Excerpt
Content
Introduction
Hypothesis
Abstract
1. Methodology
2. History of Budgets
3. Theoretical framework
3.1. Stewardship Theory
3.2. Theory of Class Struggle
3.3. Roles and activities of two financial crime agencies
4. Reasons for the Gap
4.1. Politics
4.2. Corruption
4.3. Repitition and duplication of budget items
4.4. Leakages and substandard supplies
4.5. Lack of sincere economic policy
4.6. Improper planning
4.7. Wasteful spending and borrowing
4.8. Lack of information
4.9. Abandoned and inflated projects
4.10. Weak interest from the citizens
4.11. Discontinuity in political succession
4.12. Lack of modalities for checking budget implementation
4.13. Weak suport for the civil society
4.14. Late budget approvals
4.15. Lack of policing mechanisms
4.16. Slow judicial process
4.17. Inadequate resources
5. Graphic measurements of welfare as an indicator of Human Development in Nigeria: 2006-2015
5.1. Outrageous cost of governance
6. Insecurity and crime as a consequence of poverty
7. Recommendations
8. Conclusion
Bibliography
Introduction
Former President Jerry Rawlings of Ghana executed three past Heads of State, three Supreme Court Justices of Ghana and others for allegedly corrupting the economic system that widened the gap of poverty in Ghana. That ‘house cleaning’ was the first actions Rawlings took when he seized the rein of power in 1979.
This gruesome picture among others, shows the pollution that emanated from the deep recesses of corruption as exemplified by the gap between national budgets and the mirage of budget implementation process.
It is a sad irony in governance that implemented national budgets are mostly different from what was endorsed in the budgets of many developing countries. What happened?
In order to ensure proper implementation of budgets for economic development, there has to be a proper policing based on law supervised by effective law enforcement and anti-corruption agencies.The policing process is to close or arrest the gap between the budget and its final implementation.One of the proper tests of good governance is the ability of a government to fully operate its budget.
Meigs and Meigs, (2004) defined budgets as a comprehensive financial plan, setting forth the expected route for achieving the financial and operational goals of an organization”.[1]
It is unfortunate that the ‘expected route’is usually distorted and seldom lead to an anticipated end. This leads to a consistent impediment to development. The policing process could be done with the cooperation of law enforcement agencies, government and non- governmental institutions by employing mechanisms which this paper sets out to formulate. It will also offer ideas that will sustain such mechanisms.
Chukwu (2005) opines that ’cost audit is a systematic and accurate recording of detailed transactions and operations of manufacturing, contracting, extracting, transporting, supplying, servicing etc so as to show the actual cost of an individual piece of work, service or separations of the business’.[2]
By policing, I mean all the actions and operations of persons or group in authority, set to ensure probity, checks, balances and legality. Their actions ought to begin from the stage where national budget has been formally approved, to the stage where every item on the approved budget has been fully implemented.
A huge number of Ghanaians were repatriated from Nigeria in the early 1980s. The cumulative effect of the downward economic spiral can be seen in the trends in key economic indicators between 1970 and 1982: per capita real income declined by 30 percent, import volume dropped by a third, real export earnings fell 52 percent, domestic savings and investment declined from 12 percent and 14 percent of GDP respectively in 1970, and inflation averaged 44 percent per annum over the harsh period[3] This situation led to the challenges faced by the government of President Rawlings who took the advise of the International Monetary Fund and the World Bank to apply the Economic Recovery Plan (ERP) and the Structural-Adjustment Program (SAP). This resulted in the dual budgeting system for recurrent budget and capital projects in 1983. By 1991, government revenue (excluding aid) rose to 15 percent of GDP.
’Empirical evidence suggests that strengthening the accountability of law enforcement institutions is of critical importance to effectively combat corruption and break the circle of impunity, especially in countries affected by high levels of organised crime’ (Chêne, 2009).[4]
The procurement process is a huge hinderance to national budgets. The budgets are padded in such a way that in the course of procurement, prices are increased and fake receipts are presented as a way of siphoning the funds.
Hypothesis
The principles of budgeting are comprehensiveness, clarity and regularity. Developing countries usually have good economic budgets annually butimplementing the projects according to the context of thebudget is to meet development goals is usually the problem. Many non-existing items are insidiously infused into the budgets and monies are withdrawn by an inner cabal operating between the legislature, the executive body and the budget initiating agency.
