THE NIGERIAN CONSTITUTION AND ISSUES IN THE COST OF GOVERNANCE
BY
PROF. MUHAMMED TAWFIQ LADAN (PhD)
DEPARTMENT OF PUBLIC LAW, FACULTY OF LAW
AHMADUBELLOUNIVERSITY, ZARIA
KADUNA STATE, NIGERIA.
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BEING A PRESENTATION
MADE AT PROFESSOR BEN NWABUEZE CONSTITUTIONAL LAW PUBLIC LECTURE SERIES 2012
THEME: -
THE NIGERIAN CONSTITUTION AND ISSUES IN THE COST OF GOVERNANCE
ORGANISED BY:
THE INSTITUTE FOR GOVERNMENT RESEARCH AND LEADERSHIP TECHNOLOGY, ABUJA
DATE: - 25TH AUGUST, 2012
VENUE: - NICON LUXURY, ABUJA
THE NIGERIAN CONSTITUTION AND ISSUES IN THE COST OF GOVERNANCE
BY
PROF. MUHAMMED TAWFIQ LADAN (PhD)
INTRODUCTION
Governance refers to a process by which those constitutionally empowered to administer the affairs of the state and to manage its resources, exercise their legislative, executive and judicial powers in accordance with the letter and spirit of the Constitution and other procedures laid down by law.
Governance, therefore becomes good in practice, when it is anchored on concerted efforts by those in leadership positions to address the needs, concerns, fears, aspirations and hopes of the governed in society without any form of undue discrimination.
It is against this background that this presentation seeks to realize the following objectives: -
- To establish the significant nexus between the Nigerian Constitution and the cost of governance;
- To identify and examine the core issues in the cost of governance in Nigeria from constitutional perspective; and
- To conclude with some recommendations.
- THE NEXUS BETWEEN THE NIGERIAN CONSTITUTION AND ISSUES IN THE COST OF GOVERNANCE
The search for the nexus between the Nigerian Constitution and the cost of governance indicates the aptness, topicality and relevance of today’s theme in Nigeria’s quest for good governance and democratic consolidation.
The first source of inspirational guide on the nexus, is the eminent Honouree’s valid for all times clarification on what constitutionalism is all about. In his 40 year old publication, Constitutionalism in the Emergent States (1973), Ben Nwabueze clarifies, that constitutionalism, simply put, means the constitution is a supreme law and it binds every state authority established and exercising power under the constitution including the power to make, execute and interpret laws.
This clarification suggests the existence of a constitutional government: - a government which derives its authority from a constitution and which manages national resources and administers state affairs in accordance with a constitution.
Accordingly, the Nigerian State/Government is under a constitutional obligation to make and implement a budget, which is a statement of income and expenditure and an indication of the state’s prioritised expenditure for the year. Hence a budget has been tagged the second most important national policy and programme instrument after the Constitution, which can be used either to deepen or alleviate poverty. Questions are therefore raised: - Who should make these decisions and whose interest should be paramount? What are the defining criteria for the choice of particular budgetary projects and policies as against competing alternatives?
Hence budgetary allocations and actual expenditure constitute the basis for measuring the cost of governance in a constitutional democracy. This is because the budget deals with how common interest is served through the mobilisation and allocation of public resources to common, often competing interests. It reflects a government’s vision of economic and social development and the policy and programme choices made in the translation of long-term development plans into annual financial target. Hence, when appropriately formulated and effectively implemented, budgets can help to achieve not only the traditional development objectives such as economic growth, equitable income and wealth distribution, economic stabilization as well as internal and external balance, but also institutional goals of democratic culture and good governance. Thus, the public budget is of interest to every stakeholder who stands to be directly or indirectly affected by the process or impact of its execution.
The second source of inspirational guide on the significant nexus of the components of the above theme is the eminent Honouree’s unimpeachable explanation on the constitutional requirements of legislative authorization with regard to expenditure of public funds and the limited right/power of the National Assembly (or the State House of Assembly) to tinker with the budget proposals laid before it by the President (or the Governor). According to Prof. Ben Nwabueze in his 1980 Publication, the Presidential Constitution of Nigeria, the combined effect of sections 80-81 of the Constitution is that expenditure for the services of the government requires legislative authorization. This constitutional device is the watchdog of public funds role of the legislature that is exercised through three principal legal means: -
a)Legislative control of the process of Appropriation (that is, pre-Appropriation Control);
b)Legal control of the actual expenditure; and
c)Post-Appropriation control of budgeting.
