BPP blames MDAs for budget execution woes
From Emeka Anuforo, Terhemba Daka (Abuja) and Mathias Okwe (Katsina)
THE need to save the banks from collapse and shield the nation's financial system from the claws of the global meltdown prompted the Presidency to approve the move by Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, to reform the banking industry, the Federal Government stressed yesterday.
Still on business and the economy, the Minister of State, Finance, Remi Babalola, raised the alarm that the government may not deliver 6,000 megawatts (mw) of electricity in December as promised.
And the Bureau of Public Procurement (BPP) has accused Chief Executives of Ministries, Departments and Agencies (MDAs) of undermining government's efforts at ensuring effective budget implementation.
Vice President Goodluck Jonathan, who addressed the 2009 conference of the Institute of Chartered Accountants of Nigeria (ICAN) in Abuja yesterday, observed that generally, weak integration with the rest of the global economies perhaps, made Nigeria feel that it would not be affected by the crisis, "at least not initially and so we delayed to take preventive measures on time."
Represented by the Finance Minister, Mansur Muhtar, the Vice President said: " The rise in food and unstable commodity prices respectively as well as uncertainty in the industrialised nations, financial markets have had a knock-on effect on developing nations. High fuel costs, soaring commodity prices together with fears of global recession are worrying many developing countries' analysts. Commodity-dependent economies are exposed to considerable external shocks stemming from price booms and busts in international commodity markets.
"As expected, the foreign direct investments in Africa have been drastically reduced as the credit squeeze takes hold. Furthermore, foreign aid, which is important for a number of African countries, is likely to diminish. This has also contributed to the problems within our banking sector, which has led to the quick intervention of the government through the CBN to forestall its collapse.
"This intervention is similar to that of the developed countries such as in the European countries and the United States of America (USA) that had to bail out some of their banks, insurance companies and even the manufacturing sectors.
"You will permit me to dwell briefly on the global economic crisis that has affected all of us... I am sure you are all aware of the causes of this crisis, which really started in the middle of 2007 through to 2008 and into this year 2009. We are all witnesses of the speed with which the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to resort to extensive bail-outs and rescue packages for the remaining large banks and financial institutions."
Noting while the full effects of the global slowdown remain uncertain and vary between countries, he stated that the impact on African states although, initially limited, had become, in some cases, severe.
He added: "We should be wary of any quick turnaround for our continent because... African economies may take longer time. The major challenge, therefore, is on how to implement short-term responses to the crisis while staying focused on long-term sustainability.
The International Monetary Fund (IMF) concluded its Article IV Consultation Mission with the Nigerian authorities on July 29, 2009 and noted that Nigeria entered the global financial crisis from a position of strong macroeconomic stability. The reforms of recent years paid off, with windfall from oil, high foreign reserves, and a well-capitalised banking system preventing the type of economic crisis Nigeria witnessed during the oil price cycles of the early 1980s.
"The impact of the crisis has nonetheless been significant with economic growth suffering. Growth in 2009 and 2010 was expected to fall below the impressive rates of recent years. The Fund therefore projected that growth in the non-oil sector will slow from 9.0 per cent in 2008 to 4.5 per cent in 2009. While oil production is expected to remain broadly flat, security-related disruption to gas supplies were likely to result in a contraction in the hydrocarbons sector in 2009.
"Overall, Gross Domestic Product (GDP) is expected to fall to 3.0 per cent in 2009, while a gradual recovery was expected to take hold as confidence in the banking system is restored and domestic credit conditions begin to ease, with growth picking up to 5.0 per cent in 2010. The IMF expects inflation to decelerate to single-digit levels later in 2009, reflecting the slowdown and tight credit conditions."
He pointed out that confidence was an important factor in helping the recovery. He emphasised that chartered accountants could help return confidence to a fragile environment by concentrating on, and demonstrating core values of leadership, integrity, ethical behaviour, transparency and financial expertise in taking us through the current conditions and into a more normal environment."
And it is now becoming clearer that President Umaru Musa Yar'Adua's promise to fast-track economic growth through the raising of Nigeria's energy supply to 6,000 mw from the current less than 2,000 mw level by the end of this year might be a mirage.
Until yesterday, the nation has been told by several top government functionaries that she was on the way to economic recovery through the energy boost project for which $5.3 billion Excess Crude Fund from the Federation Account was approved for the implementation.
But Babalola who chairs the Federation Account and Allocation Committee (FAAC) from where the scheme's fund was sourced, said the delivery may not be feasible because about 11 of the 36 states have refused to consent to the intervention to enable the Federal Government start the power emergency project which is to lead to the raising of the energy supply by the end of December.
Babalola made the declaration yesterday in Abuja, though he declined to name the affected states, for now. He spoke at the FAAC meeting where the three tiers of the federation shared N350.721 billion being federally-generated revenue for the month of September. This amount was more than last month's figure by N4.481 billion.
The alarm was raised just as the Emir of Katsina, Alhaji Abdulmumin Kabir Usman, chided public office holders for corruption and warned them against punishment by God for under - developing Nigeria.
Usman spoke yesterday in Katsina during a courtesy call on him by the Joint Tax Board (JTB) delegation led by its Chairman, Mrs. Ifueko Omogui-Okauru, after it undertook development tour of the state to assess the deployment of resources from the Federation Account. The visit was part of activities of the JTB quarterly meeting holding in Katsina State.