There are usually little or no reliable cost auditing before budgets are released. Cost auditing does not detail and check costing techniques and accounts in order to verify their correctness and adherence to the objectives and best practices of cost accounting.
In other cases, the final projects are not implemented in accordance with what was formally approved in the budget. This has led to a continuing under-development especially in African countries.
Law enforcement and anti-corruption agencies have not done enough in policing the gap between signed budgets and the implementation process. It has been argued that some factors militating against judicious budget implementation is due to managerial oversight of on the- ground police actions, peer group secrecy, low pay and frequent contacts with criminals who have both resources and incentives to corrupt the conduct of police officials (Newham G., 2002) [5]
Abstract
After the first anti-corruption commission was set up in Singapore in 1952, it was followed by Malaysia and Hong Kong. This has given Asia the reputation as the “cradle” of anti-corruption agencies (ACAs). Today there are nearly 150 such entities throughout the world including Ghana (Commission of Human Rights and Administrative Justice, CHRAJ) and Nigeria (Economic and Financial Crime Commission, EFCC). Has the formation of these anti-corruption bodies reduced corruption in developing countries? What are the co-operation between such agencies and other law enforcement agencies?
Can law enforcement agencies be fully trusted in policing the use of government resources towards proper budget implementation? ’There is abundant anecdotal evidence of high levels of police involvement in criminal activities in many developing and transition countries affected by organised crime’ (Chêne, M.,2008).[6]
Budgets are important for every country because it represents the body of plan towards the activities of government. Budgets are instruments of economic policies and the indices needed to measure economic activities and the functioning of government. Budgets could be balanced, deficit or surplus. Budgets provide a platform to judiciously allocate resources and to show accountability to the needs and aspirations of the government and the people. It is the abuse of all of these functions that creates the gap that this paper is set to examine
In the course of reaching a conclusion, this paper sets out to:
- historicize on the trajectories of budgeting and their implementation in Ghana and Nigeria and make an analysis of some of their budgets and implementation.
- To examine in detail, the causative factors orchestrating the phenomenon of improper budget planning and implementation.
- To ascertain the role of law enforcement and anti-corruption agencies in budget policing.
- To specifically examine some selected incidences of lapses within the implementation period.
- To identify the implications of the prevalence of improper budget implementation.
- To assess the role of law enforcement and corruption agencies in both countries in order to ascertain detected lapses in implementation.
- To relate and connect an aspect of this paper with another of my paper on the politics of godfatherism in Nigeria. The aim is to weigh a common factor bordering on bloated salaries of top government officials as it affects various aspects of governance and development.
- To proffer recommendations on practical ways to arrest the malaise of under-implementation of budgets which has resulted in protracted underdevelopment.
Keywords: Developing countries, Nigeria, Ghana, Budget, Policing, Corruption, Monitoring, Implementation, Law enforcement agencies.
1. Methodology
- Data collection and analysis from the national budgets of Ghana and Nigeria to determine welfarism.
- The use of reliable publications.
- Comparing the statistics of the budgets in line with the initial goals.
- Measuring the justification of the executed budgets.
- Measuring the gap between the budget and the actual implementation.
- Policing future gaps through the evolvement of related mechanisms.
2. History of Budgets
The origins of the term 'budget' lie in the French word for 'wallet' or 'bag' (bougette), in which documents or money could be kept. Initially, the term was purely used to refer to the Chancellor's annual speech on the country's finances, but it was soon used to describe any financial plan or statement.[7]
The word ’Budget’ is believed to have evolved through various stages before it finally became an officially used terminology.
Sir Robert Wapole who was Great Britains’ Chancellor of the Exchequer started the idea of fiscal budgeting after the ensuing chaos that resulted from the collapse of the South Sea Bubble of 1720 and he introduced the excise tax on the consumption of wine and tobacco[8]
Annual account of budget evolved in the first half of the 18th century and by 1760, it has been established. In 1764 George Grenville in his presentation of budget to the House of Commons of Great Britain, introduced the Stamp Act.[9] These developments led to an annual system of budgeting for expenditure and revenue.
