News

November 29, 2022

Finance Minister blames N206bn padding in budget on ‘wrong coding’

Zainab Ahmed

…Reps angry with Farouq for shunning invitations

By Levinus Nwabughiogu-Abuja

Minister of Finance, Mrs. Zainab Ahmed Wednesday cleared the air on the allegations of N206 billion inserted in the 2023 budget of the ministry of humanitarian affairs, disaster management, and social development.

In a special meeting with the House of Representatives committee on Appropriation which invited her alongside the Director General of the  Budget Office, Ben Akubeze, and the affected minister, Sadiya Umar Farouq, Ahmed said that there was a wrong coding of the projects.

She said the monetary provision was made for the social safety nets projects, stressing that it was an 800 dollars project that has been approved by the board of the world bank and the  federal executive council. 

According to her, the loan was fully negotiated by the government of Nigeria with the full involvement of the ministry of humanitarian affairs.

She said: “The 2023 Budget proposal has been prepared with the utmost sincerity of purpose and in line with established regulations and procedures. Over the past week, there has been a lot of misinformation in the media regarding certain provisions in the 2023 budget totaling N423.8bn 

“The expenditures questioned are mostly related to provisions for multilateral and bilateral loan-funded projects. It is instructive that all these projects are now the subject of controversy and were included in the budgets of the MDAs which were transmitted to the supervising Ministers for their review and feedback on 4 October 2022 before the presentation to both the FEC and NASS. 

“Until these recent controversies, none of the concerned MDAs raised any issues on the projects with our ministry.

“Traditionally, Multilateral/Bilateral financial institutions provide project-tied loans to the Federal government of Nigeria.

“These loans were previously not fully captured in the FGN budget; only the provisions for counterpart funds & debt service were included in the FGN budget. So, in 2021, we realized there was a gap that was underreporting and in 2021 and 2022 we started making this report.

“The sum of N206,242,395,000 was provided in the budget of the humanitarian affairs, disaster management and social development to provide for the social safety need project. This is an 800 dollars project that has been approved by the board of the world bank and approved by the federal executive council. This loan was fully negotiated by the government of Nigeria with the full involvement of the ministry of humanitarian affairs.

“This project is domiciled in the FAHADM&SD Headquarters. The World Bank is the funding source for the project, with the projected drawdown of $473,500,000, which is equivalent to N206,242,395,000, using the N435.57/USD exchange rate applicable to the 2023 budget. 

“This project was correctly described in the submission from IERD for the 2023 budget, but regrettably, a wrong code was inadvertently used in the process of inputting it, which resulted in it being captured as Purchase of Security Equipment in the GIFMIS Budget Preparation System (BPS), which has a limited dropdown range of project descriptions/codes 

“The same project was correctly captured in the 2022 budget of the FAHADMSD in the amount of N12,304,500,000 [ERGP1180310], based on the projected drawdown of $30m at N410.15/$ 2022 budget exchange rate.”

Ahmed also said that the same situation occured in the ministries of defence and power respectively, ruling out wrongful insertions.

“The Honourable Minister of Defence wrote to Mr. President requesting the immediate release of $1,363,880.40 and N158,928,045.37 to implement Phase 1 of the project. HM-MoD also requested the sums of $12,274,923.60 and N11,946,311,375.18 to implement Phases 2 and 3 of the project, all of which Mr. President graciously approved.

“Further to Mr President’s approval, 50% of the requirement for Phases 2 & 3, amounting to N8,600,000,000 (using the exchange rate of N435.57/USD), has been included in the 2023 budget proposal of the MoD. 

“The 2023 proposed budget for the FMoP includes a total of N195,465,151,790.65 MBPL with a breakdown as follows:

“Zungeru Hydroelectric Power Project: funded by Export-Import Bank of China. Amount: USD175,757,149.92, which is N76,554,541,790.65.

“Power Sector Recovery Operation (PSRO); funded by World Bank. Amount: USD 162,000,000, which is N70,562,340,000.00.

“Nigeria Electrification Project (NEP) to be executed by the Rural Electrification Agency (REA), funded by World Bank and AfDB. Amount: USD55,000,000, which is N23,956,350,000.00. 

“The Nigeria Electricity Transmission, to be executed by Transmission Company of Nigeria (TCN)): funded by the World Bank. Amount: USD56,000,000, which is N24,391,920,000.000.

“The total projected drawdown for the four projects is USD448,757,149, which is N195,465,151,790 at N435.17/$. 

“The Federal Ministry of Education (FME) – NUC. The amount in question here relates to the 2022 budget, during which it had a projected loan drawdown of $30m equivalent to N12,304,500,000 (@ exchange rate of N410.15/USD). The issue relating to this arose from the NASS committee’s review of FME’s 2022 budget implementation. 

