“Here in Nigeria we do not join the debate on fiscal consolidation versus growth because we believe in the need to do both….the share of capital expenditure in the total budget is increasing as we gradually reduce recurrent expenditure.” He went on to say: “Government is determined to reduce the cost of governance. We are reviewing the recommendations aimed at rationalizing Agencies of the Federal Government with overlapping functions…..more significant steps will be made in 2014.” Finally he said on the budget structure and I quote:
“In recent years, recurrent expenditure has tended to crowd out capital expenditure in the national budget. Over the 2013-2015 medium term, my administration will continue to implement measures aimed at correcting this imbalance in the budget structure in a viable and sustainable manner….the process for rationalizing public agencies and reducing duplication of mandates among different government agencieshas begun , following the report of the Oronsanye committee”
Interestingly if not curiously, the recurrent expenditure and component in the 2014 budget has risen by about the same 10% from 63% in 2013 to 73%in 2014. An increase of about 14billion. Yet the so called revenue shortage projection which government claims is reason for the reduction in capital expenditure has not reduced the recurrent expenditure but instead increased it, thereby rubbishing in some way the Oransanye report and the clamour by many for the reduction in the size of government. Talk about getting our priorities wrong. This is inspite of a Bill titled, the Economic Stimulus Bill which I sponsored and which though not law yet has passed the 2nd reading in the House. The Bill mandated that at lease 40% of the country’s budget must be allocated to our yearly budget for the next 5 years. The intention was to achieve some sense of trickle down economics, so the common man can enjoy the so-called dividends of democracy through the infusion of capital projects to stimulate the economy and increase employment. Some of us in the House felt that lowering the benchmark would defeat this objective. To blame such a sharp decline in capital expenditure and on the other hand an increase in recurrent expenditure on revenue shortage projection and not the reduction in benchmark is definitely a poor attempt by the handlers of our economy to be clever by half and hoodwink the masses. Unfortunately some of us saw through this insidious move.
7. Unfortunately unbeknownst to the unsuspecting public, many of us rightly or wrongly read political undertones to the fixing of a lower benchmark without any compelling reason. Simply put, 2014 is more or less an election year. To shortchange the states and starve them of funds in an election year was suspicious and disingenuous. It must be remembered that the excess crude account remains in the custody and absolute control of the federal government and it appears it is at liberty whether or not to distribute same to the states and local governments. Therefore lowering the benchmark would generate less revenue into the federation account and therefore less revenue to be shared to the states and local governments. It would on the other hand increase what goes into the excess crude account which is intendedto be distributed to the states, an intention which the federal government only pays lip service to. Invariably therefore, the states are short changed whilst the federal government is empowered. All of this in an election year. At the end, only the states belonging to the ruling Party would benefit from its largesse. Hmmmm!!
To conclude this piece, it is important to address the constitutionality of setting a benchmark in the first place. Whether or not other countries do it is irrelevant. Perhaps their constitution allows it. If we are desirous of benchmarks, there is a need to amend the constitution. Now if the federal government must set a benchmark for the purposes of budgeting, it can only do so on its own share from the federal account and not on the whole of the revenue of the federation. The constitution in line with the principles of federalism, particularly fiscal federalism states clearly in section 162 (1): “The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid ALL REVENUES (emphasis mine) collected by the Government of the Federation………….”
