Date Published: 04/12/10

Will the Bayelsa “Budget of Impact” Deliver Democracy Dividends? By Idumange John

On the 7 th of April, the Executive Governor of Bayelsa State Chief Timipre Sylva passed the State’s Appropriation Bill into Law. It is christened “ Budget of Impact”. In Nigeria budgeting is considered a hollow ritual because most often budgetary provisions are not translated into concrete programmes and projects. But even amidst this sense of anomie, the budget is an important tool in governance since it is the translation in financial terms of government policies; a fiscal estimation of what government plans to spend and how to source for funds. The Budget also shows government priorities hence it constitutes the basis for measuring government commitments and how best to consummate such commitments in furtherance of the ‘social contract’.

In any State, the budget is the second most important document after the constitution. This may just be because the constitution gives birth to it, provide for it and lays down procedure for its passage and implementation. In a working Society, the budget still enlivens the constitution since it is identified as a key instrument for the provision of all the requisite structure needed for the guarantee of the fundamental human rights. How accurately the budget is implemented to meet the economic and welfare rights of the people depends on the political will of government.

At the national level, the purpose of the 2010 Budget, "is to accelerate economic recovery through targeted fiscal interventions intended to further stimulate the economy and support private sector growth. Capital expenditure has been rationalised and prioritised to avoid spreading resources too thinly across too many initiatives." The aim was to create impact on five key priority sectors, namely: Critical Infrastructure; Human Capital Development; Land Reform and Food Security; Physical Security, Law and Order; and the Niger Delta. The Federal Government believes that these projects would benefit the masses, as they are in tandem with existing bilateral trade agreements. The goals constitute part of the conditions for debt relief package negotiated between Nigeria and the Breton Wood Institutions.

Also, priority is given to key initiatives that would further bridge critical infrastructural gaps to reduce the cost of doing business in Nigeria. Besides providing alternative routes for the transportation of goods and services across the nation, investment in upgrading our railway networks and dredging marine waterways – notably the dredging of the Lower River Niger - will create gainful employment and increase disposable income. The dredging of the  Niger has already commenced.

The Federal Government averred that economic diversification will be emphasised by the development of our agro-allied processing, manufacturing, telecommunications and other non-oil sectors to achieve a broader base for employment generation and wealth creation. The Nigerian people remain the focus of our efforts, hence our commitment to sustaining investments in health and education to develop our human capital base. The capacity of our law-enforcement and security agencies will continue to be upgraded and we shall take all necessary steps to preserve our national security and sovereignty. Such beautiful speeches are not new to Nigerians, what is perhaps new is successful implementation of the budget. Sadly, since May 29, 2007, the Federal Government has not implemented any balanced budget and the National Assembly is quite unwilling to perform its oversight functions..  

Critical to the accomplishment of set targets is to  address the situation in the Niger Delta to : ensure security and focus on developing infrastructure, grass-roots empowerment, and the preservation and restoration of the environment. This is imperative because of the enormous contributions of the Region to the economic viability of the nation. 

The World Bank avers that Nigeria suffers limited budget credibility as reflected in large gaps between approved budgets and outturns. Other challenges according to the bank are limited and opaque budget reporting, with significant extra-budgetary operations, poor alignment of resource allocation with state development priorities, ineffective budget execution, on account of poor revenue forecasts and monitoring, and weak cash management.  
 

In Bayelsa State, there is no doubt that the implementation of the 2009 budget met with several obstacles – the most buffeting was the dwindling revenues from crude oil occasioned by intense militant activities. Whereas the projected revenue was N188 billion, actual receipts was only about N96 Billion. The implication was that with the cash crunch and reforms of the Apex Bank exacerbated by the global economic recession, planned targets were either not met or met with some unavoidable deficits. It was the experience acquired in the implementation of 2009 that provided a basis for the philosophy of the 2010 budget.

The 2010 budget of Bayelsa  State is christened “Budget of Impact”. Accordingly, the philosophy of the budget seeks to entrench budget discipline and fiscal responsibility within the confines of subsisting laws. The philosophy is anchored on the desire of  government to deliver the dividends of democracy in the real sectors of the economy including the development of physical infrastructure. The Ministry of Finance and Budget seems to have realized that the dearth of critical infrastructure is militating industrialization. The robust goals, targets and key success indicators provided in the Medium Term Sector Strategies (MTSS) have been put in place to address these challenges.

The budget therefore aims to direct government resources at existing viable ongoing projects that are targeted at achieving the developmental priorities of the State Government. This would be realized by aggressively pursuing the participation of the private sector in the infrastructural development of the State. This in line with the neoliberal economic paradigm that Public-Private Partnership is a panacea to most of the ills of economic development in transitional societies.

Recognizing that the development of the real sectors would confer dual advantage of job creation and revenue generation, the budget focuses on the sustainable development of Agriculture and the Central Business District, which would constitute the hub of industrialization. When this goal is pursued with vigour, there are great potentials for employment generation that would improve the general well being of Bayelsa people.

