Budget 2013: Motion Without Movement By Nasir Ahmad El-Rufai

The first quarter of the fiscal year has
practically ended, yet Nigeria and
Nigerians are yet to know how the
approximately $140 million dollars
the country earns daily from crude oil
sales alone are being spent and how
much more is going to be borrowed
in our name to provide for services
that we can neither see, nor feel. This
hefty amount does not include daily
collections for royalties, petroleum
profits taxes, sales of liquefied
natural gas and other condensates,
income taxes, value added tax and
other “internally-generated”
revenues.
For an annual ritual that started
about six months ago, the questions
are: why is it that the Presidency and
the National Assembly have been
unable to reach a common ground on
the federal budget? Is government
blind to the urgent need for
infrastructure development, social
services, poverty alleviation and job
creation? Is the budget really for the
Nigerian people, or simply a
convoluted mechanism to further
defraud long suffering citizens?
To answer these posers, we will
continue with deeper analysis of the
2013 budget which, from all
indications is not different from
preceding Jonathan-era budgets in
terms of absence of positive
improvements. We will look at some
major sectors of the Nigerian
economy and their indicative
budgetary allocations, attempt to
correlate how the appropriations have
been designed and determine whether
they are structured to bring about
meaningful development to our
country. It would also be important to
assess if there have been any
improvements over the years, drawing
comparisons with model countries
and possibly identify solutions where
government has veered off, in the
hope that policy makers would be
willing to make necessary changes.
The importance of sensible and
prudent budgetary allocations cannot
be overemphasized because the
budget in itself is an expression of
public policy. It is the vehicle through
which the various programs and
agendas of a government come to
life. It is the major economic policy
instrument which indicates a
government’s priorities, and is also a
tool to correct anomalies and
inequities within the society.
An efficient budgetary system is
critical to economic growth and
developing sustainable fiscal policies.
On the flip side, a poorly designed
budget where attention to details are
neglected and figures just altered
from existing templates can only
exacerbate social and economic
problems within the country. The
effect of faulty budget choices will
inevitably be felt mostly by the
ordinary citizens who are at the
mercy of dysfunctional government
policies and facilities. Sadly, in the
Nigerian context, budgeting is still
based on guess work as alluded to by
the Accountant General of the
Federation a couple of weeks ago.
In light of the fifth Brazil, Russia,
India, China and South (BRICS)
summit on emerging national
economies currently taking place in
South Africa, one cannot help but
understand why Nigeria with all our
numerous resources and potentials
still does not qualify as a member.
These countries have succeeded in
managing their resources by effective
prioritization of their budgets. They
have also channeled adequate
financial resources to those sectors
which yield the highest return on
investment for their economies. These
nations have pulled hundreds of
millions of their citizens out of
poverty into middle class status while
our leaders have pushed more and
more citizens into poverty – from
about 57% in 2007 to a disgraceful
72% of the population by the end of
2011!
Hitting closer to home is the fact that
Nigeria and BRICS’ latest entrant,
South Africa, are regarded as Africa’s
economic power houses. In 2011,
South Africa’s Gross Domestic
Product (GDP) was estimated at $368
billion while Nigeria’s was $232
billion. South Africa’s revenue
sources are diversified rather than
totally dependent on mining income
which used to be the mainstay of its
economy. South Africa has also
adopted participatory budgeting on
some levels which allows citizens
contribute directly in deciding how
their budget priorities and figures are
arrived at.
Disappointingly, in comparing Nigeria
with other emerging economies, the
federal budget has simply been one
where the same things are done over
and over again while expecting
different results. Let us assess the
electric power sector budget to see if
it is geared towards revamping what
every Nigerian would agree is the
most debilitated sector of the
economy.
The first electricity generating plant
was built in Lagos around 1898. It
was not until 1950 that the Federal
government passed the Electricity
Corporation of Nigeria Ordinance No.
15 which resulted in the Electricity
Cooperation of Nigeria (ECN); the
statutory body responsible for
generation, transmission, distribution
and sale of electricity in Nigeria. After
independence in 1962, the Niger
Dams Authority (NDA) was
established, its primary responsibility
was to construct and maintain dams
in river Niger and other areas. Ten
years later (1972), the National
Electric Power Authority (NEPA) was
formed by a merger of ECN and NDA.
NEPA was mandated to “maintain and
co-ordinate an efficient and economic
system of electricity supply for all
part of the federation”.
