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Budget 2019 and plague of revenue leakages

Minister Budget and National Planning, Senator Udo Udoma.

President Muhamadu Buhari presented the N8.8 trillion 2019 budget to a joint session of the National Assembly last Wednesday, with mixed reactions trailing it from both sides of the divide even before the conclusion of the exercise. While legislators of his ruling party the All Progressives Congress (APC) were hailing him, those of the main opposition Peoples Democratic Party (PDP) and who now control the majority in both the Senate and House of Representatives were heckling him, apparently in contempt for the budget package. However, the dramatic reactions from the legislators during its presentation in the House of Representatives Chamber notwithstanding, a discerning cross section of the wider complement of radio and television audiences who watched the event live across the country and beyond, also would not have failed to ponder over the specific promises the package would bring to the country, especially when its provisions are weighed against the backdrop of challenges along its course – from conception to presentation and on to implementation.

For in a sense, any projection on whatever it may yield is closer to that from the toss of a coin than, otherwise. The simple reason is that 2019 is an election year which in all practical terms, remains pregnant with unpredictable outcomes, especially in the light of the ongoing twists and turns characterizing the partisan jostling by politicians, pursuant to next year’s general polls. In that context therefore, the budget may take a back seat from the beginning of the year, leaving Nigerians fixated to any of the significant outcomes from the polls, and which qualify to watch out for.

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In the first place is that the ruling APC may return to power at the federal level. In that case the budget will then run as intended – that is as from after June 2019. Already the Minister of Budget and Planning Senator Udoma Udoma has hinted that the 2018 budget will run until June 2019. An earlier dispensation will only be through a miracle or change of heart by the legislators of the 8th National Assembly, to abandon the ongoing electioneering campaign and return to the National Assembly in order to rubber stamp the budget, since they would not be disposed to give it the traditional five month roll in the legislative mill.

Another possibility is that the ruling APC may be defeated in the polls and another party comes into office. In that case the budget becomes a candidate for restructuring along lines that may reflect such a victorious party’s agenda. That is why common sense dictates that the budget for now, be approached with a pinch of salt, as it is coming into as terrain that is in many respects – such as political, economic and socio-cultural.

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Meanwhile, the aforementioned scenario of turbulence on the political turf may not be all the challenges the budget may face in the course of its life. Perhaps a much more significant burden for it may be that of massive leakage of funds from both the revenue and expenditure ends. Either way its successful run may be compromised from the inception, unless the administration adopts a more discretional and robust remediation to the issues involved.

Indications in this regard have been volunteered by no less personalities as the Minister of Finance Zainab Ahmed and the Director General of the Budget Office Ben Akubueze. For instance, while briefing journalists on the 2019 budget, Zainab revealed that the government is bracing to tackle anticipated revenue shortfalls through the introduction of new taxes – a measure she described as the government’s new focus on mobilizing more domestic revenue. In her words, “from the performance of the 2018 budget, there is a gap between what is in the budget and what is generated. So we are doing what we can and very soon we will be generating new revenue through the introduction of new tariffs and taxes”. Just as well, Akubueze, while addressing Chief executive officers of government owned enterprises, (GOEs), pointed out that country was facing serious financial constraints with the revenue generation recording a mere 36% as at September 2018. He then blamed the problem on 50 of them who are defaulting in remittances of government revenue.

To corroborate further the burden of illegally withheld government funds by MDAs and GOEs of specific mention is the non-remittance of as much as N20 trillion stamp duty funds which is locked in a conspiracy of silence and complacency between the Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Nigerian Interbank Settlement System (NIBSS) and the Nigeria Postal Service (NIPOST).

Granted the concern of these managers of the economy, the fact remains that the country is patently shortchanged in terms of its recoverable revenue by as much as 200%. Experts believe that with a more coordinated approach for harnessing and managing accruable revenue for the Federal government, the annual budget should not be less than N20 trillion. This a far cry from the new 2019 budget of N8.8 trillion nor the N9.1 trillion of 2018. It then remains a mystery that as many as 50 GOEs are operating scot free even as they are withholding government funds without remitting same as and when due to the treasury, leading to huge leakages to the common patrimony. What then happened to the Treasury Single Account (TSA) programme into which all government money should be paid?

While the foregoing could represent the mess in the revenue side of the governments’ challenges with respect to 2019 budget, the expenditure component also offers significant challenges. On a yearly basis, successive governments have offered the country lofty plans with respect to frugal spending only to abandon the promises unfulfilled. The Buhari administration is yet to demonstrate a departure from that trend. The provisions of the 2019 budget are also not telling a different story.

This perennial trend was a key reason why the Freedom of Information Act was enacted with a provision calling on all government establishments to publish reports on their activities before the public. In the absence of such activity reports, even the President will not be sure of the integrity of the briefings of his lieutenants leading him to pronounce in public claims that have no factual basis behind them.

Already in his presentation of the 2019 budget, one of the claims of the administration’s successes – namely a dam in Delta State has been debunked by the indigenes of the locality as a white elephant project. Clearly whoever is involved in that project has questions to answer.

And as it is with Delta State so it is with several other instances where the President would have innocently claimed success whereas, the situation could be different – a tale of woe.

 


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