The budgeting system has gone through many facets in the Nigerian public and private sectors. While there has been some semblance of sanity and consistency in the private sector, the same can not be said of the public sector. From the initial resistance, especially in the days when the “General Order” was the Holy Grail of financial management in the civil service, to the indescribable current system, it has gone from good to worst. Of course, General Order was a colonial inheritance, but its tenets of promoting accountability were almost watertight. With the ‘indigenisation’ of everything, General Order was shoved aside, and since then, we have been having a free-for-all bastardisation of the budgeting system. It has become what my Ekiti people will call “olukaluku ya mu tere” (everyone comes and takes thier own).
With the perhaps ‘mental laziness’ of those charged with budget preparation, who have become accustomed to ‘cut and nail,’ otherwise known as incremental budgeting, to the new lexicon of budget padding by the National Assembly, the budgeting system in the Nigerian public sector has become a caricature. Not to forget the financial rascality of budget holders, who use the budget as an object of ‘massive oppression’, in fact ‘economic terrorism’, with the arrogant declaration, more often than not, that “it is not provided for in the budget”; it has become a mere assemblage of figures that speak to nothing than the lining of the pockets of the powerful and mighty. It has become one ‘unifying force of ‘sharing’ and ‘pocket allocations.’’
We do know that budgeting, essentially, is to stimulate planning, which is also enhanced through budgetary control to ensure that minimum deviation, if necessary, occurs and to advance reasons for such occurrences, as means of stewardship and accountability have all been sidelined.
One of the fallacious understanding of budgeting is to see it within the narrow perspective of “what you plan to spend in the future.” Unfortunately, this constricted perspective is even advocated by those who purportedly know a lot about budgeting – accountants, and economists. How do I know this? I have had the privilege of facilitating several budgeting sessions and even leading budget preparations in many instances. However, in most of the cases, I have almost always been “the lonely voice crying in the wilderness,” as minds and dispositions are fixated on expenditure.
A story will suffice here, though, at a personal level. A junior colleague, in a distant past, was trying to budget for his monthly expenses using the “what you plan to spend” approach. After several attempts, he became frustrated and tore up all the papers he had been drawing the budget on, because, according to him, the best effort still stood at 170 per cent of his known income. I tried to counsel him to try starting with his known salary, and then deduct priority expenses, until, if he was left with anything, he could apply discretionary means of inclusion or otherwise. I bluntly told him that it is unreasonable for him to be budgeting for “ose igberaga” (the “Week of Bragado”, when he chose to ‘enjoy’ himself to the fullest), or budgeting for “body no be wood” expenses. He didn’t like my counsel.
With the benefit of insight, for a government that is reckless in looking for money through all fronts, income-driven budgeting will be a misnomer. Of course, the recent occurrences in which nearly everything is ‘taxed’ is a confirmation that you cannot trust the adept in incremental budgeting with an income-driven approach.
For the reason of the frustration experienced by my colleague, as described above, many budget advocates started tinkling with the idea of selling the income-driven approach to the government. The justification for such was based on the premise that since you may not be able to spend more than you can generate, the cases of profligacy in budgeting will be subdued by this approach. The truth is that not all companies in the private sector, which may have adopted the income-driven approach, are even doing well at it. One of the factors for such suboptimality is the tendency to exaggerate earning capacity and thereby setting up unrealistic budgets. I recall one budgeting preparation I was asked to coordinate. Having introduced the income-driven approach, the marketing department came up with bogus projections of a revenue increase of more than 400 per cent. When I asked for the inevitable question of the installed capacity of the organisation’s machinery, it turned out that even if it operates at 100 per cent installed capacity, it cannot even generate more than 32 per cent of the projected income.
Further on, when the sudden jump in projection was enquired after, the typical Nigerian answer was given: “We couldn’t do before because the past management did not support or buy into our ideas.” But the funny thing was that the only change in status was a new CEO and one or two top officials. The blame game; you got it!
With the benefit of insight, for a government that is reckless in looking for money through all fronts, income-driven budgeting will be a misnomer. Of course, the recent occurrences in which nearly everything is ‘taxed’ is a confirmation that you cannot trust the adept in incremental budgeting with an income-driven approach. They will continue to impoverish the people, as they look for the ‘maximum’ derivable income. I know that all government agencies complain of underfunding. The question no one is asking loud enough is: where do they get the funds they are stealing? Okay, stealing is not corruption, abi?!
To return budgeting to its intended normalcy, we are now advocating for a purpose-driven budgeting system. Purpose must be well defined and reasonably agreed to by significant stakeholders. It may be a tedious task for the current crop of budgeting officers and preparers to transit to this trajectory, yet it seems the only plausible means of getting out of the mere rituals (apologies to Adeogun Sunkanmi) that our budgeting has become.
Let’s move away from expenditure or revenue-focused budgeting to purpose focus budgeting. Will the government have the courage to ruffle the weather? One can only hope that this will not be drowned by the ‘uninterested’ powers-that-be.
When the purpose is adequately established after a rigorous process, then budget could be channeled towards its real achievement. As it stands today, budgeting is more about spending, and when the spending capacity outweighs the revenue, which is not uncommon with government, especially those with strong ‘economic fundamentals,’ it merely becomes ‘robbing the poor to pay the rich.’
What is essential is not the size of the budget, but to which purpose it is being put. Again, with a government that lives perpetually in denial, they can hardly be held accountable, with no defined goal with which performance can be adjudged. Now, it is easy for government to claim ‘prudence’ when they return 15 per cent of ‘allocations’ to the treasury at the end of the year, even if they had spent over 55 per cent on December 31, with no visible achievement. How different will it be if money allocated to construct 15 kilometres of road is 85 per cent spent, while the work is barely 14 per cent done, as we can match what was spent with the purpose it was allocated? I firmly believe that purpose-driven budgeting that is publicly available for scrutiny will be more helpful than what we have now.
With purpose, perhaps, we may no longer have to choose ‘which potholes to enter’ as we drive around Lagos, and we will not be paying fines for the roadworthiness of a vehicle that is forced to ply ‘vehicle unworthy’ roads. For now, it seems government is just interested in making ‘maximum’ revenue off the people, with no justification. Apart from serial stealing, what other noble purpose do they put the ‘bloated’ revenue into, one may be forced to ask?
Let’s move away from expenditure or revenue-focused budgeting to purpose focus budgeting. Will the government have the courage to ruffle the weather? One can only hope that this will not be drowned by the ‘uninterested’ powers that be.
As usual, I am “JustThinkingAloud.”
Oluwadele L. Bolutife,
A chartered accountant and a public policy and administration scholar, writes from Canada