An Analysis of the proposed federal government budget of 2010: by Hussaini Abdu.

The budget of any nation, especially a developing nation such as ours, is the next important instrument of governance after the Constitution. It reflects government's priorities in the various sectors while also showcasing government's values and reward systems. It is the budget that government utilises in encouraging or discouraging growth as well as in improving the welfare of its citizenry.

In Nigeria, due to the nation's long history of military rule, the budgetary process has been far from being open at all levels of governance. In addition, majority of those doing budget work have been technocrats, who have used technical language to alienate the citizenry from participating in the budget process. Also, governments at all levels of governance have not made deliberate efforts to enlighten, educate and encourage the populace to participate actively in the budget process.

Consequently, the people have become alienated from the very important initiative of government, which guides and has enormous influence on their daily lives. The average Nigerian does not see him or herself in the budget and does not feel constrained to be part of the budgeting process. As a result, the baton has fallen on those in authority to try and imagine what the people's needs could be and to also try and allocate funds to meet those needs. Therefore, our needs assessment system and the resultant public expenditure framework have been modeled along the top to bottom rather than bottom up approach in assessing community needs and apportioning funds to meet those needs.

Consequently, over the years, as governments and administrations witnessed a change of guards and trillions of naira were budgeted at all levels of governance, the sheer quantum of these funds have not translated into improving the lives of majority of Nigerians, whose expectations of enjoying the dividends of democracy have been dashed.

Some marginal improvement in planningWe acknowledge that in this year's budget Federal Government has made attempts at a few important improvements over previous budgets. For instance, looking at the percentage of aggregate Expenditure between 2007 and 2010, it is clear that there has been a decline in the percentage personnel costs (staff emolument) from 36.46% in 2007 to 29.88% in 2008, reducing to 27.63% in 2009 and now further going down to a proposed 23.52% in 2010. This shows that government is responsive to suggestions to reduce personnel costs and to channel money saved from this area to improve infrastructure nationwide. There is undauntedly an urgent need to do this.

Also, the total overhead budget (running cost) has crashed by almost half from 16.62 per cent in 2007 to 12.00 per cent in 2008, 10.81 per cent in 2009, reaching an all time low of an estimated 9.86 per cent in 2010. For us to get to the target of 60% capital expenditure, the government needs to do more.

In the same vein, in realisation of the need to increase budgets for capital expenditure, which is seen as the sign of growth, government has also gradually raised capital spending from 23.52 per cent in 2007 to 29.66 per cent in 2008; 32.96 per cent in 2009 and now to an estimated 33.60 per cent in 2010.

Our concernsHowever, in spite of this commendable positive response to identified challenges, we view with great concern the obvious government's decision to spend 31.5 per cent of the budget as capital expenditure as against 49 per cent re-current budget. In the current age there is no developing nation that makes progress in spending almost half of its budgetary allocation on re-curret expenditure. The need to be increase capital expenditure above re-current expenditure is not negotiable. Rather than oratory and glib statements on revamping decaying and collapsed infrastructure increase in capital expenditure would indicate a measure at improving the state of key infrastructure such as schools, hospitals and roads.

Debt Servicing: Another sour point in budgeting, which is still evident in budget 2010, is debt servicing, which has almost doubled within the last three years. Debt Servicing in the year 2010 is rising in a rather bizzare rate from the 2009 allocation of N283b to N517b in the 2010 fiscal year (2008 had N372b). It is alarming that the amount for debt servicing has almost doubled in the submission by the President. The analysis for 2010 shows that out of the total amount of N517,071,827,452 committed to Debt Servicing N478,155,330,805 is for domestic debt servicing while N38,916,496,647 is for foreign debt. This tells on how the Federal Government is draining and stressing the domestic economy. While It is commendable that the government has decided to focus on domestic debt after long years of neglect and emphasis on foreign debt, we are concerned about the increasing accumulation of foreign debt. Nigerians need to know how when these debts are accumulated.

Sectoral Analysis: A budget out of tune with its own stated intentionWhile the general statement of intention of the 2010 as proposed is aimed at addressing the past problems of budgetting in Nigeria, a careful scrutiny of the proposed budget reveals that much of the problems of the past still remain with this new budget.

EducationIt is given wisdom that no measure of efforts at devlopmentand transformation of lives of the ordinary people could be effective without factoring in the issue of education. It is also a well acknowledge fact that one of the non-negotiable rights of citizens of any given nation is the right to education.