On whether it was right for the NASS, during its deliberations on the 2000 or 2010 or 2011 or 2012 budget of the Federal Government, to have increased the total estimates, far in excess of what was presented by the President?, again Professor Nwabueze (The Guardian, Monday, 22, 2000, P.8) proclaimed that: - “The NASS can reduce, but not increase the total amount because an increase in the total amount partakes of the nature of initiation (as regards) the excess amount over and above the total figures in the appropriation bill.”
Other limitations dictated by case law are that the legislature cannot: -
a)make an outright deletion of some heads of expenditure in the budget;
b)or make a wholesale transfer of the votes meant for one ministry or department to another; thereby indirectly abolishing the former;
c)or introduce brand new expenditure heads or subheads in the budget;
d)or transfer an executive agency designated in the budget from one department to another.
Apparently, under Section 80(4) of the Constitution, no money shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation, except in the manner Prescribed by the NASS. According to Prof. Nwabueze in the Presidential Constitution at pp.240-241, the extant law on this, which is deemed to be existing law under the Constitution, has laid down the procedure, which is that:
“no money can be issued from the Consolidated Revenue Fund except with the warrant of the Minister to whom responsibility for the management, supervision, control and direction or the expenditure and finances of the government is entrusted. The Minister is required to exercise his supervision in such manner as to ensure that full account is made to the legislature.”
Further, it can be seen that Section 88(1)(b)(ii) of the Constitution amply erected a mechanism for controlling actual expenditure (disbursements etc) empowering the legislature to investigate (and to not to execute or implement) into the affairs of those disbursing or administering moneys appropriated and indeed those to be appropriated. This device, then, is a deliberate constitutional contrivance in favour of the legislature to ensure transparency, accountability and good governance in Nigeria.
On the above issue, the distinguished Honouree has the final word, when he explained that the legislative role in post-mortem inquest into the budget and expenditure, is to ensure that money appropriated and withdrawn in any fiscal year is properly spent on purpose for which it is appropriated(The Presidential Constitution at p.241).
It is evident from the above that there is a significant nexus between the Nigerian Constitution and the mechanisms provided for regulating the cost of governance.
But why is it that despite the above constitutional mechanisms, in actual practice annually, we, as a nation, have been unable or unwilling to tame the high cost of governance.
This leads me to the second part of my presentation: - issues in the cost of governance.
- ISSUES IN THE HIGH COST OF GOVERNANCE
Four broad issues have been carefully selected for examination: -
i)The paradox of Nigeria: - as a land of plenty inhabitated by the poor;
ii)Lack of financial discipline on the part of political office holders at all levels of governance;
iii)De-Prioritisation of investment in core social welfare sectors; and
iv)Lack of due compliance with constitutional obligations by political office holders.
2.1The Paradox of Nigeria
First, is the paradox of Nigeria: - a land of poverty, high unemployment rate, endemic corruption and wide income inequality, in the midst of plenty. According to the 2007 Human Rights Watch Report, the endemic nature of corruption in Nigeria has led to the loss of US Dollars 380 billion between 1960-1999. A Global Financial Integrity Initiative Report dated January 2011 estimated that US$ 130 billion dollars worth of illicit financial dollars to the fuel subsidy racket alone brings our national loss due to corruption to over $500 billion dollars between 1960 and 2011. Hence, corruption diverts resources into graft-rich public works projects, at a cost to education and health services. Corruption destroys a nation’s social and human capital, by discouraging corruption is even more damaging than terrorism/insurgency, perhaps it is the single greatest obstacle to both human and national development.
Income inequality is another serious problem. According to the National Bureau of Statistics (NBS), in 2010 65% of Nigeria’s wealth is owned by just 20% of the population (i.e. 32 million out of 160 million). Thus 80% of the population share between them only about one third (1/3) of the nation’s wealth.
