David Okelue Ugwunta, Ph.D., is the Enugu State Honorable Commissioner for Budget and Planning. In this interview, he explains the budgeting process, measuring the efficiency of a budget and other budget allied issues. Dateline: March 10, 2022.
There seem to be so much politics around the preparation and presentation of budgets, nationally & at the state level. Why is this so?
Before a budget is prepared, the Medium-Term Expenditure Framework (MTEF) is considered and approved by the State House of Assembly. Safe to say that the MTEF is drawn from the Medium-Term Sector Strategy (MTSS). Also, in preparing the MTEF we take a look at the performances and utilisations of previous allocations to ministries, departments and agencies, as well as projections for revenue. The MTEF gives an idea of what the total budget size will be. Once the Medium-Term Expenditure Framework (MTEF) is considered and approved by the State House of Assembly, we issue call circulars to all Ministries, Departments and Agencies of government. The Call Circulars contain ceilings of a specified capital expenditure allocations, information on revenue projections and recurrent expenditure expected to be provided for in the budget by MDAs. In preparing the budget, there is always a specific allocation. This is because, for instance, MDAs just like when an individual is asked to write down what they want to do, their list might exceed what could be budgeted, but when a specific amount is allocated, MDAs will make provisions for activities based on the allocated amount. This helps in prioritising the items in the budget knowing that there is a ceiling based on a specified amount allocated. It’s now left for the MDAs to stipulate projects they want to embark on and then submit to the Ministry of Budget and Planning for collation and discussion.
We also organise Bilateral Discussions, where Management (Commissioners, Permanent Secretaries, their Directors of Administration, Accounts, Planning Research and Statistics) of MDAs and the State Budget Committee headed by the Hon. Commissioner, Ministry of Budget and Planning and consisting of the heads of Ministry of Finance & Economic Development, the State Economic Planning Commission, the Office of Accountant General and the State Internal Revenue Service come together to discuss MDAs submissions. In the course of the Bilateral Discussions, we find out if they’re providing for all staff of their Ministries and their promotions as at when due, we can take a look at their capital provision and also make sure that pending/ongoing projects come first before the new ones to ensure that ongoing projects are completed. We also look at their revenue projections in the case of revenue earning MDAs. At the end of the Bilateral Discussions, there is an agreement and the MDAs signs off on it. After which the Ministry of Budget and Planning then collates the submissions and the proposed budget is presented to the State Executive Council by the Hon. Commissioner for Budget and Planning where the submissions will be ratified and the Governor then presents to the House of Assembly. At the House of Assembly, Committees of the House will also invite MDAs and ask them relevant questions pertaining to their budgetary provisions. After being contented with the provisions the House can then pass the budget and returned to the Governor for his assent after which it then becomes a law.
So, I have no knowledge of the influence of politics in budget preparation, well unless you are referring to the national budget and on which I can’t talk on. I’m only aware that the Governor is very particular about the development of the state and that he tries to ensure that projects are earmarked for the 3 Senatorial zones in the State depending on priorities and policies. For instance, in the 2022 budget there is a one billion naira provision for interventions in road for each of the 3 Senatorial zones aside from specific projects in the budget. The essence of this provision is in case an emergency comes up, it can be attended to from it.
Do you think that the public fully understand the importance of the budgets and that they participate well enough in its preparation?
In as much we can say that citizens understand the role of budget in governance, however a lot still needs to be done because in most cases, people misconstrue budgeting and they feel that once a budget is prepared, passed and signed into law, it’s as good as implemented, but in most cases, there is a very huge diverse between budget preparation and implementation. For instance, when we provided a budget of 186 billion naira in 2022, it doesn’t mean that the 186 billion naira is sitting in a bank vault waiting to be disbursed.
The question is, what comes in every month from the revenue sources?
Firstly we talk about the internally generated revenue, that is the taxes and other payments the state government generate from the state, the allocation from the Federal Accounts Allocation Committee, and then the capital receipts (debt/grants) aspect of it. So, you can now see that what you get is what you spend on a daily and monthly basis and that’s why we draw a cash management policy to make sure we track how much we’ve realised and how it will be expended around recurrent and capital expenditures. In a month for instance, we pay salaries, we give subventions to subventable agencies because they require it. Once that is done, we provide overheads of MDAs, the remaining funds are usually used to fund the execution of capital projects. Because Enugu state government believes in the welfare of the citizens and in respect to welfare, the workers in the state need to be paid first, and of course the state has maintained continuous payment of salaries in line with the latest minimum wage even when other states are revising their minimum wage. As we speak, the salaries of all civil servants in the state for the month of February have been paid and projects are also ongoing.
