2021Budget: Legislators grab extra ₦6 billion, damning Niger Delta region, education, health and electoral commissions

The statutory transfer had an unparalleled increase of ₦12.04 billion;

Fifty percent of the increment to statutory transfer went to institutions within the National Assembly (NASS) as additional ₦6 billion;

Sinking funds slashed by ₦20 billion;

There was an upscaling of the National Social Investment Programme (NSIP) by ₦365 billion.

President Buhari kicked off the new year, January 2, assigning the approved 2021 budget of the Federation. The assignment, however, comes after NASS’ ₦549.13 billion naira increment to the budget. What is more? This adjustment to the original ₦13.01 trillion affects at least 93 budget heads.

Of these 93 budget heads affected, 71 had major increments and reductions which sum up to ₦549.14 billion (549,136,971,082). 

This revised edition also featured cuts to budget items, 26 in all summing to ₦170.2bn (-170,161,299,110). However, the 45 additions across the capital and recurrent expenditures worth  ₦719.3 billion (719,298,270,192) were unmatched.  

A ₦12.04 Billion Statutory Transfer Increase, Half goes to National Assembly

Again, NASS increased statutory transfer across institutions by ₦12.04 billion, carving out 6 billion for five of its agencies. Nevermind such funds may better serve the Universal Basic Education (UBEC), NPHCDA or the Independent National Electoral Commission (INEC). 

But before jumping the gun, what are statutory transfers? Statutory Transfers are constitutionally approved expenditures. These funds are voted to certain parastatals for which such transfers are backed up by law. Thus, these institutions receive a fixed percentage of what is accrued to the Consolidated Revenue Fund (CRF) of the federation. This means that such funds are first distributed before allocations to other agencies are affected.

Besides the National Assembly, three other institutions benefitted from this ₦12.04 statutory increment; viz Public Complaints Commission with ₦3.49bn, North East Development Commission (NEDC) with ₦1.63bn and National Human Rights Commission (NHRC) with ₦920 million. 

While furthering human rights is noble, the ₦920m increment to the NHRC is not enough according to Mr Martin Obono. The human rights lawyer prefaced his complaint on the fact that the Commission does not even have a governing council. So, a fiscal increase may be akin to placing the cart before the horse.

But perhaps the more puzzling fact was why the Federal Government left out key agencies critical to infrastructural development from the allotment. Instead, the statutory advancements mainly favoured operational institutions. And thus hung the Basic Education Commission, Primary Health Development Agency, INEC and NDDC out to dry.

More so, the unrelenting advocacy for increased allocation to the aforementioned agencies should have been incentive enough for FG. Out of the nine strategic institutions bordering on the promotion of human rights, public ombudsman, electoral integrity, legislative and judicial independence, infrastructural development, these four stand out.  

Even BudgIT, in a set of tweets yesterday noted that both Health and Education are not among the top 5 Sectors with the highest allocations for capital expenditure, with ₦156bn and ₦134bn allocations to both ministries, respectively. Speaking with Ms Shonibare of Education as a Vaccine, she decried this saying “the cost of governance should never come at the cost of increasing access to critical services especially during a pandemic, rather we must prioritize these sectors. This should be the lesson learned from 2020”.

Shonibare further criticised NASS for its insensitivity in carving out half the advancements for its units. In the end, the “unprecedented crisis which is amplifying the gaps and fault lines in the provision of social services, could roll back the gains made in the health and education sector especially for girls and women.” 

In the same vein, the Principal Lead at BudgIT queried the opportunity cost forgone. For Mr Gabriel Okeowo, FG should have used the ₦6 billion to build additional 200 primary health care centres or 400 primary schools, constructed at 30 million and 15 million respectively.

On a different note, public policy analyst, Atiku Samuel welcomed the addition to NEDC stating the multidimensional fallouts of insecurity in the Northeast. He, however, feared that the corruption bedevilling NDDC, a similar intervention, may crawl in when budget increments do not match project needs assessment. With that in mind, he charged anti-corruption agencies and the Bureau of Public Procurement to be vigilant, ensuring value for money.

Other key cuts: Sinking Fund Slashed by ₦20 billion

Recall when we noted deductions earlier. Well, it seems NASS is less worried about offsetting Nigeria’s matured loan. Because why else would the 9th assembly deem it necessary to slash the Sinking Fund to retire maturing loans by 20 billion. While the executive had proposed to pay out ₦220 billion of the matured loans, the NASS reduced the allocation to 200 billion.

This act indicates that the matured loans which ought to be offset will be pushed forward. Not to mention this move could increase the possible interest on these loans, as the loans had a stipulated serviced amount annually.

Elsewhere, the Budget featured a ₦6 billion deduction from Service Wide Votes. Settlement of MDAs Electricity Bills also got a ₦2 billion naira cut. The margin was the same for Margin for Increases in Cost and Recurrent Adjustment and International Sporting Competitions.

MDAs Deduction of ₦5.9 billion

The MDAs got a deduction of ₦5.9 billion as appropriated against what was proposed. A total of ₦3,367,075,983,420 was proposed; howbeit, the approved sum fell to ₦3,361,173,906,215 as reflected in the various MDAs represented. In all, some MDAs got increased, others had their figures deducted. Ministries such as Education, Environment and Agriculture had advancements of ₦135.9 million, ₦83.5 million and ₦20 million, respectively.

A further review of the budget categories shows that recurrent (non-debt) had a total reduction of ₦7.9 billion (-7,902,077,20), while the capital expenditure had a total increment of ₦205.4 billion (₦205,406,943,442).

Capital Supplementation

Furthermore, capital supplementation had a ₦358 billion increment on the aggregate. The major addition being the Upscaling of National Social Investment Programme, which was not reflected in the proposed budget.

Implication – the Case for Statutory Transfer

By and large, the increment in the appropriation to Statutory Institutions raises some glaring questions. First is the case of unparalleled increment with its possible consequences. The increase in appropriation only reflects operational institutions and omitted development institutions. Agencies such as NDDC, UBEC and INCE which are saddled with development initiatives were ignored. Instead, FG saw fit to increase allocations to agencies whose duties centred around operations; a move which questions whether the budget is aimed at reconciliation and development as indicated.

Again, there is the issue of inequivalent need assessment. Operational agencies such as NERI, for instance, had their budget increased without the need for such increment. Thus, they have more money than they requested, with implications for fiscal extravagance. This will result in the waste of resources taking into cognisance that the budget has a ₦5.19 trillion deficit.

Moreover, Statutory Transfer as it is called is a proportion of the monies accrued to the CRF. Thus, the variation in the amount calls for a holistic review and a proper representation of the stipulated figure.