Perhaps a Maintenance Budget Is What We Need

December 31, 2019by Tope Fasua0

I love budgeting. Especially for large organisations. I have done a bit of that in the past, in the corporate world that is. It could be a very interesting exercise, involving a good knowledge of the entire business of the organisation that one is budgeting for, and, depending on how much leeway one is allowed, an ability to imagine the future. In the world from which I come, it is about pushing the system, challenging operatives to do more, year on year, benchmarking with peer organisations, home and abroad, and even sometimes, trying to achieve feats which no one else had dared. The final documents are a product of science, and art. Sometimes, an organisation, division, department or unit may achieve or surpass their budgets in a given period. It usually takes focus, leadership, drive, tenacity, commitment, and sometimes, a bit of luck. At other times, they fall short and try again. In the Nigerian government, performance is often measured by how much they are able to spend in a given year. In the private sector, we are always measured by how much more profitable we are able to get. Government could use some of the strategies that have been honed in the private sector.

I must address a thorny issue at this point. I have always struggled to say that Nigeria could do a lot better in terms of the amounts she budgets for her 200 million people. At N10 trillion, I don’t believe that there is much cause for cheer yet. A rough estimate means less than N50,000 (or $139) is being budgeted by the federal government per person for the year 2020. This figure is one of the lowest in the world – only better than that for war-torn countries where they don’t know what to do with themselves. I am however reminded by Mr. Femi Falana, and of late Prof. Nazifi Darma, that there are parastatals in Nigeria, whose budgets do not reflect in the federal government budget, and who may – together – rack up an amount in yearly expenditure that rivals what the federal government is able to do. These are organisations like the Central Bank, Nigerian National Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC) and so on. The arguments are bifurcated at this point. Why should their budgets not be added to that of the federal government, so that we can see a true picture of the resource injection to and economic velocity of Nigeria in a given year? Also, is this how it is done elsewhere? If this is how it is done (and I suspect so), then the core federal government still has no excuse budgeting $139 for each citizen, when countries in Europe and America manage to budget an average of $28,000 per citizen. It should be made clear to everyone that the government is the largest single spender in any and every economy in the world, and its spending and revenue plans define so much for an economy every year. Governments are pacesetters everywhere. The money they spend are major catalysts for the private sector. Most of them – like the U.S./U.K. etc – ensure they almost never give a dime of their taxpayers’ money to any foreign company. Even foreign aid is routed through one of their own. So, at $139 per Nigerian, even if the budgets of the other ‘rogue’ institutions were added, we still find it difficult to achieve $300 per capita, budgeted for education, health, security, environment, agriculture, and all the rest. Something is awfully wrong with our economy when we look into the future.

Running a nation is expensive business and I suspect we still haven’t started here. That is why I will echo my egbon, Mr. Oluwadele Bolutife when he asked in a recent article on what he called ‘Purpose-Driven Budgeting’, where those who loot Nigeria manage to find the monies they loot, given that they always complain that the budgets are never enough for anything (and indeed the budgets can never be enough). The fact is that there should be nothing to loot from a budget of $139 per citizen and the result is there to see on the streets. Therefore, what happens is that the very lifeblood – a very thin lifeblood at that – of the nation is being sucked dry by a few who manage to get their hands on the booty. For in the hands of a few, the budget looks large, but shared to touch every Nigerian, it is nonsensical. We couldn’t be more callous to ourselves. When we look around us we will see those important, human issues that have been perennially neglected, but which should have since been fixed through the instrumentality of the budget – which has been described as any nation’s most-important yearly document, which encapsulates her vision, her purpose, her promise to her people… and visitors alike. For every kid we see on the street, out of school, there is a budget failure (either inadequacy or misallocation or both). For every pothole, every rubble, every plastic dropped in the wrong place, every ugly graffiti on the wall, every needless accident, every stranded pensioner, every decrepit hospital, every school without a roof or a ceiling, every child studying under the mango tree, every armed robbery or terrorist strike, every kidnapping, every village in rolling darkness, every company struggling to provide its own infrastructure, every ramshackle bus ferrying harassed-looking passengers, every island within the country that still needs to be crossed by canoe. All of these are budget failures. Until our country looks and feels like Switzerland, or Abu Dhabi, or Australia, we have more budgeting to do. We are human beings too, and our people deserve the basic minimum and more.

My key concern for today is however about what type of budgeting system we need. Let us look at Oluwadele’s suggestion – a purpose-driven budget. My view is that every budget, or budgeting system, for it to make any meaning, must of necessity be purpose-driven. What a nation, company or person seeks to achieve with their lives or within a given period, should be the key driver of the budget. A purpose-driven budget allows an entity to double down on what matters most and cut waste. So for Nigeria, such a budget should cause us to determine down to the wire, how many Nigerians we need to provide for, how many work in our public service (no chance for even one ghost worker), the size of public service we need and how they should add value, the roads we need and what value they will add, the transportation links between our cities and at what cost? And so on. Brilliant idea.

But when the Buhari government came in 2015, it came with the idea of a zero-based-budgeting system (ZBB). This system holds that every year, a government starts on a clean slate. This idea was touted as one of Buhari’s integrity ideas, until we stopped hearing about it altogether. The idea of forgetting about last year entirely, in order to start a new budget is itself problematic. Does that not encourage the abandoning of projects? How many projects can be started and completed within one accounting period? How do we plan for long-term projects? But the idea sounded sexy from an anti-corruption perspectiv,e since ZBB is all about justifying every expense and revenue that makes it into the budget. Bureaucrats will also complain about how cumbersome, nay impossible, such an approach can be in our country, even though it is far better than what we have presently.