Nigeria is richly endowed with human and natural resources particularly oil and gas as well as 34 solid mineral resources such as gold, coal and sulphur. With a nominal Gross Domestic Product (GDP) of $280 billion dollars in 2011, Nigeria is the second largest economy in Africa; the sixth fastest growing economy in Africa with a Real GDP economic growth rate of 6.9% in 2011; the largest producer of oil in Africa and the seventh largest in the world in 2011. With a population of about 160 million in 2011, Nigeria is by far the most populous country in Africa, accounting for 47% and 2% of West Africa’s and global population respectively.
Despite this rich human and natural resource endowment, Nigeria’s GDP per capita is only $1,200 dollars; average life expectancy at 51.9%, average years of schooling at 5.0% rate and poverty is widespread, with about 70% of the population living below the poverty line in 2011. Hence, Nigeria was ranked by the UNDP 2011 Report on UN quality of life/Human Development Index as the 156 out of 187, among the “least human development” countries globally in terms of income, education and life expectancy.
Despite a plethora of development policies and programmes, Nigeria’s level of economic development over the past five decades has been disappointing. The country’s economy is dominated by the primary production sector, with agriculture, which is predominantly practiced by peasantry with low and declining productivity, accounting for 41.6% of GDP, followed by crude oil 15% in 2011, while the secondary sector, especially manufacturing, has stagnated at 3.7 to 3.9% of GDP in 2011. This makes Nigeria one of the least industrialized countries in Africa.
For an agricultural nation, it is a paradox that 41% of Nigerians, nearly 70 million (out of 160 million), are classified as “food poor” in 2010. The zonal distribution tells a deeper story. About 52% of the people living in the North-West and North-East, 39% of the North-Central, 41% of the South-East, 36% of the south-South and 25% of the South-West are hardly able to feed themselves.
Hence, the paradox of Nigeria with widespread and endemic poverty in the midst of plenty. The question then is, Why does the second wealthiest nation in Africa and a country not lacking in resources or manpower, have a human development index that is lower than the average in Sub-Saharan Africa? Why do the great majority of Nigerians lack access to clean and safe water, electricity and other basic necessities? Why are over 14 million educated youths unemployed, forcing them to engage in fraudulent and cybercrimes? Why do the most vulnerable groups in Nigeria lack access to justice as a human right in the justice sector reform initiatives?
Though Nigeria is a country of paradox, overall, the country has the potential to build a prosperous economy, reduce poverty significantly, and provide the basic social and economic services its population needs. However, several years of military rule, poor public expenditure management, over-dependence on oil and unmitigated rent-seeking behavior to amass wealth from the nation’s treasury have conspired to undermine the country’s development.
2.2Lack of Financial Discipline
Nigeria’s presidential democracy is said to be one of the most expensive in the world. This much is justified by the country’s soaring recurrent spending in its successive budgets and the rising debt profile prompting deep concerns and warnings about the high cost of governance and the health of the economy. According to the Central Bank of Nigeria Annual Report for the year ended 31st December 2010, the consolidated expenditure of the three tiers of government was N8,370.9 billion in 2010, while the revenue was N7,135.8 billion. consequently, the combine fiscal operations resulted in an overall notional deficit of N1,235.0 billion, or 4.2 percent of GDP. The fiscal operations of the Federal government resulted in an overall notional deficit of N1,105.4 billion, or 3.7 percent of GDP. Provisional data on state government finances indicated an overall deficit of N132.1 billion, or 0.4 percent of GDP), while that of the local governments revealed a surplus of N2.5 billion, or 0.01 percent of GDP.
The consolidated Federal Government debt stock, as at December 31, 2010 was N5,241.7 billion, or 17.8 percent of GDP, compared with N3,818.5 billion, or 15.1 percent of GDP in 2009. External debt stock rose by US$0.63 billion to US$4.6 billion, following the additional disbursement of concessional loans from multilateral institutions. Domestic debt grew significantly by 41.0 percent to N4,551.8 billion as a result of substantial borrowing to finance critical infrastructure in 2010.
The rising pubic debt profile of the government was also a major concern during the 2010 budget period as economists agreed that it could have untoward effects on key macroeconomic indices like Inflation, exchange rate and domestic interest rates. The cumulative effect of these developments was that the average life of Nigerians did not record appreciable improvement in 2010.
