By Rafiq Raji, PhD
After much ado, the Nigerian legislature finally passed the government’s budget for the 2017 fiscal year in May, almost five months into the period. For the umpteenth time, the budget was passed late. Had the executive submitted the budget on time, it could have been passed earlier, reckons the legislature. The lawmakers could have been sprightly regardless. They are both to blame.
Time costs money
Although making into law the government’s spending plan almost mid-year into the fiscal period did not hamper its activities (the 2016 appropriation law allowed for spending till then), there were costs. Besides, the lagged spending could have created more value if it had been dispensed with as originally planned. The time value of money, one of the first lessons one learns in finance, is often not contemplated with the seriousness it deserves in public circles. Incidentally, some of the officials and legislators who clearly give it no consequence in their public functions, are not similarly wasteful with their own resources. It is simple really. Money not appropriated for almost six months into the fiscal year could easily have created value of at least half the average annual inflation rate, proxied by the prorated return that could be earned from government securities during the period; currently yielding between 16-20 percent. In the public context, the time value of money is more encompassing than that, however. Myriad procurement and construction contracts that could have been paid for, with the value they create subsequently trickling down to numerous other entities in their respective value chains, could easily have metamorphosed much more further afield. A simpler instance is how wages by the beneficiary entities to their workers translate into money for food staples, school fees, and so on. Point is, there are huge monetary costs to delaying the preparation and passage of the budget.
Realpolitik at the outset is best
Tipped off by a whistleblower, the police raided the house of Danjuma Goje (an influential senator and chair of the Senate’s appropriation committee) in April, carting away valuable documents and monies. In his fightback, the clearly infuriated senator wondered if the budget might not suffer further delays by the police action. His reason? Some of the documents taken from his house were purportedly related to the budget itself. A charge the police fervently denied. Sensing the police might have stirred up a hornet’s nest, the executive branch quickly ordered them to return Mr Goje’s belongings. That is, even as some were potentially incriminating. Had he not been so crucial to the achievement of the government’s goals, some wondered if they might have been as accommodating. Still, the actions of the police in bothering Mr Goje at such a crucial time were clearly impolitic. With the budget now passed into law, might Mr Goje be again bothered? That is for him to worry about.
The point here is that in addition to the executive not preparing the budget on time and the naturally slow pace of the legislative process, it could still have been passed into law much earlier if similar wisdom had been applied at the very beginning as well. For instance, the senate president, Bukola Saraki, whose support is even more crucial to ensuring the incumbent adminstration is able to get its sponsored bills passed and so on, was made an enemy of at the outset of the administration. As Mr Saraki still battles a false assets declaration court charge, some of the holdups at the Senate related to approving executive appointments (that of the anti-corruption czar for example) and other business the executive needs legislative approval for, could easily be adjudged as its own institutional response to what it rightly believes is an assault on its independence. The Senate was likely to use whatever leverage at its disposal in a fightback. So even as the curtains have now been drawn on this most recent executive-legislature drama, it is dearly hoped both sides would for all our sakes apply the lessons to their future dealings.
Earlier and quicker next time
Fortunately, Mr Saraki has admonished the government to submit the 2018 budget on time to avoid a repeat of this year’s tardiness, by September, say. It should probably sound the bells months before. And if when the time comes, the executive does not act responsibly, the legislature should halt consideration of all the administration’s business with it until this is done. More proactively, the legislature may need to create a bipartisan budget office of its own. To stir the executive into action if it drags its feet, the lawmakers could even propose a “shadow” budget for debate. Amidst the uproar that would likely ensue, the fabled slow-turning wheel of government might miraculously pick up steam.
Published in my Premium Times Nigeria column on 14 May 2017. See link viz. http://opinion.premiumtimesng.com/2017/05/14/2017-budget-counting-the-costs-by-rafiq-raji/