The role of CSOs in implementing fiscal responsibility law

The role of CSOs in implementing fiscal responsibility law

By Obo Effanga

One of the most critical problems of Nigeria’s development is that of poor management of its enormous resources. Despite its huge earnings mainly from oil, the level of development in Nigeria has persistently failed to rise in commensurate measure. This is caused mainly by an irresponsible management of resources, corruption, poor fiscal responsibility and lack of laws and policies to guide proper management.

The gravity of the situation has been painted by the pioneer executive chairman of the Economic and Financial Crimes Commission (EFCC), Nuhu Ribadu, who alleged that Nigeria’s previous leaders stole from public coffers an estimated $507 billion (about N64 trillion)[1]. This figure is the equivalent of 26 years’ national budget. The above corroborates the submission of Dr. Antonio Maria Costa of the United Nations Office of Drugs and Crimes who alleged that about $400 billion was stolen from Nigeria by its leaders and stashed away in foreign banks as of the commencement of civilian rule in 1999[2].

There is every indication that this all-time record of public corruption might have been broken during the past nine years of civilian rule, going by all the so-called revelations in the last one year. Until the various probes instituted in the National Assembly and the executive arm of government are concluded, we may not be able to paint a full picture of the extent of mismanagement of public funds.

The galloping increase in the price of Nigeria’s major revenue earner – oil, in the world market seems to have brought harder times to the country. Since the return to Constitutional government in 1999, the country has been enjoying large surplus in revenue from the budgeted figure because the price of crude oil has always sold above the benchmark price each year. Much of the surplus are frittered away by state governors soon after the allocation to each tier of government, pursuant to the provision of the Constitution. This is because the additional amounts were never budgeted for and; without a very effective oversight from the legislature, whose duty it is to appropriate state funds and monitor spending; many governors allegedly mismanaged such funds. Mismanagement here is a mere euphemism for stealing as much of the funds were allegedly converted to private and personal uses.

The problem of fiscal irresponsibility must also be situated in the peculiar political structure in Nigeria. During the many years under military rule, the ruling class and by extension the larger public was so used to a powerful military officer (the head of state or the state military governor) issuing instructions that had the practical force of law including appropriation of public funds. A good dose of that attitude was emulated by the emergent Constitutional presidents and state governors (some of whom are also former military officers).

Added to the above, many heads of the executive arm of government have become so powerful due to their control over state resources to the extent that they have ‘pocketed’ members of the legislature who would often approve any spending by the earlier, whether or not such expenditure is in the best interest of the state. We must also remember that many of these members of the legislature were sponsored and assisted by the head of the executive arm to ‘obtain’ the party ticket or secure ‘victory’ in the general elections and as such see themselves as stooges of their ‘benefactors’.

The Fiscal Responsibility Law
The introduction of the Fiscal Responsibility Bill and the Public Procurement Bill was a response to the above sorry pass. The FRB is meant to ensure financial prudence, budgetary discipline and transparency in fiscal activities. It is expected to introduce a culture of fiscal behaviour that will promote prudence and sound financial management in the system and at the same time promote good governance.

After years of discussion involving all stakeholders, the Fiscal Responsibility Bill was eventually passed last year and signed into law by President Umaru Yar’Adua.
It sets out a general framework for budgetary planning, execution and reporting and sets the general targets and limits for selected fiscal indicators for the country with sanctions for non-compliance. If properly implemented, the law is expected to ensure balanced (or nearly balanced) budgets, low debt profile and accountable/transparent government through the setting up of Medium Term Expenditure Framework (MTEF) and the fiscal strategy paper. The above would streamline the spending of government by providing a three-year roadmap upon which budgets are based.

What Fiscal Responsibility Act aims to establish
The preamble to the Fiscal Responsibility Act makes it clear that the law sets out to give teeth to certain aspects of Chapter 2 the Constitution otherwise seen as non-justiceable. These are Sections 13 and 16 which charge the State to harness the resources of the nation, promote national prosperity, and ensure efficient, dynamic and self-reliant economy. The Act also seeks to give opportunity to the State to control the national economy in a manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity. It also seeks to ensure the State’s promotion of a planned and balanced economic development and to harness the nation’s resources for the common good.

It has been argued[3] that the Nigerian Constitution has not made adequate provisions with respect to comprehensive procedure for budget preparation, comprehensive framework for preparation and holistic presentation of the budget as well as a comprehensive content of the budget built on a verifiable database. For that reason, the fiscal responsibility law is seen as necessary.