On September 25, 2015, while the idea of ZBB raged – as does many sexy-sounding ideas in Nigeria – one David Adama wrote an article in PREMIUM TIMES, titled “Are we going backwards with our Budgeting Systems And Processes?” In the article, Adama argued that Nigeria has since moved on from such ideas as ZBB, having settled on performance-based budgeting since the Obasanjo days. You see, buying into the best ideas has never been Nigeria’s problem. There are enough vendors who ply our route on a daily basis, many with the best skills in salesmanship. Performance-based budgeting is seen as one of the best ways of progressive budgeting. At emphasis is the performance of the budgets of previous years, with regard to input and output, in order to determine efficient resource allocation. A clear obstacle here is how to measure input and output for public sector projects, especially how to remove externalities such as politics from the whole equation. Input is not only monetary. Output is not only buildings, tangible results or infrastructure. Politics interferes because, by definition, politics is about giving value oftentimes, to entities who don’t merit value. A president takes projects to his village. I am not talking of any particular president now, thou mischief-makers! A governor, service chief, local government chairman, House of Representatives member, senator… they all do the same. So for performance budgeting to work, a people have to be totally tuned towards performance, and excellence. I wouldn’t vouch for Nigerians in this respect. If the minister of finance is trying to tell us they are using some sort of performance-based budget when she announced that 2019 budget has performed 85 per cent, she should remember what I just wrote above.

Therefore, just as zero-based budgeting died a natural, albeit painful death, performance-based budgeting had died much earlier, via a ghastly accident. I am sorry to tell Mr. Bolutife that a purpose-driven budget can only work among a people with common purpose. In Nigeria, the purpose of a great many people is to see to the ruin of the nation. Only a tiny, and some say ‘foolish’ majority, bother to push the nation in the right direction. A man with the wrong purpose in life, or no purpose at all, has no use for my brother’s long-winded advice.

That is why Nigeria has always practiced – and continues to practice – what Bolutife called ‘olukaluku ya-mu-tere’ budgeting. I laughed out loud when I first saw this. Only ‘northern’ Yorubas will appreciate the import of this nomenclature. In pidgin English, we could call it ‘everybody come grab your own’. It evokes the reality of an ‘okrika bend-down-select’ in terms of its casualness. In fact, ‘bend-down-select’ has more structure and honour, apologies to Okrika City. You see, when you see those ear-to-ear grin plastered on the faces of our top politicians at budget season, it is for the joy of what they know is coming to them from those budgets. All, ALL of our budgets are padded, whether by the preparer of the budget, the legislature who approves or sometimes even the auditor gets to ‘add something’. In some places, a very strong cleaner, or office boy, gets to have a small allocation in the budget – maybe a small contract for which s/he will supply the contractor and take his cut. Nigeria has bastardised the art of public finance. Every line item has an owner and this has nothing to do with performance, purpose, or zero-based. In the service, they call it ‘envelop system’, and this government has since capitulated to this idea of incremental – or arbitrary allocation – budget. The civil servants won. The half-integrity of our current leaders couldn’t withstand the pressure. I recall Segun Adeniyi’s account of how he prepared his budget as presidential spokesman. Things have only got worse. Enough said already.

My suggestion is different. Instead of purpose-driven, or an unworkable zero-based, or a complicated performance-based budgeting system, why not simply focus on maintenance. Call it a maintenance budget; one that forces us to work on one of our cognitive biases – inability to maintain anything whatsoever. I believe we can maintain and organically improve the infrastructure we have in this country today for the next five to 10 years, such as to allow us to build ourselves and appreciate creativity, logic, science, and productivity. The current system we are running makes us think money drops from heaven and that since we have the money, we can buy anything. Wrong thinking. Trouble loading. We need to slow down. We need to understand that only we can achieve development for ourselves. We need to start building things and the best way is to start from the ground up. We need to challenge our students, our young ones, as to the possibilities. Enhancing productivity is our biggest problem today. Enhancing productivity while developing local capabilities and capacities more like.

I am not calling for ‘recurrent expenditure’ to be unduly large, even though there is nothing wrong with a large recurrent if such amounts are being used to retrain our minds, and to maintain the things we have, rather than chasing new toys everywhere every year. Neither zero-based budgeting, nor performance-based, focuses our minds beyond mundane acquisitions at the end of the day. One could even say we budget more for the countries we import from, than for our own country, her future and unborn children. We need a more inward-looking budgeting strategy, that understands how to use cash flow to reboot the economy internally, and tool our youths massively. We need budgets that will allow us complete over 10,000 abandoned projects that are still relevant, and wake up dead capital of at least N20trillion in infrastructure, real estate, transportation, security, education and the likes.

by Tope Fasua

Tope Kolade Fasua is a Nigerian ex-banker, entrepreneur, economist and writer with 28 years of work, business and policy analysis experience. He is the founder and CEO of Global Analytics Consulting Limited, an international consulting firm with its headquarters in Abuja, Nigeria, and footprints in the United Kingdom, USA and United Arab Emirates. Fasua has authored numerous columns on newspapers and six books. He currently keeps regular columns on policy analysis issues with Premium Times and Daily Trust newspapers.

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