“The project is the “Second Africa Higher Education Centres of Excellence for Development Impact Project” and the financier is the World Bank. [ERGP30180290] 

“For 2023, the amount captured for this project and the Sustainable Procurement, Environmental and Social Standard Enhancement Project is N26,134,200,000  (60 million US Dollars @345.57/$]; both are World Bank funded projects. 

“The current issues would have been easily clarified between the respective MDAs and the FMFBNP had the affected agencies followed the established budget processes.

“The proposed 2023 budget for each ministry was circulated for review and feedback, then presented at the Federal Executive Council (FEC) before it was submitted to NASS by President Muhammadu Buhari.

“It is noteworthy that the total amount of multilateral/bilateral loan-funded projects included in the 2023 budget is N1,771,404,182,322, involving a total of 14 implementing ministries.

“The aggregate projected multilateral/bilateral loan drawdown and expenditure of N1,771,404,182,322 is shown on Lines 271 and 301 of the MTEF/FSP approved by FEC and presented to NASS. It is also shown on Lines 182 – 195 on page 12 of the 2023 Appropriation Bill.

“So far, no issues have been raised in relation to the multilateral /bilateral loan-funded projects by the other ministries 

“It is evident that there are internal coordination issues between the PIUs in some MDAs and the CEOs/Accounting officers of the implementing ministries. We will be taking necessary actions to ensure that this is addressed going forward 

“Finally, let me state clearly that the allegation that the FMNBNP “padded” the budgets of the affected MDAs by inserting the projects in question makes absolutely no sense. If the projects are in the budgets of these MDAs, the FMBNP cannot procure them, as their procurement can only be handled by the concerned MDAs.

“Specifically, for multilateral/bilateral funded projects, the PIUs are domiciled in the designated implementing MDAs, and the lenders will not deal with any other agency, including FMBNP, on their procurements”.

Also testifying before the committee, the Permanent Secretary of the Ministry of humanitarian affairs who represented the minister said at no time did they go to the media to discuss the issue of budget padding.

He said: “I bring the apologies of the minister. She tried to reach you to express her inability to be present today. She’s unavoidably absent. That’s why she gave me permission to represent her. We did not go on air explaining anything about this issue of the budget. I was there present on the committee.

“It was not the ministry of humanitarian affairs. The minister was asked a question and when she noted the code, she said she did not understand and that she will get clarification the chairman obliged that more clarification will be brought and the matter was put to rest. 

“One of the members in the summary insinuated that there is padding and what was what the press took. So, the minister of humanitarian never mentioned padding. She requested time to correct this mistake she observed and that is what the minister of finance has clarified. Two, we did not go to the media refuting or challenging rather we wrote a letter seeking clarification and that was given to us promptly.”

The chairman of the House Committee, Hon. Aliyu Betara in his remarks expressed displeasure with the ministry for not seeking clarification but running to the media with the issue, saying that the lawmakers were not happy.

He also lambasted the minister for not honoring their invitations, asking her to quit the job of she was tired of it.

“Permanent Secretary, to my understanding, your minister is in town. She doesn’t want to appear before this committee and you are going into the media, going out telling them different things about our budget. She needs to come in here and tell the committee what really happened with your budget.

“When the president lays the budget normally there are little mistakes within the budget. The Minister through the DG, Budget Office writes to us in Appropriation Committee with my senator counterpart, of the humanitarian to notify us of the change of the workings within the line items.

“That was the main reason I was looking for your minister at that time to tell her that we have a copy from the ministry of finance for that amendment. This budget we are having is not an act but a proposal. Everything in this budget can be amended. 

“For your ministry, if you see that kind of issue within the budget, you would have contacted the chairman of the committee within the house, liaise with me and not go to the media. That is the main reason we called this minister to iron out the issues. We are not happy.

“Equally with the Ministry of defense. I have a copy of the letter from the Minister of Finance, written to the President, his approval to give the ministry money. I am having issues with the same committee here. Both committees in the house and senate.

“They want to remove the money. If he says he does not know about the approval, this is a copy of the approval from the president. It is the same minister that we have invited now to tell the committee about the approval and if the committee should remove that money, nobody should fault the appropriation committee. They have the right. We have invited him to come here. 

“He would have come to the committee chair and said he has discussed with the Ministry of Finance and they understand themselves. But we are hearing it from the Minister of Finance, without him here. So PS please tell you, Minister, it is not even about the appropriation committee inviting. She has issues with her committees in the House.

“Most times they invite her, but she does not come to appear before the committee. So it is wrong. If she is not ready for the job, let her quit. The chairmen are complaining. In our report now, they could not submit a report to the humanitarian ministry. So PS talk to her. She would have appeared here to clear herself”.

In their respective remarks, the deputy chairman of the committee and the spokesman of the House, Hon. Benjamin Kalu called for greater synergy between the Ministries and the parliament to prevent misinformation that will dent the image of the government in general.