The Role of Nigerian National Assembly

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THE ROLE OF NIGERIAN NATIONAL ASSEMBLY IN THE BUDGET PROCESS A PAPER WRITTEN BY DANIEL OMOLEWA OGUNSOLA APRIL, 2009 Table of Contents 1. Executive Summary3 2. Introduction4 3. Balance of Budgetary Powers5 4. The National Assembly in Nigeria’s Budget Process7 4. 1. Legal Framework8 4. 2. Institutional capacity10 4. 2. 1 Effective Appropriation Committee Capacity10 4. 2. 1 Establishment of a Budget Office10 a. Journey So Far11 b. Challenges11 c. Prospects11 4. 3 Political Will of Individual Legislators11 5. Budget Implementation12 6. Conclusion14 1. Executive Summary The paper seeks to analyse the three identified variables as determining the actual role of the Nigerian legislature in the budget process. The Nigerian budget process under the military has a history of executive dominance, very poor public expenditure management and lack of accountability and transparency. This provides the background to the emerged democratic budgeting process and ultimately explains the various challenges being faced by the legislature and the public in the process of scrutinising the budgets of the country. Under military rule, the budget process was mostly characterised by executive dominance, poor financial management, poor implementation, and generally a lack of transparency and accountability. Since the advent of our recently evolving democratic experience, the expectations are that a new culture of democracy will be institutionalised to ensure that the allocation of public resources is in line with the needs of the population. Amongst the new actors that are now jostling for a voice in budget policy are the country’s National Assembly and civil society organisations (CSOs). Budget implementation plays a very crucial role in the realization of the primary purpose of government, which is the guarantee of the security and welfare of the people. There is need for a clear departure from the regime of corruption and waste that have been entrenched in the Nigerian public finance system in order for this lofty dream to be attained. This therefore mandates the legislature to push the frontiers of citizens, pro-poor budgeting a step further, by not only reducing some estimates of the executive, but also inserting provisions for developmental projects to be cited in each federal constituency being represented by the legislators. Sustainability of this new legislative development biased initiative will depend largely on new capacities including innovative legislations to be put in place to ensure proper scrutiny of budget implementation, through its effective monitoring and continuous critical evaluation. . Introduction According to Chief Ken Nnamani, the immediate past President of the Nigerian Senate, the Legislature is a co-manager of the Natural Economy “I have emphasised the importance of a credible legislative framework to complement executive actions for economic development. Economic development is an interaction between culture, insititutions and economic behaviours. This interaction needs to be structured and coordinated in order to achieve the desired result. Law performs this work of coordination. As lawmakers our responsibility is to help provide frameworks that enable high quality coordination of economic activities” Budget implementation plays a very crucial role in the realization of the primary purpose of government, which is the guarantee of the security and welfare of the people. Capital projects provide government with an opportunity to impact on the lives of the people in a positive way. However, recent experience on the implementation of capital budgets in Nigeria leaves much to be desired with increasing returns of unspent funds to the Treasury year after year. As such, the infrastructure, capital components of education, health, etc of the Federal budget are left unspent while the indicators in the sectors continue their negative dive. Thus, the link between policy, planning and budgets in the current approach to budgeting through the Medium Term Expenditure Framework continues to weaken through the inability to implement capital budgets. Also, Nigeria’s quest to meet the Millenium Development Goals (MDGs) is frustrated by this development. 3. Balance of Budgetary Powers When presenting the 2006 budget to the National Assembly, the then Senate President, in his speech stated that “ The National Budget is an important policy tool, hence the constitution requires Mr. President to present, and the National Assembly to approve, estimates of the revenues and expenditures of the Federation for the next financial year, which in Nigeria follows the lunar year. The power to approve includes the power to analyse, debate, amend and enact into law the estimates presented by Mr. President. The principle of separated institutions sharing power” is clearly illustrated in budgeting”. During the 2009 budget cycle, the legislature not only reduced some important expenditure items as proposed by the executive, the National Assembly also took liberty to increase allocation