Apart from other targeted poverty alleviation programs such as food, housing and other subsidies, it is recognised that access to and provision of basic levels of education (primary, secondary and tertiary) is central to increasing the welfare of the poor. This right needs to be more forcefully enforced and encouraged through adequate funding in annual budgets.

However, the Nigeria government in its budgetary provission has continued to neglect this important aspect of the rights of the Nigerian people and a prerequisite for the nation's growth.

Nigeria is ranked 158---- out of 178 --- countries in the 2008 Global Monitoring Report. Even the Nigeria government statistics put children who are out of basic education at about 12Million.

Girl-Child education is still a challenge in Nigeria, as about 60% of those who are out of basic education, are girls. We have more states showing negative gender parity (less girls enrolling, retained and completing). In spite of this huge deficit, our education budgets have over the years perfected their gender blindness and this factor continues to militate against the education of the girl child.

Nationwide, there is certainly huge under spending in the education sector, especially as regards increasing capital budgets so as to reclaim and refurbish dilapidated schools. This shortfall is evident in the fact that the Federal Government's component of the UBE fund is still under drawn because states are not meeting the requirements for which monies are being released to them.

At the tertiary level, lecturers recently resumed duties after a three-month strike to demand for the prioritization of that sub sector by government. A cursory look at the education sector reveals huge challenges that require urgent attention.

HealthAt about four per cent, the Health Sector allocation for the year 2010 is definitely grossly inadequate and unable to meet the numerous challenges of the sector, especially in rural communities.

About four million of the Nigerian population is living with HIV; these people depend on sporadic Foreign Donors efforts for Anti Retroviral Drugs (ARVs), care and support. Millions of pregnant women still have to pay to have babies delivered and in the process 800 out every 100,000 die as a result of inability to afford necessary healthcare cost to prevent or avert such deaths; under five children still die from preventable diseases. And almost all community health infrastructure have either collapsed or converted to other use. The total health allocation is still less than 15% Abuja Declaration and HIV is still given less than 5%. Interstingly, the National Hajj Commission has an allocation of N1,067,470,875 , the state house is using about 500 million Naira to purchase Treated Vehicles, while scandalously the National HIV response as anchored by National Agency on HIV and AIDS has a mere 701,938,135.

Water and AgricultureIn the 2009 budget, the FGN proposed to spend N9.2billion on the construction and rehabilitation of dams, N11.6billion on water supply and sanitation out of the over 166.3billion proposed in the bill. Many of the 2009 Budget interventions clearly opted for a multi-dimensional approach in addressing key challenges to water supply in the country.

The 2009 Budget also gave priority to the completion of all ongoing projects in the water sector, which will quickly deliver tangible results in service delivery. Accordingly, rather than embarking on new projects, massive proportion of the resources were devoted to completing existing water supply projects and discharging outstanding obligations from the 2007 and 2008 fiscal years. However, against the backdrop of the current overall 29% implementation rate as at the end of third quarter of the 2009 budget, much is left to be desired regarding actual benefits to ordinary Nigerians.

In many cities, access to potable water remains elusive. This sometimes results in outbreak of water borne diseases such as cholera and guinea worm.

Water should be seen as essential to life and its supply and accessibility can be linked to achieving all the MDGs. Water is essential to sustaining life and Right to Water is enshrined in the Right to Life and Dignity, as set forth in the International Bill of Human Rights.

The 2009 Nigeria Human Development Report puts the percentage of Nigerians with access to improved source of drinking water at 49.1%. This means that over 70M Nigerians do not have access to improved drinking water. This should not be the case, with the level of abundant water supply available in most parts of this country.

The 2010 proposed budget has set aside 3.6% of the total budget for agriculture and water supply. This nees to be reconsidered, even though there was a nominal and real increase in the absolute figure allocated to the sector as against that of last year. With the enormous challenge on ground in this sector, the government is expected to take decisive actions. Cholera and other water borne diseases are now becoming a regular occurrence and hunger is on the increase.

Policy inconsistency in AgriculturePolicy inconsistencies and summersaults which have characterised the Agricultural sector have in no small measure affected the financing of this all important sector. First, there is a problem with what constitutes the Ministry. In 2005 and 2006 fiscal years, it was called the Ministry of Agriculture and Rural Development. In 2007 fiscal year, it was called the Ministry of Agriculture and Natural Resources. Apart from the fact that these inconsistencies impact negatively on the allocations to the sector, there is also the issue of ineffective mergers of interventions.

