Budget 2008 - Plugging Poverty Loopholes?

from All Africa

This Day (Lagos)

ANALYSIS

By Abimbola Akosile
Lagos

In the 2.37 trillion naira 2008 budget, still awaiting passage before the National Assembly, Nigerians have been promised a pro-poor, people-friendly initiative that would lift millions of helpless citizens out of poverty.

Abimbola Akosile examines its pros and cons, and the views of concerned stakeholders

Which Budget?

The budget is an important tool in governance, the translation in financial terms of government's policies; a fiscal estimation of what government plans to spend, where it plans to spend it and how it intends to source the funds. It shows government priorities and forms a yardstick for measuring government's commitment to fulfilling to the letter, the 'social contract' it entered with the people.

The issues of budget and budget implementation in Nigeria have been on the front burner of national discuss hence the budget question is no longer limited to 'who gets what'? But how it is employed in governance in affecting the lives of the people.

According to experts, the criteria used for selecting the objects of public expenditure in Nigeria remain hazy aside being confronted with limited financial resources. Governments often make choices, perhaps arbitrarily, that are influenced by political pressure, perceived economic growth demands, global realities, etc., and with little consideration for the impact such choices would have on the quantity and quality of human life.

The resultant effect is that the people for whom the government is supposed to work for are impoverished and wallow in poverty.

The 2008 Budget, with a total figure of N2.37 trillion, is the first to be presented by the present administration, which came into power on May 29, 2007.

It allows stakeholders to consolidate on the gains of the past eight years, remedy past mistakes and contribute to efforts to evolve a strong fiscal base for this administration. It also provides space for Civil Society to contribute to the Seven-Point Agenda of the present administration and the economic development of the nation.

2008 Presidential Budget

At the Joint Session of the National Assembly Abuja, on November 8, 2007, President Umaru Yar'Adua, the Nigerian economy has been one of the fastest growing, not only in Africa but also in the world, a growth rate that is forecast to continue into 2008 and 2009.

To him, the collective challenge today is to translate Nigeria's macro-economic gains into tangible improvements in the living standards of the people. Yar'Adua said despite the rapid growth of the economy, about 50% of Nigeria's population still live below the poverty line; and that oil still accounts for about 40% of GDP, 90% of exports and 80% of government revenue.

The challenge therefore is to reverse these ratios. The budget has been prepared within the context of a Medium-Term Fiscal Framework, which takes account of the forecast revenue and expenditure for the period 2008 - 2010.

The 2008 budget, he said, builds upon and consolidates past macroeconomic and budgetary reforms; gives priority to, and makes ample provision for improving physical infrastructure, particularly power and transportation, human capital development, the Niger Delta, and social safety nets; which are all encapsulated in the Seven-Point Agenda.

Broadly, the 2008 budget provides: N444.6 billion for Security and the Niger Delta, which is 20% of the total budget, up 6.5% from 2007 allocation; N210 billion for Education or 13% of the total MDA spending; N139.78 billion for Energy sector, excluding National Integrated Power Projects which will be implemented through alternative funding; and N121.1 billion, that is 7% of total budget, for Agriculture and Water Resources.

According to the President, taking into consideration the nation's commitments under the Paris Club Debt settlement, and in pursuit of the attainment of the MDGs, the 2008 budget will devote the entire debt relief gains, amounting to N110 billion, to carefully selected poverty reduction initiatives and programmes in education, agriculture, water resources, power and social safety nets.

He said the budget is basically about the ordinary Nigerian; about accelerating the provision of basic infrastructure to improve the quality of life of our people; and about creating jobs and the enabling environment for the private sector to thrive.

He also expressed Nigeria's commitment to pursuing the goal of making the economy one of the twenty biggest economies in the world by the year 2020, which will entail fast tracking the key parameters of the development paradigm as outlined in the Seven-Point Agenda; and also maintain macroeconomic stability and fiscal responsibility.

Analysis for Progress

To chart the way forward, a detailed analysis was carried out by a team of budget experts including Mr. Hillary Ogbonna of ActionAid Nigeria on the federal budget for the years 2005 - 2007 in four sectors namely: education, health, agriculture and water resources.

This period coincided with the unveiling of the National Economic Empowerment and Development Strategy (NEEDS) document; and the sectors were chosen because of the strategic place they occupy in human development as showcased in the Human Development Index (HDI) which is the measure of standard of living for countries worldwide.

Education for All

According to the analysis, apart from manpower development, Nigerian education sector faces lots of challenges. To develop human resources needs lots of human attention and human intervention. One of the main challenges is the growing trend in the number of children of school age and how to get them accommodated in the available schools and the provision of new schools if necessary.

