FG’s Non-Release Of Funds Worsens Economic Woes | Independent Newspapers Limited
Newsletter subscribe


FG’s Non-Release Of Funds Worsens Economic Woes

Posted: May 27, 2016 at 4:30 am   /   by   /   comments (0)

Isuma Mark


The Federal Government has failed to release capital votes 30 days after signing the 2016 budget into law. This is despite the delay the budget suffered since 2015 when it was presented to the National Assembly.

The administration of President Muhammadu Buhari, which in few days clocks one year in office, has dithered in the release of funds for capital projects, which experts say compounds the worsening economic conditions in the country.

The N1.8 trillion capital budget, which was aimed at jump-starting the ailing economy, has been delayed going into the second half of the year, with many Nigerians suffering what might be the toughest times ever since the 1984 essential commodity era.

Senator Udo Udo Udoma, Minister of Budget and National Planning, in the course of signing the budget had promised that there would be no more delays in executing projects as contained in the 2016 budget. But 30 days after, there has been no release of funds. Udoma specifically said the Federal Government aimed at kick-starting the almost comatose economy with quarterly injection of N350 billion.

Even his counterpart in the Ministry of Finance, Kemi Adeosun, while acknowledging the current government’s poor performance weeks ago, said: “We are going to pump N350 billion into the economy until we see growth. The job will be done painstakingly, and we will come out of it better.”

While the nation is in the tail end of the second quarter of the year available indices point to a nose-diving economy largely rated as Africa’s biggest with little to show for it.

The fall in the value of the naira against major currencies, especially the United States dollar, rising interest rates, climb in electricity tariffs and a vexing fuel price hike have set the stage for what might be the toughest economic times for Nigerians, according to economic watchers who spoke to Independent.

They say the current economic situation needs revaluation for it not to degenerate to the essential commodity era of the 80s. Of particular concern to them are inflation and the fall in the value of the naira.

The flurry of activities promised by Mr. Udoma and Mrs. Adeosun, which elicited hope, has since been replaced with anger, frustration and disappointment.

Checks conducted across key ministries handling capital projects revealed no capital has been released yet, none of the officials spoken to wanted to be quoted for fear of reprimand.

At the Ministry of Finance, sources confided in Independent that President Buhari has not given go ahead.

A particular source said, “We are equally frustrated like all Nigerians because we buy from the same market. Funds have not been released because the president has refused to give a go ahead.”

Pressed why as important as it is urgent capital votes have not been released against the deplorable state of the economy, the source said, “Even the minister cannot explain it.”

They exonerated Mrs. Adeosun from any blame, saying she is equally disappointed but she cannot complain openly.

“Madam is very sincere and ready to work but the conditions are harsh being that she relies on confusing and conflicting orders from the president,” one source said.

When Independent tried to find out earlier from the Special Assistant to the Minister of Finance, Festus Akanbi, he said only those contractors who complied with the minister’s directives would be paid.

“There was a directive for contractors to comply with. If they don’t comply with that, funds would not be released,” he had said, failing to say what conditions they must meet.

An unnamed contractor said it was “verification and nothing more.”

“They took over the leadership of the country and started verification exercise. Those who were paid and started their jobs by the last administration were asked to stop for the process to be completed. That was why those who were properly mobilised by the last administration stopped working.

“Those who got contracts have not been mobilised as I am talking to you. In fact, some contracts have been re-awarded without bidding based process as contained in the Procurement Act.

“So the whole process smacks of confusion and amateurism,” the contractor noted, not wanting to be named.

Quests to get the opinion of the Ministry of Budget and Planning revealed that the ministry’s part in the budget stops after the making and passage into law of the budget.

James Akpadem, Special Adviser on Media to the Minister of Budget and Planning, told Independent that funds are released by the Ministry of Finance.

An economist close to government who refused to be named referred Independent to the president’s budget presentation speech in 2015. The president had said: “Our 2016 borrowings will be principally directed to fund our capital projects.”

“Financing the budget has stalled because the president wants to borrow to finance it. The country is broke. Minister of Information and Culture, Alhaji Lai Mohammed, said the country is broke. Rotimi Amaechi, Minister of Transport, said the same thing. So where do they get the money from if not borrowing? Yet no one wants to lend the country because of lack of confidence”, the economist said.

He explained that no one exactly knows what is going on because there is confusion and people are not happy. “I can categorically tell you about five ministers are not happy the way the whole budget and funds releases are going on. Yet no one wants to speak.”

On the implication, he said, “Investors would completely give up hope because if funds are not released, it won’t show the direction of government’s policy. Investors, he said, want to see clear cut government policy framework that indicates verifiable process and what is in it for them.

“That is why Tanzania, Bostwana, Kenya, Ghana, among other countries in Africa, are investors’ toasts and not Nigeria anymore. The last report on ease to do business indicated an appalling performance by Nigeria. We are no longer top guns.

“So the quicker the government releases funds the better. Funds must be released for contractors to go back to sites. The close to 100, 000 Nigerians laid off by contractors must be reabsorbed,” he noted.

According to him, concerted efforts must be made to release funds and crystallise policy directions to push back the hazards afflicting the economy.

“It is getting late,” he warned of the country’s economy and Buhari’s leadership direction. “No better time to assemble better economic team, release funds and let people get something to do than now. There is anger, there is darkness and there is fear everywhere. The excessive bleeding must be made to stop before things get out of hands,” he warned.

However, Minister of State for Budget and National Planning, Mrs. Zainab Ahmed, said implementation of the budget is on course, noting that there has been systematic release of funds.

Speaking to the staff of the ministry during the opening of a five-day specialised training programme on reform and service improvement, Mrs. Ahmed noted that civil servants are the engine room for growth and development and implementation of government development projects.

Mrs. Ahmed said, “Funds have been released for projects that were ready to go and implementation has started in earnest.”

Mrs. Ahmed still engaged in litany of promises, saying, “Let me say that the budget of N6.06 trillion so far is the largest that Nigeria has ever had and it is very ambitious. It has a capital provision of 29 percent,” she said.

Quizzed to spell out which specific project funds have been released, she declined to mention.

On diversification amid growing threats to oil, Nigeria’s sole revenue source, Mrs. Ahmed said there is a serious commitment to diversify the economy.

Muda Yusuf of the Lagos Chamber of Commerce and Industry thinks the panacea to the worsening economy lies in improving the purchasing power of the ordinary Nigerian who has been roughshod by the spate of harsh policies.

The question, he says, “Should be how to stop the hardship from getting worse”.

He traces the current economic problems to the collapse of oil prices in the international markets and Nigeria’s heavy dependence on the commodity, which has left government with little funds to meet its obligations including payment of salaries and pensions across board.

“That is a major source of hardship”, he emphasised. “If people don’t get salaries how will they survive?” Yusuf asked.

Dr. Bongo Adi, lecturer at the Lagos Business School (LBS), said that the monetary authorities should take the gauntlet and devalue the naira as a starting point to putting the economy back on track.

Though most economic watchers have voted for devaluation, the Central Bank of Nigeria (CBN) has opted for a flexible exchange rate regime, thereby easing control on the foreign exchange market.

He, however, added that devaluation in itself is not a panacea but must be effected in concert with other policies to achieve desired results.

“This doesn’t correct the fundamental distortions in the system but will momentarily stem the tide of capital flight. Long run solution isn’t going to be straightforward. The bottom-line is engendering growth, curbing unemployment, and stemming inflation,” he noted.

Join us on Facebook for more discussions on this story.