Minister of Finance, Mrs Kemi Adeosun. PHOTO: CNBC Africa
1t 2017 Capital Votes Plan, drawn from the Federal Government Consolidated Revenue Fund (CRF), and another N100b raised through the newly introduced Islamic lending style for project-specific investment platform- the Sukuk Bond, floated by the Debt Management Office (DMO), where contractors handling certain roads infrastructure across the six geo- political zones were mobilised to return to site.
The 2017 budget has been fraught with several challenges, including late passage and assent (June 2017); poor revenue performance (shortfalls) against projections and irregular releases of votes, apparently arising from shortfalls.
These developments, particularly that of irregular or unplanned capital votes releases, according to economic and engineering experts, portend great danger for the country, including poor and late service delivery; increase in cost of projects and loss of weather opportunity among others.
This grim fact is confirmed by the draft report of the 2017 Second Quarter Report, by the Director General of the Budget Office of the Federation, Mr. Ben Akabueze, obtained by The Guardian, yesterday.
According to the Report, as much as 52.58 per cent of projected revenue failed to materialise in the second quarter, thus making implementation of projects a challenging task for the government.
It said in part: “The execution of the 2017 budget in the second quarter of the year was very challenging on several fronts, mainly due to the extension of the 2016 capital budget to 5th May, 2017, effectively halting execution of the 2017 capital budget in the first half of the fiscal year.
The execution of the 2017 budget was also adversely impacted by the late passage of the budget, as well as, the shortfall in expected oil and non-oil revenue receipts. Government, however, continued to meet its non-discretional expenditures.
The Guardian learnt that of the N1.2t so far released, the sum of N350b was released piecemeal between July and end of October, spread among different projects to different MDAs in the new financial management strategy of the current administration based on priority.
The Finance Minister, Mrs. Kemi Adeosun, and her counterpart in the Ministry of Budget National Planning, Senator Udoma Udo Udoma, have insisted that due to the leanness of revenue available for project implementation, the quarterly capital votes arrangement cannot be adopted, hence the decision to adopt the “release-as-you get” strategy.
Adeosun, while responding to a question on this matter early this year had said: “Going forward, what we are doing is that anytime we have enough funds, we immediately hold the cash management meeting and decide on projects to deploy the funds to. That is our strategy.”
Penultimate week, Adeosun while receiving a French investors delegation to Nigeria in her office announced plans by the Federal Government to release a limited sum of N750b for the execution of 2017 capital votes. The action came at the back of advocacies made by some economists, including the federal authorities for the re-setting of the country’s budget cycle back to the January to December 31 calendar.
The minister followed it up last week with a declaration (while at the National Assembly defending the ministry’s 2018 budget) that the N750b votes had been cash-backed and was being credited to MDAs accounts.
This statement drew the ire of experts, who felt Adeosun was taking the whole country for a jolly ride. Some of them insisted that no such amount has been released, claiming that the minister was stampeded to say so because of the apparently poor implementation level of the 2017 budget, which in their estimation, hovers around 15 per cent.
One of the experts, Dr. Ogho Okiti, an economist, and President/CEO of Time Economics Ltd, said his findings revealed that the MDAs were yet to be credited, contrary to the minister’s claims.
Okiti, a former presidential Chief Economic Adviser, also stated that the new financial management strategy adopted by the administration, whereby capital votes are released on piecemeal basis was breeding uncertainty and unpredictability, which have negative implication on projects execution.
“From my findings two days ago from some directors of finance and accounts in the MDAs, their accounts have not been credited. What that tells you is that the amount was not cash-backed as claimed by the minister. I think she was stampeded into making that declaration, perhaps in the face of the apparent poor budget preparation and execution. Nothing has changed with this economic team. It is the same over- optimism of revenue projections, revenue fall and poor implementation. The way we prepared and implemented our budget has not changed: the same weak and mediocre officials are still there. That’s why, assuming the N750b is even cash-backed and credited, if you have a budget size of over N7t and you are doing N1t of capital, how can you be satisfied because that’s just about 15 per cent of the entire budget? How can anyone be satisfied because that’s where mere mortals like me and you benefit. The rest is for salaries and flying for climate change accord conferences.
“Again, the piecemeal strategy of releases of capital votes has a negative impact on implementation because of uncertainty and unpredictability. This is so because, contractors cannot continue work even with borrowed funds because they are not sure of the next time they would get paid. That is what a planned quarterly release arrangement does. That arrangement is a basis of information and expectation with which the contractor can work with,” Okiti added.
Another economist and Chief Executive of Global Analytics Consulting, Tope Fasua, aligned with Okiti’s position, but went further to say that only N300b has so far been cash-backed in the face of huge borrowings, and expressed shock at what is happening to the country.
His words: “It’s extremely depressing, to say the least, that in the face of the large sums of monies that we have been raising from both the local and international markets, only about N300b could be said to have been released for implementation of capital projects in a whole year. It would appear as if there’s a monster somewhere that is devouring all our generated revenue, as well as, borrowed funds. This is unacceptable,” Fasua stated.
He equally queried the piecemeal capital votes’ releases, saying it slows down implementation.
Speaking in the same vein, the outgoing President of the Nigerian Society of Engineers (NSE). Otis Anyaeji, described the Piecemeal release of capital votes as a recipe for disaster and failure.
“Anything that is done haphazardly will lead to further chaos and confusion because everything concerning implementation depends on financing, be it design, procurement, construction or commissioning. They all depend on releases which have to be well planned. There’s no stage of this that can be done haphazardly because they are all linked to capital votes.
“ Therefore, it’s unthinkable that a government that wants to work for development, or provide services for her citizenry would not imbibe a well-planned capital release plan, but depend on a haphazard strategy of capital releases because it has a lot of disadvantages, some of which include: poor quality delivery of projects; delay in completion target; increase in cost of contracts and loss of weather opportunities among others,” Anyaeji submitted.
Attempts to get reaction from Adeosun and the Accountant General of the Federation on issues raised by the experts were not successful. Calls and messages sent to them were not responded to.
The President’s Chief Economic Adviser Dr. Adeyemi Depolu, could not be reached for comments as he was said to be out of the country.
Spokesman of Julius Berger Construction Company, Moses Dukku, declined comment on the impact of piecemeal capital releases on the construction industry.
Most construction companies in Abuja had, however, closed for Christmas holiday.
0 comments:
Post a Comment