By 12 noon of May 29, 2023, President Muhammadu Buhari will have vacated Nigeria’s highest office. For different people, he will be remembered for different reasons -positive and negative.
As his exit from Aso Villa and the swearing-in of another president near, a critical reflection of Buhari’s promises should suffice as well as his financial commitments to the promised projects.
In this report, we shall consider the budgetary allocations to the Ministry of Defence and its budget performance under the Buhari administration.
READ ALSO: Health workers’ strike longest under Buhari-led government
For many reasons, the performance of the defence ministry is pertinent because it’s the only ministry with the mandate to provide administrative and support services to the various security arms (Army, Navy, and Airforce) to ensure the maintenance of the country’s territorial integrity. The ministry also focuses on one crucial area -security- which is one of the focal points of the outgoing administration.
Dataphyte’s review of the budgetary allocation to the sector shows an annual increase in the total funds allocated to the sector. However, a large chunk of went to recurrent expenditure.
In this report, we shall focus on the capital allocation component of the budget only. The reason for this is that it is the component of the budget that focuses on projects/programmes. Also, it is the only budget component whose performance is captured on the Budget Implementation Report (BIR).
According to the data from the BIR, a total of N36.70 billion was allocated for capital projects/programmes in the Ministry of Defence in the 2015 budget. Of this, N26.09 billion was released, representing 71.09 percent of the approved amount.
Out of the sum released, only N23.71 billion was utilised.
In the 2016 budget, N130.66 billion was allocated to the sector for capital expenditure, but only N97.25 billion (74.43 percent) was released for the financial year. However, N93.29 billion of the funds was utilised.
As explained by a public finance analyst, Mr Olaniyi Olaleye, one of the reasons for unutilised funds could be the delay in the release of funds which oftentimes would not allow government ministries the time to carry out all intended projects since the budgets often ran in cycles.
In 2017 and 2018, the capital allocations to the sector stood at N139.29 billion and N157.72 billion respectively. While 84.48 percent of the funds was released in 2017, 84.18 percent was given to defence in 2018.
The budget performance for these two years was the highest in the period under review. Both years recorded at least 84 percent budget performance.
The total funds released in 2017 were utilised. However, only 95.03 percent of the released budget was used in 2018.
The following year, the amount approved for capital projects in the ministry increased by about 1 percent, but performance dropped. The ministry’s budget performance was only 67.14 percent.
For 2020, the sum of N115.89 billion was approved for the ministry for the execution of capital projects. This was the second lowest budgetary allocation in the period under review. The budget performance for the year was also the lowest. However, the data available for 2020 only covered three quarters of the year (Q1-Q3).
The highest capital allocation to the defense sector was in 2021 — N1.12 trillion. The initial amount appropriated to the sector for the implementation of capital projects was N601.84 billion. Later in the year, an additional N523.95 billion was allocated as capital supplementary budget, bringing the total capital allocation to N1.12 trillion.
At the end of Q4 2021, only N636.93 billion, representing 56.58 percent of the allocated amount, was released. Then only N593.51 billion was utilised at the end of the fiscal year.
If the defense sector were to be assessed using the scoring formula of the Public Expenditure and Financial Accountability (PEFA) programme, the defense score would be a “D.”
According to the PEFA scoring formula, a budget can be scored an “A” if the aggregate expenditure is between 95 percent and 105 percent of the approved budgeted expenditure in at least two of the last three years.
Then a “B” if the expenditure was between 90 percent and 110 percent of the approved budgeted expenditure in at least two of the last three years.
If the aggregate expenditure outcome were between 85 percent and 115 percent of the approved aggregate budgeted expenditure in at least two of the last three years, then it would be a “C.”
Anything below the above is classified as “D.”
Going by this scoring formula, the budget performance of the Ministry of Defence could be rated as D as it did not meet an 85 percent performance in any of the years in the period under review.
According to Mr Olaleye, if a budget performance of a government/ministry was below 95 percent, it would indicate that the budget was not credible. He explained that a standard budget deviation was usually 5 percent.
Deviation, Olaleye explained, meant the gap between what was budgeted and what was implemented.
He stated that the defense budget performance was below the allowed standard budget deviation, describing the budget in the period under review as lacking credibility.
Among others, he pointed to delays in the release of funds to implement programmes and the inability of the government to generate projected revenues as two of the reasons the budget of many ministries in Nigeria lacked credibility.
Olaleye also highlighted bureaucracy and bottlenecks in the procurement process as major factors.
For the incoming administration, Olaleye called for the speedy release of funds to MDAs to enable them to implement all intended capital projects to enhance their budget credibility.
An economist, Mr Charles Akinwale, explained that budgets were not fully implemented in Nigeria because of the delays in the release of funds by the Ministry of Finance.
“Apart from that, if there is no revenue to fund the projected expenditure, MDAs will not have funds to implement their budgets. This explains why the next government must look for ways of earning more revenues,” he noted.