for several items and introduce several new items into the budget. The National Assembly, as stated by the Chairman of the Committee on Appropriation, however made effort to comply with overriding macro-economic projections of the executive and endeavoured to stay within the general principle of the budget. In my own opinion, the egislature pushed the frontiers of citizens, pro-poor budgeting a step further, by inserting development projects to be cited in each federal constituency being represented by the legislators. There are however, some of the insertions of the legislature that are subject to public protestations. It was widely reported in the Nigerian press, that the President Umar Musa Yar’adua may have stated that the courts would have to decide the expediency of the legislature outrightly removing some items and not stopping at that, still inserting additional expenditure items. The Guardian learnt yesterday that the presidency has obtained advice of the office of the Attorney-General of the Federation and may head to court “soon” to seek judicial interpretation of the powers of the NASS to reduce budgets as proposed and increase theirs so arbitrarily. The NASS members allegedly increased their votes from N64. 517 billion to N111. 38 billion but cut drastically votes for many of the projects the presidency is to implement” 4. The National Assembly in Nigeria’s Budget Process Budget Preparation As I observed during the Budget and Parliament Course, on the discussion forum, in South Africa, the Committee on Finance and its Joint Budget Committee is involved in the budget process before being tabled in Parliament. I understand that portfolio committees also report on departmental annual reports in time for these reports to be taken into account in making the next budget allocations. In Malawi, it was stated by one of the participants that the parliamentary Budget and Finance Committee meets the Minister of Finance to discuss the Draft Budget Estimates before its presentation in the House, the Committee giving its advice on what should be modified or amended after consultations with other stakeholders. In Canada, the Finance Committee take hearings on an economic and fiscal update that is presented ahead of the budget. Recommendations are then passed to the executive. A participant described in another discussion how the Rwanda Parliament passed a budget law which describes all processes which must be followed by all institutions during the budget process. It should be stated that in Nigeria, a standard budget practice is evolving, at the moment, the legislature is not involved in anyway in the preparation of the budget document, it is done between the Ministry of Finance, the Federal Budget Office, Ministry of National Planning and the respective MDAs. A budget process bill has once been introduced in the Senate to stipulate the procedure and processes, including time frames to be adhered to by each stakeholder in the budget process, it has yet to see the light of the day. However, there has evolved a regular time-table, which is being followed by the National Assembly in the appropriation process, there is still need for legislation to specify the role of each party in the budget process from evaluation of previous budget cycle, rolling over into the present budget cycle. Clearly from the provisions of Sections 80 and 81 of the 1999 constitution, appropriation powers are vested on the National Assembly to approve federal budget. The Constitution, in Section 80 (3) states: “No money shall be withdrawn from any public fund of the federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly. ” Section 80 (4) further states: “No money shall be withdrawn from the Consolidated Revenue fund or any other public fund of the Federation, except in the manner prescribed by the National Assembly. In Sections 83 (1) and (2) it further vests the power to provide for Contingencies Fund and Supplementary Estimates where the need arises. It is therefore clear that the Constitution has given the Legislature enormous powers in the budget process. The House of Representatives (and its appropriation Committee) has a crucial role to play in ensuring that appropriated funds are used to improve the living conditions of the people rather than being returned to the Treasury. 4. 1. Legal Framework A comprehensive legal framework is generally believed to be an essential component of an effective and enduring budget system. This framework can exist as part of a country’s constitution, or can be adopted through other legislation. A key goal of a well articulated legal framework is to help ensure that adequate checks and balances have been established for the budget system. Thus, the legal framework can ensure that there is a role for the legislature and for independent auditing institutions, guarding against the total dominance and potential abuse of the budget system by the executive. A legal framework that clarifies the roles and responsibilities of the executive and legislative branches in the budget system, and of independent institutions such as the Auditor