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

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


By: Idumange John


On the 7th of April, the Executive Governor of Bayelsa State Chief Timipre Sylva signed the State’s Appropriation Bill into Law. The sum of N187
billion has been appropriated. 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.


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