3. Theoretical framework
3.1. Stewardship Theory
This paper is partly informed by the Stewardship theory which presents a model for management, where managers are expected to be good stewards who will act in the best interest of the owners. The stewardship theory analyses the socio- psychological behavioral pattern of the executives. The steward’s behavior is pro-organizational and collectivists, and has higher utility than individualistic self-serving behavior and the steward’s behavior will not depart from the interest of the organization because the steward seeks to attain the objectives of the organization (Davis, Schoorman, & Donaldson 1997).[10] Based on this context, this theory highlights the mutual relationship and collective gain between the leader of organizations and the society. The steward is to serve and not to be served. His actions must be selfless and not selfish. His actions must not be detrimental to society. The theory foresee societal development where the steward is dutiful. Ironically, when the steward selfishly manipulates the resources of the society put under his care by the trust of representation, his role becomes detrimental to the society.
When budgets, considered to be the instruments of state planning, are intentionally tinkered against the common good of the society, it means that the steward is working in contrast to the expectation of public good. In the context of this paper, such actions are categorized as betrayal of trust and abuse of office when an elected public officer uses the machinery of office to consciously manipulate and reverse ideas that ought to improve the standard of living of the persons that voted him into office.
3.2. Theory of Class Struggle
Another theory relied upon in this paper is the theory of class struggle as exemplified by Karl Marx and Friedrich Engels in the 1848 Communist Manifesto. Marx posited that ’The history of all hitherto existing societyis the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.’[11]
The struggles for the control of power and resources has been the bane of most conflicts and under-development in Africa. Within the national realm, individuals within or outside the government desperately strive to amass wealth at the detriment of the country and fellow citizens. One way to do this is to distort national budgets and frustrate the proper implementation of projects that will benefit the masses. In other cases, groups of persons employ the force of violence or other means considered as instruments of the survival of the fittest, to unleash mayhem on the people or arm-twist the government or existing status quo to yield to their odoriferous demands. The result of these actions is to negatively change the course of development.
3.3. Roles and activities of two financial crime agencies
Nigeria: The Economic and Financial Crimes Commission:
The functions of the commission as spelt out in act 2002 Part II /5.(1) states that the Commission shall be responsible for (f)the adoption of measures which includes co-ordinate preventive and regulatory actions, introduction and maintenance of investigative and control techniques on the preventionofeconomic and financial related times;
(m) maintaining a liaison with officeofthe Attorney-General of the Federation, the Nigerian Customs Service, the Immigration and Prison Service Board, the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation, the National Drug Law Enforcement Agency, all government security and law enforcement agencies and such other financial supervisory institutions in the eradication of economic and financial crimes;
(o) carrying out such other activities as are necessaryorexpedient for the full discharge of all or any of the functions conferred on it under this Act.[12]
[...]
[1] Meig. W., & Meig, F. (2004). Accounting the Basic Business Decision New York, USA, MCGraw-Hill Book Company, 51-68
[2] Chukwu, I, K. (2005). Management Resources. Full implementation Resources and Budgeting. Retrieved from www. Humtreasry.gov.uk/documents/publicaspendingandservices.
[3] Govemment of Ghana, Program of Actions to Mitigate the Social Costs of Adjustment (Nov. 1987), p. 3.
[4] Chêne, M., (2009). The impact of law enforcement institutions on corruption, Transparency International/U4, (U4 Helpdesk query 215), Chr Michelsen Institute, Bergen, Norway, http://www.u4.no/helpdesk/helpdesk/query.cfm?id=215
[5] Newham G., (2002). Tackling police corruption in South Africa, Centre for the Study of Violence and Reconciliation , June, Johannesburg, South Africa, http://www.csvr.org.za/wits/papers/papoli14.htm
[6] Chêne, M., (2008), Organised crime and corruption, Transparency International/U4, (U4 Helpdesk query 171), Chr Michelsen Institute, Bergen, Norway, http://www.u4.no/helpdesk/helpdesk/query.cfm?id=
[7] A Budget History, 18 Mar 2007 http://www.telegraph.co.uk/finance/2953319/A-Budget-history.html Retrieved 20 June 2017
[8] https://web.archive.org/web/20120117205111/ww.interbudhttp://wget.co.uk/history-budget.html Retrieved 20 June 2017
[9] https://historyofparliamentblog.wordpress.com/2012/03/07/the-first-budget-walpoles-bag-of-tricks- Retrieved 20 June 2017
[10] Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a Stewardship Theory of Management. Academy of Management Review, 22 (1), 20 -47
[11] Bahatia, H. L. (1978) History Of Economic Throught, New Delhi: Vikas Publishing Houses PRT Ltd.
[12] Economic and Financial Crimes Commission, https://efccnigeria.org/efcc/about-efcc Retrieved 22 August 2017