In April this year, about $5.3 billion was removed from the Excess Crude Account as Power Sector Special Intervention Fund and each state was requested to get approval from their state Houses of Assembly to transfer their contributions.
Babalola yesterday said: "This is affecting the remittance of funds to the Steering Committee on Emergency Power. Members are advised to liaise with the Director, Home Finance to find out if their states are affected and expediently process the approvals of their state Houses of Assembly on the matter."
He said money was in the Central Bank of Nigeria (CBN) Special Account. "Every single kobo for capital project stays in the Central Bank. It is only from the Central Bank that you can issue to whoever the contractors are", he said.
The three tiers of government also shared the $2 billion from the Excess Crude Account to stimulate the economy.
The N350.721 billion shared was made up of a statutory revenue of N235.121 billion, N51.192 billion for augmentation and N36.529 billion from the Value Added Tax (VAT) and N27.879 billion being exchange gain for the month.
Babalola said that relative calm in the Niger Delta region had resulted in a renewed hope for developmental projects in the region.
He said: "There is a gradual return of companies which hitherto fled the Niger Delta region and the resumption of repair works on oil and gas infrastructures has commenced. The amnesty programme has dimmed one of the binding constraints to our economic prosperity.
"My hope for the future lies in the renewed vista for urgent actions in all areas of the economy. Our economic circumstances require careful consideration of policy, careful weighing of the evidence, discriminating judgment and a continuous openness to new information.
"The assessment of the information about the economy suggests we have every reason to be encouraged. And that if we continuously engage and work on the challenges we face, we will come through this period better placed to enjoy and secure the long term prosperity this government is committed to delivering."
He urged all tiers of government to have clear-cut intentions, well-defined, people-oriented and citizen-centred policies that can be effectively executed.
"Together we can develop the various identified industrial zones in the Niger Delta region; create thousands of jobs, and foster tourism that will attract millions of people to a region that wants to walk in the footsteps of history," he said.
The Katsina Emir said the current efforts at rebranding Nigeria would remain an exercise in futility if our public office holders do not rebrand their hearts.
His words: "They can be no rebranding of the country if particularly the leaders do not rebrand their hearts and shun corruption. And I want them, be they Christians or Moslems to know that if they don't refrain from corruption, they will be punished here on earth and even in the here after.''
Alhaji Usman explained that the warning had become imperative because it was painful that in spite of the huge resources that Nigeria generates, under-development stares her in the face.
Mrs. Okauru who is also the Executive Chairman of the Federal Inland Revenue Service (FIRS), explained that the inspection of projects as part of the JTB Meeting was borne out of the need to hold state governments accountable for the revenue they collect and by extension to encourage voluntary tax compliance.
BPP Director-General, Mr. Emeka Eze who spoke yesterday in Abuja at the third quarterly Sectoral Consultative Forum organised by the House of Representatives Committee on Public Procurement in collaboration with the Coalitions for Change (C4C), stated that the Federal Government has resolved to show such CEOs of the culprit MDAs, who, he said, have been empowered, but failed to implement their respective budgets the way out of the system.
He particularly described them as part of the opposition who were bent on pulling down the government.
According to him, the Federal Government will soon impose sanctions against such people "who have demonstrated lack of capacity to implement budgets, even when funds were fully released," adding however that efforts were on to adjust budgets of some ministries, which he said ordinarily should not be involved in the execution of capital projects.
"Not all ministries should implement capital projects. Some were meant for policy designs and administrative issues, and we are doing that already," he said.
On the challenges of implementing the Public Procurement Act, especially in the agriculture as well as water resources sectors, Eze, an engineer, regretted that MDAs usually resort to buck passing as a way of absolving themselves from blames on poor budget performance, and called on the National Assembly to ignore such excuses during oversight functions of the MDAs.
"If they are with you (the National Assembly), they will use the BPP as a shield, if they are with the President, they will use the National Assembly as shield, and if they are with you and me, they will say they are waiting for approval of the president. But the truth is, only contracts worth N300 million and above come to BPP," Eze noted.
Another challenge, he said, was external interference from interest groups and individuals during pre-qualification and evaluation of contractors for projects, explaining that such conflicts of interest usually lead to non award of such contracts at the long run, or giving room to personal discretion of the CEO on who takes the contract.
He also identified petitions emanating from unfair treatment of contractors, the use of extraneous clauses in contract agreements, especially where foreigners are involved, deliberate delay of payment to contractors as well as late approval of contract award by the Federal Executive Council, even when certificate of "No objection" were duly issued by the BPP as some other impediments to effective implementation of budgets.
Earlier, the Chairman of the House Committee on Public Procurement, Yusuf Maitama Tuga, said the consultative forum was organised to promote dialogue among stakeholders, and to help the committee identify genuine inherent challenges in public procurement.
Tuga, who was represented by Deputy Chairman of the committee, Olusegun Akinloye, stated: "This interface will invariably elicit information that would enable the committee and the House of Representatives stimulate accountable, reliable and trustworthy public procurement practices in Nigeria."
Also in his opening remarks, the Chief Whip of the House, Emeka Ihedioha, reiterated that as legislators, members would always strive towards ensuring that their constituents get the "dividends of democracy", adding that what the House expected was a drastic improvement in the 2009 budget over that of the previous year.
Also delivering a goodwill message at the forum, Chairman, House Committee on Agriculture, Gbenga Makanjuola expressed regrets that the agricultural sector has been neglected in the last 25 years, even as he blamed poor development of the country on lack of effective implementation of laws and policies in the country.
