999 Constitution of the Federal Republic of Nigeria as amended which states that “the composition of the Government of the Federation or any of its agencies and the conduct of its affairs shall be carried out in …such manner as to reflect the federal character of Nigeria…” The number of projects had to be increased in order to give a sense of belonging to every geo-political zone of the country to ensure socio-economic justice, equity, fairness, and to command National loyalty.



“Within the context of the provisions of Sections 4, 80 and 81 of the Constitution, everything that the National Assembly has done is within its powers.

Furthermore, Chapter 2 of the Constitution emphasizes the need for balance, inclusivity, & equity in the distribution of national resources. The annual budget, which symbolizes the distribution of these resources must reflect the aforementioned values, which we swore to uphold.

These Constitutional provisions, in addition to a recent Court judgment have affirmed the fact that the budget process is a ‘joint effort’ that must reflect the input of both the executive and the legislature — the latter being the closest representatives of the people.

However, we are fully aware that the Executive has the exclusive responsibility to execute all parts of the Appropriation Act once it is signed into law.

It is our firm belief that if the President had been properly briefed by his appointees, he would not have raised most of the concerns that he did in his remarks at the budget signing. It is therefore inevitable for the legislature to give members of the public an insight into what transpired during the appropriations process and how we arrived at the decisions that are contained in the 2018 budget.

With the aforementioned background, let us respond to each of the issues raised.

10. On the issue of the period when the budget proposal was submitted & when it was passed by the National Assembly, it is necessary to remind Nigerians that although the budget was submitted in November, as at March 15th 2018 (5 months and 8 days after the budget submission) Mr. President was still directing the Secretary to the Government of the Federation to compel the Heads of Ministries, Departments and Agencies of the Federal Government to appear before the committees of the National Assembly to defend their respective budget.

In addition up till April (6 months after the budget submission), the Executive was still bringing new additions to the 2018 budget which the National Assembly in good faith and in the spirit of collaboration and harmonious working relationship accepted.

More importantly, the 2017 budget, was signed into law on June 5th, 2017 and by the provisions of Section 318 of the Constitution, which defines the Financial Year as “any period of 12 months beginning on the first day of January in any year, or other date as the National Assembly may prescribe” – the 2017 budget lapsed on the 5th of June 2018. This same provision is replicated in the 2017 Appropriation Act.

12. It is important to also note that if not for the fact that the 2017 budget elapsed on the 5th of June 2018, the Federal Government would not have recorded notable capital projects for the just ended financial year. This is because the Federal Government only started releasing funds for capital projects in December 2017 when the funds from the Federal Government’s loans were released and disbursed to contractors.



On the issue of an Organic Budget Law to improve the budgetary process, the proposed law is pending in the National Assembly and cannot be considered without the amendment of Section 81 of the 1999 Constitution (as amended) which gives the President the power to propose “estimates” at ANYTIME in the financial year. Nigerians need to know that during the last Constitutional Review exercise, the National Assembly in its wisdom amended this provision and it was approved by over two-thirds of the State Houses of Assembly.

The new Constitution Amendment requires the President to submit the budget not later than 90 days to the end of the financial year. As of today, the President has not yet signed this Constitutional Amendment Bill which would have helped us to have a proper budget alendar, which shall eventually lead to the realization of the proposed January to December budget cycle.

It was stated that the legislature made cuts amounting to N347 billion which were meant for 4,700 projects. Again, these reductions of N347 billion were made from low priority areas to higher priority areas to support the generation of employment for our youth by MSMEs.

We took the decision to reduce the funds in some areas in order to ensure balance and equity in the spread and utilization of our national funds. Additionally, the figures given amounts of the reductions made by the National Assembly were unduly exaggerated as we did not make any substantial reduction on any project to the extent of affecting its implementation.

To give the exact detail of the projects where we made deductions, it should be noted that the counterpart funding for the Mambilla Power Plant, Second Niger Bridge/Ancillary roads, the East-West Road, Bonny-Bodo Road, Lagos-Ibadan Express Road and Itakpe-Ajaokuta Rail ..Project, was reduced by only N3,956,400,290 – which represents only 1.78 % of the total N222,569,335,924 submitted by President Buhari. This left these projects with N218,612,935,634 which cannot negatively affect their implementation.