In the Central Bank of Nigeria Communiqué No. 75 of the Monetary Policy Committee (MPC), the Committee noted the positive growth outlook in the near to medium term but expressed serious concern over the heightened risk of inflation following from the proposed high expenditure outlay of the Federal Government as contained in the 2011 Appropriation Bill passed by the National Assembly, especially in the wake of rising global food and energy prices. In this regard, the Committee recalled that in the past few MPC meetings, it had stressed the need for fiscal retrenchment and drawn attention to the unsustainability of the rising trend of domestic debt. The current fiscal stance is inconsistent with the objective of maintaining stability in exchange rates, prices and interest rates. The Committee, therefore, believes that unless the fiscal stance is reversed, the economy would have to bear a high cost in terms of pressure on foreign reserves, high interest rates and/or higher level of inflation.
Disturbed by the huge spending on politicians, Central Bank Governor Sanusi Lamido Sanusi revealed that of the N500 billion Federal Government overhead cost, the National Assembly took N136.2 billion, which is equivalent to 25.1 percent of the total.
Piqued by the country’s spending for political office holders in 2010-2011, the Presidential Advisory Council (PAC) headed by General Theophilus Danjuma (As at May 27, 2011) recommended that the Federal Government cut the country’s recurrent budget to 40%. It also suggested that the ministries should be pruned down to 18, from 42. The panel also asked government to rationalise all non-ministerial agencies to eliminate overlap, duplication and redundancies. The outcome of the report is yet to be implemented.
While the 2011 Appropriation (Amendment) Act authorized the issue from the Constitutional consolidated Revenue Fund of the Federation the total sum of N4,484,736,648,992 (i.e. 4.48 trillion naira), the three tiers of government spent N8.3 trillion in 2011 from the Federation Account as against N5.8 trillion in 2010. This is N3.4 trillion higher than the N4.9 trillion budget for 2011.
Based on the existing revenue sharing formula, the Federal Government is entitled to 52.68 percent of the statutory revenue; states 26.72 percent; and local governments 20.60 percent. Out of the amount shared in 2011, the Federal Government received N4.37 trillion; states N2.22 trillion; and local governments N1.71 trillion. In 2010, Federal Government got N3.1 trillion; states N1.5 trillion; and local governments N1.2 trillion. This is about N1.2 trillion higher than the N4.6 trillion budget for 2010.
Recently, Senator Olubunmi Adetunmbi, in a motion entitled: - “Looming dangers of bankruptcy in states: - the need for fiscal evaluation”, declared that most of the 36 states in the federation are in dire financial straits. Based on figures from the Nigerian Governors’ Forum, Senator Adetunmbi revealed that “only four States – Abia, Akwa Ibom, Anambra and Jigawa – were in good financial health.The remarkable thing here is that Akwa Ibom is the only oil rich State that was certified to be financially healthy. In fact Rivers and Bayelsa states which receive huge revenues from the Federation Account were classified along with Oyo, Bauchi, Nasarawa and Gombe as being financially unhealthy”. The conclusion from this therefore is that there is no correlation between the amount of money available to a State and its financial health or what the government is about to achieve if it manages its resources prudently.
The Senator further revealed that,“of the 15 States classified as being in ‘critical condition’ – Ekiti, Plateau, Benue, Edo, Borno, Adamawa, Cross Rivers, Enugu, Taraba, Ogun, Kogi, Yobe, Ebonyi, Ondo and Kaduna”, the North accounted for eight (8) states while the South accounted for seven (7).
2.3De-Prioritisation of Investment in Core Social Welfare Sectors
A cursory look at the 2012 budget proposal and other sundry matters, reveals the fact of de-prioritisation of investment in core social welfare sectors such as water resources, agricultural and rural development and health. For instance, despite the revelation contained in the January 2011 Nigeria Water Sector Roadmap, that water sustains life and alleviates food poverty, and about half of the Nigerian population are without access to potable water supply, and the relatively low development of our water resources places Nigeria among the group of countries within the sub-Saharan Africa that lose about 5% of GDP (or US dollars 28.4 billion annually), the budgetary allocation in 2012 for water resources sector is N39 billion, nearly half of the N70.8 billion it got in the 2011 budget.