General, is essential to establishing accountability. The clarification of roles and responsibilities can also extend to the different levels of government, providing an indication of which tier is responsible for delivering which public services or which revenues can be raised by the different tiers. A legal framework should also establish the rules and regulations that guide the budget decision-making process and the management of government revenue and public expenditure. Even simple rules can be important, such as setting the key dates in the budget process and defining the reporting obligations for the executive. These rules also can dictate the scope of the budget or spell out the often complex procedures surrounding the procurement of goods and services by the public sector. Approaches vary, however, with some egal frameworks including a significant number of procedural details and others giving more flexibility to government managers. Even in the latter case, the legal framework will include a minimum set of requirements to ensure that managers can be assessed and the public interest protected. Ideally, the budget should capture all of the financial transactions of government — the total revenues to be collected, funds to be expended, debts to be repaid, and new and old liabilities to be incurred. The full picture of the government’s financial status cannot be captured if some programs, agencies or commitments are not captured in or outside the budget simply referred to as “extra-budgetary commitments” in the Nigerian Public Expenditure Management mantra. 4. 2. Institutional capacity 4. 2. 1 Effective Appropriation Committee Capacity An effective Appropriation Committee should be well equipped and staffed. As presently constituted, the House of Representatives, with about 20 permanent staff, is one of the best staffed Committees of the House of Representatives. However, this is far to few considering the huge responsibility upon the committee by the Constitution. 4. 2. 1 Establishment of a Budget Office Strategic legislative monitoring and evaluation of capital budget implementation has become an imperative if the living conditions of Nigerians will be improved. The Appropriation Act being a law is not to be breached through non implementation of its estimates. And this calls for new legislative capacity to ensure that the provisions of the Appropriation Act are implemented at least to the extent of available resources. The legislature require improved capacity to ensure the fulfilment of the citizens aspirations. The Appropriation Committee is tasked with ensuring that the people get value for money and public funds are managed, administered and disbursed according to authorisation. So far in the Nigerian legislature, issues regarding Public Expenditure Management, is presently saddled with the Appropriation Committees of both houses (being a bi-cameral legislature), and the Public Accounts Committees (PAC). However, this capacity is inadequate. There is therefore an urgent need to establish the National Assembly Budget and Research Office. Barry Anderson, in his paper ”The Value of a Non-partisan, Independent, Objective Analytic Unit to the Legislative Role in Budget Preparation” he says that a legislative budget unit, “In its most basic terms, an independent analytic budget unit can provide information to put the legislature on a more equal footing with the executive” And also, it simplifies complexity, promotes transparency, enhances credibility, promotes accountability, improves the budget process, Serves both the majority and minority, and provides rapid responses. a. Journey So Far The NABRO Bill, has been in the legislative works since the advent of democracy in Nigeria in 1999. However due to several possible factors, it has suffered defeat in each of the Assemblies up until now. At present, the National Assembly Budget and Research Office Bill was passed by the House of Representatives and is therefore awaiting passage by the Senate, once this stage is over, the bill goes for harmonization in case there are differences between the two houses’versions, for onward transmission to the President of the Federal Republic of Nigeria, for assent. The Bill then becomes a law and the National Assembly Budget and Research Office would then be established. There appears to be high political willingness on the part of the individual legislators to ensure that NABRO takes off. This is evident in the budgetary provision that was included in the 2009 budget for the take off of the office. b. Challenges The general lack of understanding of bureaucrats and some legislators in the operations of NABRO has been the major setback. c. Prospects When NABRO is finally established, it will provide the National Assembly with objective, timely and non-partisan analysis needed for economic and budget decisions and with the information and estimates required for use in the budget process. 4. 