This obviously contradicts the claim that these projects lost “an aggregate of N11.5 billion”.

Specifically:
A. The counterpart Funding for 3050mw Mambilla Hydropower Project was reduced from N8.5billion to N8.2billion (a reduction of N300million);

B. The construction of the Second Niger bridge including access roads phases 2a and 2b in Anambra and Delta states and other projects in the South East were reduced from N10billion to N9.1billion (a reduction of N900million);

C. The construction of Bodo-Bonny road with a bridge across the Opobo channel in Rivers State was reduced from N10billion to N8.7billion (a reduction of N1.3billion);

D. The funding for the Lagos-Ibadan Expressway was reduced from N20billion to N18billion (a reduction of N2billion), which would not significantly affect the construction of the road in one appropriations cycle;

E. The Railway Projects (Counterpart Funds):
1. Lagos-Kano (ongoing)
2. Calabar-Lagos (Ongoing)
3. Ajaokuta-Itakpe-Aladja (Warri) (Ongoing)
4. Port Harcourt- Maiduguri (New)
5. Kano-Katsina-Jibiya-Maradi in Niger Republic (New)
6. Abuja-Itakpe and Aladja (Warri)-Warri Port and Refinery including Warri new Harbour (New)
7. Bonny deep Sea Port & Port Harcourt of N162,284,335,924 was retained by the National Assembly as presented by Mr. President; and

F. The @nassnigeria increased the aggregate funding for the East-West Road from N11,285,000,000 to N12,085,000,000 because we realized the strategic importance of the road to the entire oil producing areas of our country & the fact that the road project has lingered for too long;



Addressing the issue of the Second Niger Bridge project, apart from early works, as of today, there is no existing contract for the Second Niger Bridge in spite of frequent requests from the National Assembly. The N900million reduced from the N10billion proposed by the Executive was deployed to fund ancillary roads that connect to the Bridge. It should again be noted that the N12.5billion and the N7.5billion appropriated for the Second Niger Bridge in the 2016 and 2017 budget by the National Assembly were never utilized for the project.

We also need to call the attention of the public to the fact that the National Assembly allocated an additional N2billion to the Enugu-Port Harcourt Expressway project. This was more than the Executive proposed.

As part of the implementation of the 2017 budget, the contracts for 15 roads were awarded by the Federal Executive Council with no budgetary provisions. Realizing the importance of these projects, the National Assembly decided to spread the N3.9billion saved from the earlier mentioned projects funding to facilitate the take-off of these projects that include: the rehabilitation of Ikorodu-Shagamu road in Lagos State; the rehabilitation of 9th Mile-Orakam to Benue Border; and the general maintenance of Pankshin – Ballang – Nyelleng – Sararele – Gindiri road in Plateau State, etc. These are the projects purported to be “project inclusions without conceptualization.” On these projects, the National Assembly needs to be commended by Mr. President for helping to support the take-off of these awarded but unfunded projects.

Furthermore, it was stated that the budget of the FCT was cut by N 7.5 billion. This is true. The legislators stand by this decision because, through its ov
ersight of the Federal Capital Territory (FCT), the National Assembly discovered that in the 2016 and 2017 budget cycle, there was a severe non-performance of the budgetary allocations to the FCT. During the two years in question, over 50% of the funds that were allocated and released to the FCT were not utilized. These funds were ultimately returned to the treasury.

Hence, in order to ensure that scarce resources were allocated in accordance to ‘needs over wants’, funding for the FCT which has historically been under-utilised were allocated to other MDAs that have demonstrated the capacity to implement their allocation for the development of the nation and its people. It was part of the allocation that we spread over the roads for which contracts were awarded with no budgetary allocation.

On the provisions for strategic interventions in the health sector which were said to be cut by an aggregate of N7.45billion, it is on record that for the first time since the National Health Act was enacted in 2014, the National Assembly made provision of an additional N55billion for funding primary healthcare through the Basic Primary Healthcare Fund which will be sourced from 1% of the Consolidated Revenue Fund.

Thus, contrary to the claim that the health sector suffered any budgetary cuts, we actually provided more funds that will make access to health services possible for over 180 million Nigerians.

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