This kind of interaction (referring to the interview) is also important so that the public can understand more about budget processes and that not all items provided for in the budget may be implemented at the end of the fiscal period. Budget implementation is also subject to availability of resources / fund and of course the government have good intentions of implementing any item in the budget, but because all the resources are not available, government begins to prioritize the items in the budget and attend to the more pressing ones. I think there is still need for more education so that the people, the citizens can understand. We do our best to carry the people along which is why throughout the budget processes, we engage the citizens. Asides from the daily engagements where people walk into the ministry/budget office with questions regarding budget and the random questions on the social media,
we have provisions for citizens’ engagements in the budget processes. During the budget preparation “citizens’ engagement” we reached out to stakeholders cutting across Traditional rulers, President Generals of town unions, leaders of religious and faith based organisations, youth organisations, civil society organisations and others in a town hall meeting, then we get their inputs into the budget, because there is also what we call the citizens nominated project, where citizens suggest projects they want the Government to handle. For examples the reconstruction of Agbani road going on right now was suggested by citizens that participated in the last citizens’ engagement in Nike Lake Hotel. The construction of the flyover at T-junction Abakpa was a citizens’ nominated project and many more. So, this Government listens to citizens.
The Government of Enugu State led by Rt. Hon. Dr Ifeanyi Ugwuanyi, is committed to carrying his citizens along throughout the budget processes. Due to the bulky nature of the budget document which is about 300 to 400 pages, citizens find it difficult to go through the document page by page, so, we now streamline it to produce a “citizens budget” which is more of a pictorial presentation of where funds are expected to be generated from and what the funds will be used for. There is also the quarterly budget implementation report as well as the citizens accountability report which shows what item have been implemented and achieved at the end of the fiscal period. These are ways in which we carry citizens along and let them participate in budget process. Irrespective of this, I still feel there is need to engage the citizens continuously and more because the population grow every day and it is difficult to cover the entire population that are interested in participating in the budget process at a single or multiple engagements.
Are there issues to be worried about in the 2022 budget, either at the state or national level?
The major challenge in the preparation and implementation of budgets at both the national and state level is the unavailability of needed resources/funding and the 2022 budget may face it. This is the reason for percentage performance in budgeting. For instance, the 2020 budget had 72% performance, meaning that out of the 146 billion earmarked for 2020, only 112 billion was achieved. The Government didn’t achieve100% of the budget because of lack of or lean resources. If the resources were available, we could strive to implement the budget 100%.
Can you summarize the present budget Enugu State is running and how Enugu’s budget has fared so far, especially since you assumed office?
It’s early to assess the 2022 budget, because this is just the 3rd month, almost the end of the first quarter of 2022.
However, we produce quarterly budget implementation report, whereby we sum up and present all inflows into the state and then all outflows in terms of expenditure by the end of each quarter. It’s only when we’re able to do that, we can now attach a percentage to what we call budget performance. We do the budget implementation report every quarter then we do the final wrap up in the fourth quarter which now gives us an idea of how the budget is faring. So far, the state government is implementing the budget. The state government has been paying salaries as at when due in terms of personnel, the State Government has also been providing resources for the day to day running of the offices. Now capital projects are also ongoing. The capital projects that we procured since last year including Agbani road project that’s been reconstructed currently, the flyover at T-junction Abakpa Nike, work is currently ongoing at these sites, the remodelling of old government lodge, the Nsukka Stadium, the cottage hospitals and others. New projects have also been awarded, the State Government is going to build additional type 3 hospitals, at Aninri, Awgu and another at Uzo-uwani LGAs.
How does the Ministry plan on using the 2022 annual budget to implement poverty reduction strategies, employment generation and wealth creation?
Well, this is part of the 8-point Agenda of Governor Ugwuanyi’s Administration and the government is interested in Poverty Reduction. The Government doesn’t deal with the citizens directly, there are agencies of government established for representing the government in these areas. These agencies include the Ministry for Human Capital Development and Poverty Reduction, having their functions and activities in respect to addressing the issue of poverty and achieving its reduction, the Small and Medium Enterprises (SME) Centre, having programmes and policies on poverty reduction, support to emerging SMEs and youth employment, Ministry of Youth and Sports, Ministry of gender and social development, Ministry of Agriculture amongst others. These government agencies are saddled with responsibilities of implementing programmes and projects that will directly affect the youth, the poor and the vulnerable.
Now the NG-CARES which means Nigeria Covid-19 Action Recovery and Economic Stimulus, is running concurrently across the 36 States of the Federation and Enugu State is part of it. The NG-CARES have delivery platforms and result areas which addresses the poor and vulnerable and helps them recover. The 3 delivery platforms of the State include, The FADAMA, The Small and Medium Scale Enterprises Centre and The Community and Social Development Agency. NG-CARES is a World Bank Assisted Program aimed at helping states and citizens recover from the negative consequences of Covid-19 and Enugu State is benefitting, so we’re at the fore front of tackling the issues of poverty reduction to the best ability of the State.
This year’s budget is at least 9.9% higher than last year’s budget. One wonders what the reasons are.