3 Political Will of Individual Legislators More than ever, there is a high level of determination and awareness among legislators in the Nigerian National Assembly to ensure an effective budgeting system that is strong enough to deliver the “dividends of democracy” which is effective service delivery to the citizens of Nigeria. In various fora, the Speaker of the House of Representatives has clearly stated the position of the House of Representatives to reposition the PEM along the path of input, output and outcome. This shift in paradigm has given the House of Representatives a clear direction in the past two years and they have exhibited a high spirit in the various leakages in the public financial system that have been discovered by them and efforts made to block them. For example, before the present budget season, the House of Representatives leadership had made several public statements revealing the existence of several accounts of the Federation, that have never been included in the revenue framework of previous budgets, yet being expended by the executive in contravention of the provisions of section 80 of the constitution. 5. Budget Implementation There has been growing dissatisfaction amongst the parliamentarians over the performance of the executive in the implementation of the budget. For example, during the 2007 budget cycle, the National Assembly rated the budget implementation at 60%, the 2008 budget cycle didn’t attain as much performance rating, with a 30% mark given by the legislature. This however became a subject of conflict between the executive and the legislature, passing the buck at the table of each other. Part of the reasons adduced by the executive for this low budget implementation performance is that Ministries, Departments and Agencies of government didn’t fully understand the provisions of the Public Procurement Bill usually called “Due Process”. These issues are being fine-tuned to avoid the pitfalls of last year. In order to forestall this occurrence in the 2009 Appropriation cycle, the legislature, while passing the appropriation bill inserted some legal provisions in the Appropriation Act, to ensure that periodical reports are submitted to the National Assembly by Ministries and Departments who are charged with the responsibilities of executing the budget. Some of the sections are; Section 6 (2) The Accountant General of the Federation shall forward to the National Assembly full details of the funds released to the government agencies immediately such funds are released” Section 7 The Minister of Finance shall ensure that funds appropriated under this Act are release to the appropriate agencies, and organs of government as and when due, provided that no funds from any quarter of the fiscal year shall be deferred without prior waiver from the National Assembly. In the foregoing provisions, beyond the duties placed on the Accountant General and the Minister of Finance, reports from MDA’s on received disbursements will further verify whether the two officials have complied with their duties. Section 25: (1) The Federal Government shall cause to be drawn up in each financial year, an Annual cash plan which shall be prepared by the office of the accountant general of the federation. Section 26: The Minister shall within 30 days of the enactment of the Appropriation Act, prepare and publish a disbursement schedule derived from the annual cash plan for the purposes of implementing the Appropriation Act. 6. Conclusion Improved budget implementation will lead to improved policy implementation and better planning. There is an inextricable linkage between planning, policy and budgeting in the Medium Term Expenditure Framework, which is being practiced in Nigeria at the moment. An improved budget implementation will also lead to enhanced service delivery by government to the people, it would also produce reduction of waste and inefficiency in public service delivery. To ensure improved budget participation and a harmonious flow of budgetary information and performance in Nigeria, the legislature need improved capacity. The role of the legislature in the process of budgeting, macro-economic planning and policy implementation cannot be over-emphasised in the emerging global economic realities. References •The Third Way: Leading Democratic Change through Institutional Interdependence – A selection of speeches of Senator Ken Nnamani. Edited by: Dr. Sam Amadi, KNCLD, (2006) •National Treasury, South Africa 2005, McGee (2007), p. 21 •“Due Process and Procurement in the Nigerian Public Sector” Dr Chika N. Oguonu, https://www. hollerafrica. com/showArticle. php? catId=1&artId=248 The Role of Parliaments in the Budget Process, Edited by Riccardo Pelizzo, Rick Stapenhurst and David Olson, World Bank Institute, (2005) •The Value of a Nonpartisan, Independent, Objective Analytic Unit to the Legislative Role in Budget Preparation, Barry Anderson, World Bank Institute, (2005) • “Due Process Mechanism and Digital Opportunities” Paper Presented to the University Community at Princess Alexandria Auditorium, University of Nigeria, Nsukka, Ezekwesili O (2005) •Parliament and the Budget Course– http//apps. parliamentarystrengthening. org/Forum

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