Presently, out of the 42.1 million Nigerian children who ought to be in primary school, less than 24 million are in school. The rest are not captured in any statistics and they are not known to be part of the nation's calculation when deliberating on investment in capacity issues.

Currently, the total population of secondary school students in Nigeria is 6.4 million, but the total number of Nigerians of secondary school age who ought to be receiving secondary education is 33.9 million. So where are the rest? They are not in any vocational institutions, trade centers, or skills giving activities planned and delivered by the government as a deliberate policy.

Summarily, evidence shows that less than 23 million and 6.5 million Nigerian children have access to primary and secondary schools out of 42.1 million and 33.9 million of school age at the two levels respectively which implies that more than 60 per cent of children who are supposed to be in both primary and secondary schools are no where nearer to the school environment.

It is true that numerous problems confronting the Nigerian education sector cannot be cleared in a year or two but there is need for a giant take off in terms of budget allocation to the sector especially with the present reforms going on in the sector. This implies a better budgeting approach to the sector that will take into consideration numerous problems and issues as listed above confronting the educational sector in Nigeria.

The mere basic increment in the federal allocation to education may not help the country much but a more systematic approach identifying priorities and issues of national urgent importance.

Health is Wealth

This section is an analysis of the Nigerian health sector budget for the years 2005 - 2007 because of its critical position as a major social sector. The nature, movement and pattern of Nigerian federal health sector allocation and expenditure has shown how serious the country is with health issues. Also allocation and expenditure of the health sector performance is at variance with the targets set by the National Economic Empowerment and Development Strategy (NEEDS).

In order to achieve the health Millennium Development Goal, at the country level, every government want to ensure an effective health system, and to do that, they must collect sufficient revenues in a sustainable, equitable, and efficient manner.

They must pool health risks and purchase services so that they can provide their citizens with a package of essential services and also ensure financial protection against the costs of catastrophic illness. From a rational point of view, this means that governments should fund or subsidise those health services that qualify as basic public and merit goods.

Similarly, Government should also, as a matter of basic equity, finance services for the poor and, ideally, provide the entire population with financial protection. An important element in these efforts is figuring out how to purchase health services efficiently, because efficiency gains constitute an additional source of revenue.

The National Economic Empowerment and Development Strategy (NEEDS) health component aim at improving the health status of Nigerians in order to reduce poverty. This involve comprehensive health sector reform, aimed largely at strengthening the national health system and enhancing the delivery of effective, efficient, good quality, and affordable health services.

One of the strategies towards achieving this is through the development and implementation of a comprehensive health care financing including the fast tracking of the National Health Care Insurance Scheme. From the foregoing with little or no difference since NEEDS implementation one is tempted to ask if there have been any serious move towards the realisation of the NEEDS target.

Let There Be Water

Budget allocation for the years under review in the ministry of water resources have been in favour of capital expenditure. Capital expenditure otherwise known as development budget in the ministry has been 91.93 per cent, 96.24 per cent and 93.99 per cent for the years 2005, 2006 and 2007 respectively. See figure below for a clearer picture of water resources recurrent vis a vis capital allocation for 2004-2006.

No capital provision was made to the Department of Planning, Research and Statistics in 2006 and 2007. In similar cases allocations to Dams and Reservoir, National Water Resources Institute, Hydrology and Hydrogeology decreased astronomically in 2006 when compared with what they got in 2004 while Water supply and Quality control, Irrigation and Drainage has been increasing in the same proportion with the total budget allocation to the ministry.

Rural water projects attracted about 23.91% in 2005 but went down again in 2006 and 2007. Does that mean that the rural communities in Nigeria have 100 percent access to clean and drinkable water? It is interesting to note that the shortfall on rural water supply in 2006 fiscal year was compensated in water projects funded from the debt relief.

Water should be seen as essential to life and has a link in achieving all the MDGs. Water is essential to sustain life and enshrined in the right to life and dignity, as set forth in the International Bill of Human Rights. In 2002, the United Nations adopted water as a human right.

The rate of increase in capital allocation to River Basin Authorities is encouraging provided that these monies are released as at when due and utilised accordingly. There should be corresponding measures to monitor the performance of the River Basin Authorities.

This is the only way Nigeria should be able to meet with its target as contained in the water policy which aims to assist all rural communities to obtain basic water supply facilities; to increase the capacity of local, state and federal government to assist communities to obtain basic water supply facilities and to supplement the National Primary Health Care Programme by promoting better health practices, focusing on clean water, good hygiene, diarrhea control and proper excreta disposal.

