Why FG budgets are dysfunctional ―Prof Ojowu

FORMER Chief Economic Adviser to President Olusegun Obasanjo, Prof Ode Ojowu says the manner in which federal government budgets are conceived and executed especially in terms of financing is a major reason they are dysfunctional.

Also, Chairman, House of Representatives Committee on Insurance and Actuarial Matters, Olufemi Fakeye said national development is stifled because capital budgets are stopped by the end of each financial year instead of them to be rolled over.

Ojowu and Fakeye spoke in separate interviews with Tribune Online on the sidelines of 2018 annual seminar for financial correspondents and business editors, organised by Nigeria Deposit Insurance Corporation (NDIC), which ended at the weekend in Kano.

Ojowu said since loans undergo a very complex process to acquire, it will be futile to commence their negotiations within the budget year that they will be used to fund.

“You really don’t have the time. So you need to secure these loans earlier. For example, if you intend to use a loan for 2019 budget, you should start the negotiation now so that by the time you are preparing the 2019 budget, how much you have secured through loan agreement.

“It can be put in a commitment form so that by the time it is committed to you, when you are preparing the budget for that particular year, then you have a source of fund that you can say: look I have secured a loan of so much for capital projects of 2019 representing 20 percent or 30 percent of your capital requirement.

“As it is now in the 2018 budget what they have said is that as the loans they wanted to use for capital project mature, they will speed up the process of capital implementation but the time is the issue and you cannot be sure when the loan is acquired for that purpose. There is no timeline for it. Anything that does not have a timeline should not be suitable for that year’s budget implementation.

Ojowu who was also Chief Executive Officer of National Planning Commission (NPC) said no administration has implemented 50 percent of the capital budget since 1999.

“And that is large because of a number of things like delay in the approval of budgets, the other is the availability of funds for capital implementation.

“Over this period, capital implementation has always lagged behind and that is why I am saying that in order to minimise the negative impact of the timeline, we roll over the capital projects once they are already approved for implementation.”

While arguing for the need for government to borrow to finance development, Ojowu insisted that “borrowing should be targeted at specific projects.

“I don’t like borrowing and putting the money into treasury before deciding what to use it for thereafter. Like the Sukkuk funds that were dedicated to 25 capital projects. When we are going to borrow from any source at all, the reason for borrowing than the use of that borrowing must be provided in advance for the public to share in it.”

He described N8.6 trillion 2018 budget proposal as not being a big deal in real terms when it is deflated in terms of inflationary pressures.

“The issue is whether, in fact, we have the time and the capacity to implement the budget. Over the years, we have not been able to implement even the small amounts of money that are available for capital expenditure.

“We need early submission of budget proposals to National Assembly. The law requires 90 days so that by January we are able to begin the implementation of the capital budget.

“It is when we implement at the correct time that we will be able to know the impact of insufficiency of funds because as of now, even though the funds are not enough, we still can’t use them all because of time constraint.

“So we need to eliminate the time constraint and the elimination of time constraint is within our control. And once we do that, we will be able to know the difference between time constraint and availability of funds.”

Fakeye, on the other hand, said there is no guarantee that the budget would be passed by December 31 for implementation on January 1, 2018.

“They brought the budget in November. As far as I am concerned, you brought it late and if you brought it late, it is cumulative and it is commutative as they tell you in algebra.

“Basic rule in algebra is if A=B and B=C then A=C! If you bring the budget late, you cannot be the enforcer of time deadline.

“As we speak, we are trying to raise $5.5 billion through bonds in the London market. They intend to raise the money to fund the 2017 budget. The same government is also ruling that it will stop 2017 capital implementation on December 31. So if you raise the money, what would you do with it?

“We need the press to let Nigerians know the executive arm needs to maintain capital expenditure in a way that people can get more mileage out of the economy.

“They should not just say because of it December 31, there is no more money. This is why there are abandoned and unfinished projects scattered all over”, he stated.