Forty-one years after formalizing the
structure for power management and
supply in the country, have there
been significant improvements? With
the continuous promises from the
government about power outages
becoming a thing of the past, how is
it that the electricity supply situation
has only gotten worse? What is
happening to the continuous
budgetary allocations to the power
sector and the numerous projects
undertaken by the federal
government? How is it that smaller
and more impoverished nations have
been able to provide steady and
improved power supply while
Nigerians constantly hear fables?
Most adults who have spent a great
portion of their lives in Nigeria have
probably never experienced constant
24hours of government-supplied
electricity without breaks between.
This scenario only even exists for the
urban dwellers in large cities that
enjoy a fair amount of electricity per
day. For those who live in many of
the state capitals within Nigeria, the
power supply is less reasonable and
it gets worse for the rural dwellers.
No one is immune to the power
outages so much so that the
Presidential Villa and Governor’s
lodges are all powered by stand-by
generators.
The horrendous power supply in
Nigeria has become a source of
national embarrassment to say the
least. During the FIFA U-17 football
championship hosted by Nigeria
some years back, there was an
electricity outage in Kano during the
game between Spain and USA. An
extra 14 minutes had to be added to
compensate for the embarrassing
moment. Upsetting power outages
have also been experienced at our
international airports several times.
The importance of reliable power
supply in Nigeria cannot be
overemphasized. For there to be a
major boost in the economy and the
diversification away from dependence
on oil, the power sector must be
given utmost priority in budgetary
spending and implementation. The
benefits of having steady power
supply will impact tremendously on
manufacturing, SMEs which create
employment, attracting foreign
investment and boosting business in
general.
In the 2013 budget, total allocation to
the power sector is N74.26bn, a
measly 1.4% of the total budget.
Capital expenditure for the power
sector is pegged at N70bn (about 1%
of the total budget, or 3% of the total
capital budget) while recurrent
expenditure is N4.26bn. For a sector
in dire need of rehabilitation and
resuscitation, these figures are not
indicative of any sense of
prioritization leading to improvements
anytime soon. Could it also be that
successive governments are simply
uninterested in fixing the power
sector as majority of the people
think? Or could it be that truly, the
power situation is beyond human
capacity and is being manipulated by
‘ghosts, witches’ and ‘wizards’? It is
disheartening that a nation with a
population of nearly 170 million
hardly generates 4000 megawatts
steadily while South Africa which has
less than a third of our population
(about 50 million) generates ten
times more electricity (about 45,000
MW). It is not difficult to understand
why South Africa surpasses Nigeria
on major development indicators in
spite of the latter’s potentials.
Is the government relying wholly on
the private sector to shoulder the
short-term investments in the sector?
For the power situation in Nigeria to
be turned around, government would
need to invest massively in the
sector. The investments needed must
include federal budgetary intervention
to expand and modernize the nation’s
transmission infrastructure, some
investments in renewable generation
capacity using wind and solar, and
even some hydropower stations to be
placed under private sector
management or ownership as soon as
they are commissioned. Unless the
government pragmatically pursues a
mix of public and private investment
in the various segments of electricity
supply industry using our ample gas,
hydro, coal, wind and solar resources,
our nation will remain in partial
darkness for at least the next five
years. South Africa on its own has
recorded success in its power sector
by harnessing their freely available
natural resource (coal) and
converting it to power. It did not go
about importing natural resources
which it already has, or relying solely
on a private sector solution. Instead,
it invested in making available
resources usable to the public and
private sectors.
Until this government or any other
government for that matter is able to
tackle the power supply problem in
the country, it would not be taken
seriously because this is one area
where it is easiest to prove that a
government is indeed working for the
benefit of the people. Corruption and
impunity which are the major culprits
for the chaos in the sector must be
dealt with. A good starting point – a
massive national signal – would be
for all federal government facilities
(including the Presidential Villa, the
National Assembly and Supreme
Court) to stop forthwith the use of
generators to supply electricity for
their day to day activities both at
work and home. Such a signal will
not only compel the public electricity
providers to sit up and get better, but
will encourage policy makers to
experience some of the pain that the
ordinary Nigerian feels every day.
Hopefully, this will engender change
in official attitudes – and perhaps
raise the budget for the power sector
from the pathetic amount provided for
in 2013!
In the meantime, as the executive and
the legislative arms of government
continue to bicker over who has the
power to do what, or who has the
mandate to award what contract, the
whole budgetary process is becoming
more and more like the famous
axiom: All motion, no movement.
Sadly, from economic development,
poverty alleviation and job creation
perspectives, that, exactly, is what the
2013 budget may be turning out to
be.