Merging the Agricultural sector with rural development has proven not to work effectively. Even though rural development is necessary for the growth of agriculture, merging the former with the latter is a failure of understanding that there are other rural development interventions that cannot be subjected to the supervision of an Agricultural Ministry.

Presently the ministry has been renamed as the Federal Ministry of Agriculture and Water Resources[1]. This also underscores the problem of policy inconsistencies as mentioned above. While the problems earlier identified dealt with the merger of the Ministry of Agriculture with other interventions, the present one is about the merger with an entire different sector. Obviously, the merger of both the Agriculture and Water sectors if not properly managed, is capable of creating huge bureaucracy. One out of the two sectors may also suffer abandonment if the process is not well managed

Still palliative measure on povertyThe Poverty Alleviation Program is one of the major efforts by government aimed at checking poverty in Nigeria. Over the years, this program has embarked on various initiatives that are expected to affect the lives of a few poor persons. However, the actual percentage of Nigerians who have been pulled out of poverty has been doubtful as has been the sustainability of the project. Critics say the project has been highly politicised. It is therefore important to re-allocate funds and make judicious use of the funds to effect changes.

One would expect that this unit would coordinate the poverty eradication efforts of the Federal Government but this has not been clearly demonstrated. In the 2010 budget, the Federal Government is proposing to commit N3.9B to this program. Given the number fact that 75million Nigerians are said to go to bed hungry, this amount is unlikely to make much impact.

Even with the N3.9B that goes to the program, only N1.65B is actually going to real projects that will affect the lives of the poor (42% of the budgeted sum). The rest of the 58% (N2.25B) goes into administration of the fund and other recurrent expenditure. The budget did not allocated much for social safety net, which has been promoted as one of the viable measure against poverty in the country. If we continue on this path, the poor can only be expected to increase in their numbers and the dream of Vission 202020 can only be said to be a mirage.

Reduction on spendings on Women AffairsIn 2009, the budget allocation to the Ministry of Women Affairs was at 3,671,754,185; the 2010 appropriation bill for the ministry has a total amount of 2,432,758,588 (164,288,881 is for meant for capital projects while recurrent expenditure takes the chunk of 2,268,469,404). This shows about 33.7% decrease from last years' budget. This is arguably the lowest ministerial budgetary allocation in 2010, when compared with other Ministries. However, it is expected that the budget should focus on core interventions as provided in the National Gender Policy such as addressing harmful traditional practices against women and children, the administration of justice using CEDAW, gender sensitive schools curricula, national response on sexual and gender base violence etc.

While understandably, the Woman Affairs Ministry plays more of administrative linkages with other MDAs in the implementation of policies targeted at women, there are yet to be shown how these other institutions would advance the cause of women and achieve gender equality.

Women constitute about 50% of the total population and they constitute over 60% of the over 75M poor Nigerians. Great attention should be paid to ensure that the budget is used to address specific gender and women's rights issues.

Between the stated and the real: A budget that lies against itselfIt is important at this stage to alert all that what is stated in the letters of 2010 Appropriation bill might in reality be far from the reality it represents. Some of the improvements and increased spending it presented as promising in critical sector could in reality be mirages.

Close scrutiny of the increase in the 2010 budget over that of 2009 shows that the increase promised is merely in the nominal (ordinary) value. Where real value is introduced, after deflating the nominal value with the annual inflation rate of 10%, there will be a decrease in the amount allocated to all of the selected sectors. The 2010 federal budget, which increased nominally by 31.5%, will now show a real increase of 17%. This means in essence that the 2009 budget was increased in the 2010 budget by 17% and not 31% as stated by government. This implies that there is not as much money as we think that will be available to deal with issues as stated.

Cut in people benefiting spendings

Education, health and agric sectors had a decline of 1.3%, 6.8% and 20.7 (all negative), respectively. This means that in actual sense, government has made less provision in these sectors in the 2010 budget, when compared to the 2009 budget. The worse hit, as always in these analyses, is the Women Affairs sector with a decrease of 41%. This is in sharp contrast to the real increase in the 2010 FCT budget, which rose astronomically up to 65.7% above the 2009 budget.

When we compare the budget of the agriculture/water sector to that of Defence, it becomes clear that the defence sector had been prioritised over and above the agriculture and water sector. While the defence sector got 5.7% of the budget, agriculture and water now combined got only 3.6%, while health got 4% of the budget.