Agriculture & Rural Devt

Experts claim there is a strong relationship between agriculture and the Millennium Development Goals. About 70 percent of the MDGs' target groups live in rural areas, particularly in Asia and Africa, and for most of the rural poor agriculture is a critical component in the successful attainment of the MDGs.

In Nigeria, it is estimated that up to 70 percent are employed in agriculture. Even though structural transformations are important in the longer term, more immediate gains in poor households' welfare can be achieved through agriculture, which can help the poor overcome some of the critical constraints they now face in meeting their basic needs. Thus, a necessary component in meeting the MDGs by 2015 in Nigeria is a more productive and profitable agricultural sector.

While the linkage with agriculture is particularly strong for the first MDG of halving by 2015 the proportion of those suffering from extreme poverty and hunger, all MDGs have direct or indirect linkages with agriculture.

Given that the majority of Nigerian poor people live in rural areas or rely on agriculture, and that agriculture paves the way for economic growth in the poorer nations, agricultural and rural development will underlie progress on the broad array of economic and social indicators emphasized by the MDGs.

The most effective strategy for making steady, sustainable progress toward the MDGs is to serve all the goals in an integrated way. However, each goal will need a well-defined package of technologies and services for success at the field level which can only be possible through development financing in the form of government budget and expenditure.

Concerned Views

A two-day summit was organised for the civil society on the 2008 budget in Abuja last November, to analyse it and get Civil Society input into the instrument. The event was to afford Civil Society groups the opportunity of evolving a consensus to be presented to the Legislature during the Budget Hearings/Defense.

The initiative was jointly supported by the ADVANCE Project (a USAID funded project implemented by PACT Nigeria) and the European Commission on Public Finance Analysis Project.

The project sought to increase capacity for effective civil society engagement with government and focused on three main outcomes including strengthened CSO institutional capacity; increased CSO capacity for effective advocacy and strengthened Civil Society and Government partnerships to fight corruption.

Those who attended the summit, including this reporter, observed that the 2008 budget promises to address Federal Government's seven-point agenda on security, transportation, human capital development, power, the Niger Delta, social safety nets as well as improve physical infrastructure.

It was also noted that the budget formulation process did not benefit from extensive consultation from various segments of the society and therefore cannot claim to reflect the people's wishes, aspirations and concerns; that the budget is skewed in favor of recurrent expenditure at the expense of capital expenditure; and that there was no over-arching strategy on which the budget was based.

To the participants, allocation to the agriculture sector did not sufficiently capture our development aspiration in terms of food security and job creation; that there were no allocations for agricultural micro-credits to encourage small scale farmers, to generate employment in this sector, promote food production and increase food security; and no budgetary allocation for water sanitation. Other observations include silence on care and support for people with disabilities; no tailored service and support for persons with disabilities; disparity in budget allocation, which greatly favor mega educational institutions to the disadvantage of smaller ones; gender discrimination in budget allocation with more funds being allocated to boys' schools more than girls' school. To the summit members, lumping does not make for effective disaggregation of data and assessment of allocative efficiency; there was insufficiency of funds allocated to capital projects; and no budgetary allocations for women with disabilities.

The forum recommended that more attention should be paid to issues of development rather than security in the Niger Delta; budget allocations should be segregated to make for easier M&E; there should be extensive consultations among different segments of the society to increase participation in the budget process at all levels.

There was also a call for more funds to be allocated to small and medium scale enterprises in all sectors to promote household employment, income, improve standard of living and also as a means of wealth distribution; and allocations in critical sectors like education and health should be made to meet internationally acclaimed standards as minimum prescription.

To them, definite budgetary allocations should be made to meet the special needs of persons with disabilities at all levels and in all sectors; while specific allocations for training needs in all sectors and at all levels, especially in tertiary institutions.

Participants wanted government to make budgetary allocations for building capacities of staff of MDAs and the legislature to increase budget utilisation and appropriation; to support capacity building efforts of CSOs to better engage with the budget process; and to make financial allocation for tracking the budget and evaluation at all levels.

Awaiting Deliverance

As Nigerians patiently wait for the National Assembly to review and pass the 2008 Appropriation Bill before the end of this month, a vital issue comes to the fore.

No matter how well-crafted or descriptive the budget may be, if it does not translate into meaningful, visible development and growth for the people, then all the anticipation would have been in vain.

Nigerians are tired of waiting for leaders to try and make their money work for them. This budget may have the highest figure so far in the country's history, but if it cannot improve the life of the smallest citizen, the trillions budgeted may appear wasteful and misplaced. That cannot be allowed to happen again .