The reason is simple. Of course, you know there is inflation, and the exchange rate and prices of goods in the market are no longer the same. A project that was worth one million last 2 or 3 years may cost 1.2 million naira or more to execute right now. Secondly this government is winding down, the tenure is almost coming to an end, so the government is interested in completing all ongoing projects and making a mark, this is the reason the budget is titled Budget of Sustained Growth and Consolidation. Now government is thinking of sustaining the growth recorded in previous years and then consolidating on what been achieved, hence the 9.9% increase in this year’s budget. Enugu state government also intends to do more programs and projects and that’s why the capital budget is at about 115 billion naira. This is because the government is interested in finishing the construction of ESUT College of Medicine at Igboano, equipping it and ensuring that it’s set up and academic activities commence there this year. The water sector will be getting a lot of boost. The government is at the verge of delivering the 9th Mile crash program, which has 8 boreholes that will be powered by Solar. It is already functional, we’re just at the verge of finishing them and connecting them to the supply into the city. The 3rd National Urban Water Sector Reform Project is also on. These are strategic areas which the government wants to deliver on. Construction of roads both urban and rural. The NG-CARES is also among the list of projects the government is also committed to. These are part of the reasons why there is the increase in the budget. Government also intends to operationalize the Type 3 hospitals built, 7 of them have been completed in seven locations including Udenu, Ezeagu, Awgu is a cottage Hospital with isolation wing, Igbo-etiti, Isiuzo, Nkanu East, and then about two other Locations. In a bid to operationalize them, the government will have to make investments in recruitment of staff and relevant skills that will work there as well as recruitment in other sectors of the state economy. These are part of the things that will increase the need of Government. For instance, the recurrent expenditure of the last budget (2021) was about 68billion but this year, it’s 71billion. Personnel expenditure was about 28billion as of then but this year it’s 31billion.
When the state expenditure and income are placed against each other, what progress would you say the state made the previous year?
We are still waiting for the office of the Accountant General to publish the Audited Financial Statements, which will reflect the revenue and expenditure of the State in 2021. It’s only when the audited financial statement is published that we can know the level of performance and progress in terms of percentage. But for the year of 2020, the budget performance percentage was 72%, in 2019 the performance percentage was 80%.
There are speculations that some projects contained in some past budgets of Enugu State didn’t see the light of the day. Were the budgeted funds returned?
Funds to implement the budgets are not given in advance. Like I said earlier, in 2020, 72% of the budget was achieved, about 28% wasn’t achieved. Funds are not dished out in advance; we implement as we generate funds so, the question of returning funds doesn’t come in here. This is called Cashbacking of expenditure. Any project procured by this administration is paid for. When contracts are given, the government pays as the contractor gains mileage in execution. The government provide funds based on activities, the budget and the spending are activity based. It’s not a situation of excess funds or unutilised funds. If for instance the Ministry of works is ready to start the construction of a particular road and the Executive Council approves 100million, the contractor mobilises to site. The government can give initial advanced payment to the contractor, about 20% of the approved funds to start the project, no other funds are given to the contractor until he has finished utilising the funds that have been given to him and he gains some mileage in implementing the project, after that he will generate certificate based on the activities carried out on the project. The Ministry will supervise it and then the Government will pay. The budget implementation is purely activity based, we monitor activities and implementation and then pay.
Seeing that Governor Ugwuanyi’s administration terminates on May 29, 2023, will he pass another budget for 2023 or will that be the duty of the next administration?
Yes of course, he will pass a budget for 2023, it’s an annual activity. But whatever budget he passes will not be fully implemented by him. Government is a continuum, whoever succeeds him starts with the same budget, perhaps midway into the new administration, his successor can now revise the budget, depending on his own priorities. Whatever budget passed in 2023, the Governor will try to implement as much as he can and time permits before he leaves the office, so whomever comes in will continue with that Budget.
How does the Ministry intend to improve the funding of some sectors?
There are standards, the United Nations have standards when it comes to most of these thematic areas that are in the social sector, like education, health, gender issues, youth and sports development and all that. As a State we try to match those standards in budgetary allocation and funding.
So far have you been successful with matching those standards?
Well, we do our best. Of course, no implementation is 100%. In education, basic, secondary and tertiary education, the government have been doing so much. This government has constructed and reconstructed about 1,355 classroom blocks with instructional and learning materials in various primary and secondary schools across the 17 Local Government Areas of the state that were dilapidated in the past, like the Ekulu Primary School as well as recruitment of thousands of teachers. We support the state-owned tertiary institutions IMT, ESUT College of Education, ESUT, Enugu State Polytechnic Iwollo. This Government is known for making huge investments in critical infrastructures in the social sector, education and health, of course when people are healthy, they can fend for themselves, when people are educated, they can gain employment, become entrepreneurs etc. We take such investments serious.