The ratio of Defence to health to agriculture and water budget stand at 1.6:1.4:1. This means that for every N1.00 going to the agriculture and water sector, N1.60k would have to go to the defence sector. While for every N1.40k going to the agriculture and health sector, N1.60k would have to go to the defence sector.

Table showing the Trend analysis of selected sector budgets (2007 – 2010)

Misplaced PrioritiesIf the picture painted by the scenario above is not people-friendly, more grim is the following analysis of proposed spending which suggests a continuation of the culture of misplaced priorities.

Further analysis of 2010 Appropriation bill indicates that money which should have been allocated to pressing needs for the less privileged members of our society is spent on high profile projects and programs, which benefit just a few.

An instance of this is the provision, under the Presidency budget, for a line item known as 'miscellaneous', amounting to N1.5 bn. Items under that head still include 'other miscellaneous expenses' put at N353m, which is more than 20% of the budget line, use of miscellaneous in budgeting is out dated and completely out turn with modern conception of budget as an accountability document. Other breakdowns include: · Donation & gifts (N160m). When and to whom does the Presidency have to donate and for what purpose? Is the amount different from that of 'welfare packages' within the Presidency for which an additional N183m is proposed. · Sporting activities (N54m). What might this refer to since it says activities, not facilities? What about resources allocated to ministry of sport? · Rehabilitation and furnishing of 10 houses along Ibrahim Taiwo Street for use of principal officers to Mr. President (N200m). This comes to a unit cost of N20m to rehabilitate and furnish one of such houses. It is also more than the total capital project cost for the University of Benin Teaching Hospital (UBTH), which is N152m. · Replacement of seating sofas, rugs and curtains for the main house (N98m) and· Provision of UPS at VP's residence, New admin block (N100m). It would be important to find out how many units of this would be purchased as this amount comes to the same amount required to purchase two mobile intensive care unit and two rapid intervention vehicles/ERT personnel and equipment vehicle for the National Emergency Management Agency (NEMA).

Even the Parliament...· Senate to spend N270M on retreat. This brings to an average of N2.5M per senator for the retreat and it further brings it to N500,000 per day for each of the senators. (for a five-day retreat)· Senate to spend N15B on sitting allowances and honorarium in the 2010 budget. Senate to spend N1.2B on computer materials and supplies. · You find similar example in the House of Representatives

More resources to generate avoidable energy

The Federal and state governments have promised to increase power supply to 6,000 mega watts by the end of 2009 – this we have came to find out is the original stalled capacity of Nigerian electricity. Even at that some months ago, when this promise was made, it seemed as if the end of year 2009 would never come but here we are, at the end of 2009. As at date (December, 2009), record has it that we are currently at only 4,000 Mega Watts. There is still a gap of 2000. We are not talking about distribution, which is even more chaotic than generation.

Little wonder then that all MDAs are still committing huge sums of money for alternative power supply for 2010. Even the State House, which is expected to be on a high priority power line still plans to spend N52M for fuelling generators for the year. The National Assembly has budgeted to spend N450M on generators and fuel for 2010; the Ministry of Education, about N1b. This means that the nation should be prepared for another year of epileptic power supply.

A computation of all these amounts would show a mind-buggling sum, which should have been utilised on poverty eradication instead of on purchase of UPS, generators and fuelling. It is estimated that over 70% of Nigerians don't get up to 2 hours power supply in a day and almost every business set up in the country depends on generator. We can't increase productivity, attract foreign investors or fight poverty under prevailing situation.

ActionAid Nigeria after reviewing the 2010 Budget as proposed by the Federal Executive has concluded that:

The Nigeria federal government is still far from getting right its priorities in making life more bearable for the mass of the Nigeria people, majority of who still live in abject poverty.

That it is obvious that the government has remained insensitive to the aspirations of the people in its allocation of resources to matters that could be declared wastes in the face of the infrastuctural deficiencies in the nation.

That the luxury that both the executive and the national assembly has deigned giving themselves has continued to show a leadership that hold the electorate in contempt as these (the electorate and tax payers) have continued to be denied thta which is taken for granted in civilised societies.

That there is need for the Federal Government need to review its proposed spendings, especially in areas where it has made embarassing cuts in spendings on people benefitting and nation growing sectors such as health, education, agric etc.

That the National Assembly not pass the Appropriation Bill in its present form as it neither reflects nor address the aspirations of the people of Nigeria. The National Thank you.

Hussaini Abdu PhD
Country DirectorAction
Aid Nigeria