Because the law requires the preparation of the Medium Term Expenditure Framework (MTEF) which is to streamline the contents of the budget each year, the Act could entrench a system of fiscal stability and discipline which has been lacking.

The law also provides for savings and assets management by mandating the relevant tier of government to save its share of surplus funds accruing from the reference commodity in a special fund. What it means currently is that the federal government can save its share of the excess crude money for future use, since that amount was not budgeted for. When, as it is hoped, the various state governments adopt their own fiscal responsibility laws, the excess crude funds would then be effectively mopped up for better use than we see currently.

However, it must be stressed that the mere passage of a law may not necessarily translate to the correction of a situation. Every law must be engaged with to make it work for the people it is meant for. One critical sector which must be involved in this is that of the Civil Society Organisation.

How CSOs can make the FRA work

Popularise the law
The first step to making the Fiscal Responsibility Act work is to popularise its existence. While presenting the 2008 Budget proposal to the National Assembly last year, President Yar’Adua announced that he had signed the Fiscal Responsibility Bill into an Act. He also announced that he had reached understanding with state governors to propose similar laws to their state legislatures for enactment. Nearly one year after, the ‘authentic’ copy of the document is yet to be officially released and mass-produced or circulated. It is also not posted on official websites. CSOs need to engage the Civil Society liaison office in the National Assembly to get the copies of this law out. Various organisations can then reproduce copies for wider publicity and use, just as it was done with other legislation of high public interest such as the ICPC Act, EFCC Act, Public Procurement Act, NEITI Act and the Electoral Act.

The law needs to be made popular not only to the civil society but also to the government officials who are given key roles to play in implementing this law. This includes the agencies whose inputs the minister is required seek for the preparation of MTEF. This is to make them realise their obligations under the law and even more importantly, their liability for prosecution in the case of a breach as indicated in some sections of the law.

Engage the implementers
As stated above, we need to engage certain government officials in order to ensure the implementation of the law. Interestingly, the law provides for the establishment of a Fiscal Responsibility Council and Board which membership shall include members of civil society. CSOs must therefore demand involvement in setting up the Council and Board both through direct nomination by them (the CSOs) and by asking critical questions about the qualifications of other nominees. We should in fact demand for a public hearing before the screening of nominees.

The Act makes provision for the minister to hold a public hearing for the preparation of MTEF, pursuant to the proviso to Section 13(2) of the Act. We should see this opportunity as one created for the people to make their input to the process. As CSO, we should start by getting the views of regular and ordinarily excluded people to the table.

Build technical skills
CSOs must of necessity familiarise themselves with the provisions of the Act and update their technical skills to be able to make practical and effective input to this process. With such skills, they should be in a good stead to provide technical support to the various arms of government, especially the legislature to make them fully implement the law.

Promote effective oversight
Another way to ensure the effectiveness of this law is through the oversight function of parliament. CSOs need to partner with the legislature to ensure effective oversight through the provision of information. They could also request to accompany the legislative committees on their oversight visits.

Lobby state governments
The current law being a federal law, there is a need to encourage the state governments to adopt their respective enactments to deepen the work of fiscal responsibility. I am aware that some state governments, such as Rivers and Delta have already sent a similar Bill to their respective Houses of Assembly. It behoves CSOs in those states to follow up the process. This could be achieved if CSOs begin to lobby governments at those levels to see why this law is needed. This campaign should not be embarked upon haphazardly and, learning from the FOI campaign, we must not take things for granted that everybody in government wants or should want to see this legislation put in place, no matter how beneficent we think this is going to be to the whole society. We need therefore to set out clear strategies for handling this campaign.

Strengthen CSO networks
To achieve the above and all, CSOs must strengthen and expand the existing networks to make them effective in holding the governments accountable in the new fiscal responsibility regime we all want to see. With a formidable CSO network and synergy, government personnel would be put in check to ensure the effectiveness of this law.

* Paper presented by Obo Effanga, Parliamentary Liaison & Policy Advisor, ActionAid Nigeria at the Civil Society Advocacy Workshop/Road Show organised by NDI in Calabar July 4, 2008
[1] Strategies for winning the anti-corruption war in Nigeria, ActionAid Nigeria briefing paper no2 of 2008
[2] Http://
[3] Odiri, J.E: “The legislature and fiscal responsibility bill”, paper presented at the Kaduna legislative dialogue on Fiscal Responsibility Bill (June 2-4, 2006)

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