Concerns on spending by states as Federation allocation expected to rise to N4.4trn

ATTENTION is being beamed on states’ spending pattern as allocations from the Federation Account to state governments are projected to rise to the region of N4.4 trillion over six months. 

Economic watchers are expecting a cash bazaar for all levels of government as the removal of fuel subsidy frees lots more money for governments to share.

BusinessDay media reported on June 27 that a top level committee representing the entire federation and chaired by Charles Soludo, the Anambra State governor, had held two meetings since being set up two weeks ago to advance Nigeria’s quest to add a massive N4.4 trillion within the next six months to the cash available for sharing by the three tiers of government.

The current average monthly Federation allocation is N600 billion.

Analysts believe that additional cash, which works out to an average of N733 billion every month and implies a doubling in the monthly allocations, is possible following the government’s removal of costly petrol subsidies and foreign exchange reforms that paved the way for a 60 per cent depreciation of the naira.

But there are concerns on how all the levels of governments, especially states, will apply the expected windfall, even as they battle with debts and debt-servicing.

The Director of Media of the Nigeria Governors Forum, Abdulrazaq Barkindo, disclosed that the new state governors had been undergoing training on how best to manage funds and attract economic development to their respective states.

Barkindo told The ICIR that state goverments were having a United Nations Development Programme (UNDP) training on transparency and accountability in governance.

Barkindo said, “At the Nigeria Governors Forum, we are first and foremost established by the governors. We provide the platform for them to discuss, particularly a day before they go to the National Economic Council. I must also say that our role is still advisory as the governors have executive powers on what we advise them to do.”

He added, “We have our monitoring and evaluation mechanisms to track projects and interventions. Some foreign donors and agencies prefer to route intervention through us than through the state governments, and it is because of our transparent and accounting system.”

He further said that the Forum was intervening in ensuring structured and committed approach to governance, which he said would address loopholes in bad governance and ensure transparency and accountability.

To the Lead Director, Centre for Social Justice, Eze Onyekpere, lack of functional e-procurement portal and transparent budget systems in the states remains a concern.

“Many states’ e-procurement portals are non functional; you cannot easily track government businesses.There are lots of secrecy in the way and manner budgeting and its implementation is done in the states. Pre-bidding and after bidding processes are shrouded in secrecy,” Onyekpere told The ICIR.

Onyekpere: Many states’ e-procurement portals are not functional

“Examination of bids and information about how bids are conducted should be in the public domain. There should be more public information on open bidding and transparency to enable the media and civil liberty organisations track and cross-examine processes even after the bidding has closed,” he added.

Compliance on procurement and fiscal responsibility laws is still weak in several states, findings have shown.

Also, most states don’t actually have e-procurement portal for tracking government business.

The Executive Director of the African Centre for Leadership Strategy and Development, Monday Osasah, informed that Nigeria signed on to the Open Government Partnership (OGP) initiative at the 2016 London Anti-corruption Summit. However, many states are yet to domesticate it with the proper legal framework.

“Many states have signed on to the commitments of the OGP, but implementation is still weak. Records show that only 25 out of 36 states have signed on commitments to the OGP.

Osasah said Open Contracting is a major part of the OGP, which many states are still not complying with.

“There are many states that have procurement laws but operationalising and allowing citizens to track procurement, budgeting and other government business remains a concern,” he said.

The OGP is a multilateral initiative that aims to secure concrete commitments from national and sub-national governments to promote open government, empower citizens, fight corruption, and harness new technologies.

Immediate past president, Muhammadu Buhari, at the anti-corruption summit in London signed on to the commitment of the OGP, which seeks to promote transparency and accountability in governance through citizens participation and inclusivity in government business.

Nigeria’s Federal government and sub-nationals are spending large chunk of their revenue in servicing debts.

The World Bank, in its latest report, says Nigeria spent 96.3 per cent of its 2022 revenue on servicing its debts. The World Bank gave this information in its report on Macro Poverty Outlook for Nigeria, released in April 2023.






     

     

    The ICIR had reported that with the rising debts, the Debt Management Office (DMO) raised concerns over reckless borrowing.

    Available records showed that in the first half of the year, Nigeria’s GDP growth remained weak and fragile as it slowed to 2.31 per cent
    in the first quarter of 2023, from 3.5 per cent in the fourth quarter of
    2022.

    Key sectors that contracted included agriculture, which shrank by 0.9 per cent, the first time in about a decade. The livestock sub-sector was the worst hit as it contracted by a staggering 30.6 per cent. Other sectors that contracted included oil refining, which contracted by 35.8 per cent; textiles, 3.7 per cent; rail transportation, 49 per cent; and
    insurance, 8 per cent.

    “We borrow a lot to fund the budget. As such, it is expected that both the federal and the sub-nationals should engage in prudent and cost-cutting measures to save the economy from collapse,” Onyekpere said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

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