Government has also expressed its determination to enhance efficiency in public expenditure management by strengthening the capacity of government institutions responsible for driving efficient and effective public expenditure management. However, this writer believes that for Bayelsa State to fully and successfully entrench efficiency criteria in governance, the House of Assembly must not bring unnecessary pressure to bear on the executive in respect of the so called ‘constituency projects” which do not see the light of day. Another pre-condition is the dissolution of the Technical Committee and the restructuring of the Due Process Bureau. By my independent assessment, the Technical Committee has created confusion, policy inconsistency and implementation flip-flop, while the  Due Process has made several ghosts out of even staff whose appointments were legitimately confirmed years before the present administration..

There is also a critical need for boosting Foreign Direct Investment (FDI), which would attract foreign partners to develop the economy. By encouraging FDI, the administration would have garnered enormous goodwill from major global financial institutions to catalyze the local economy and increase her competitive edge in capital investments. This is feasible because, already, government has concluded arrangements with the World Bank to provide support in planning critical sectors of the economy as well as educate principal officers on financial management based on well tested participatory, all-inclusive principles.

The budget of impact has set an aggressive agenda State is set to pursue investment in safe and highly rated instruments for reasonable economic returns. Perform periodic budget monitoring exercises to assess the efficiency and effectiveness of the State’s MDAs in the implementation of their appropriated budget; Optimise the State’s internally generated revenue. Further improve the State’s access to donor funds. Follow up and determine the issue of actual quantity of crude oil produced in Bayelsa State.

From the above analysis, three strategic initiatives of the Budget of Impact of 2010, stand out. First is the urgent need to stimulate the State’s economy and increase employment opportunities. This can be achieved by adopting a neoliberal paradigm of facilitating the transition of government parastatals to commercially viable and financially autonomous entities to become self-funding and revenue generating. The State Government has earmarked some of parastatals such as Bayelsa Palm Limited, Bayelsa State Transport Company, Bayelsa State Housing and Property Development Authority, amongst others for privatization.

Clearly, two policy actions have been taken to create a conducive atmosphere for private sector participation in the economy. Government has put in place the privatization and commercialization policy. The underpinning Keynesian philosophy is that when parastatals are market-driven, they would be more efficient and profitable. These laws would enable the State to embark on the proposed viability assessment in the MDAs. In addition, there is the concessioning Law  and the Privatization Law before the Bayelsa State House of Assembly ( BSHA) and the timely passage of these bills into law would guarantee investment security in Bayelsa State.  Investment security would increase capital votes, reduce the recurrent component of the budget, increase the propensity for increasing taxes which will pave the way for economic growth.

The second strategic initiative is to pursue direct private sector involvement in some of its existing commercial entities and social projects. Examples of such entities include aquaculture, rice and shrimp projects, the Central Business District, the Nembe-Brass Road, the 500 Bed Melford Okilo Hospital, the Bayelsa Oil Company, Hotel and the Gas Turbine project. These initiatives are designed to complement government’s efforts to ensure the effective delivering social services  for accelerated economic development and wealth creation.

The third strategic initiative is to facilitate the concession of certain public services to competent private sector participants with proven track-records for delivering of quality service. The overarching aim is to boost the State’s internally generated revenue and allow the Government to focus its resources on the delivery of social services to Bayelsa people. However, it is only when the capital component of the budget exceeds the recurrent component that development can be accelerated in all its ramification. If there is room for supplementary budget, the capital component should be increased to create the desired impact.

With the inauguration of elected Chairmen at the Local Government Level, the LGAs should also make their own budgets in line with the strategic goals of the administration. The newly sworn-in Chairmen are complaining that the Councils are indebted, but there is a coordinating Ministry headed by a Commissioner. The Commissioner of Local Government and Rural Development should give account of the expenditure of monies accruing to the Councils or risk a public protest. Accountability and transparency are critical for the good governance of the LGAs. This writer demands for a probe of the Ministry of Local Government and Rural Development at least to ascertain how the funds accruing to LGAs have been mismanaged so that the Commissioner would be placed under public scrutiny.

The policy thrust  of the Ministry of Finance is the efficient allocation of the State’s resources to its strategic priorities to promote rapid economic growth,  effective management of public finances and promotion of fiscal discipline and accountability in the State’s financial operations. With the realization of these goals, macroeconomic stability and fiscal sustainability would be the necessary guarantee.

However, for the Budget of Impact to be effectively implemented, the Ministry of Finance and Budget must put in place an internal mechanism to oversee the full implementation of the budget unencumbered by the distractions from any Committee/Agency. The Bayelsa State Ministry of Finance and Budget should also reinforce its internal mechanisms to reduce extra-budgetary expenses. It should intensify efforts at Monitoring and Supervision of the budget and reduce the recurrent component of the budget.

In the last analysis, the administration should renew its article of faith to complete the projects budgeted for in the 2010 fiscal year. This could better be achieved through periodic monitoring and evaluation while at the same time reinforcing existing mechanisms of transparency to ensure budgetary discipline in Bayelsa State. And only then can the Timipre Sylva administration overcome the unenviable public perception of poor performance and deliver the dividends of democracy. 

Idumange John, is Fellow of the Institute of Chartered Economists of Nigeria.