Edun’s ‘ways and means’ audit

Recently, the finance minister, Mr Wale Edun, appeared before the Senate and commented on Ways and Means, a temporary loan the Central Bank of Nigeria gave governments. He said the current administration was “interrogating the N22.7 trillion that we met on the ground. We had instituted forensic audit to see the impact.” For anyone who has followed closely matters relating to Ways and Means as reported in a section of the media in the past few months, the minister’s comment cannot but draw attention. One reason is that there’s now an expectation that by the time the forensic audit is concluded, there’ll be closure to some of the issues public discussions regarding Ways and Means have raised.  

For any Nigerian who has high expectations of the current government to bring some changes to public administration, one benefit this audit will have is that a link between public expenditure and outcomes will be established. In other words, and if this is what the minister has in mind, a trail of how the fund is expended and how it has impacted the targets will be established.  One then expects that subsequently a culture of such assessments will be institutionalised and continued. If the current government has a clear view of the impact of Ways and Means taken before it, this will give it an idea of the impact of its own expenditure in a certain direction. Why is this important?

This is a nation where it’s well documented that there’s hardly a good official understanding of the impact of every naira expended on services, people, civil servants, or other entities. Proper assessment before spending is lacking so we often say, “Governments throw money at problems.” No one checks the exact amount needed or the results achieved. In the event, there’s a lot of room for the kind of graft cases that anti-graft agencies have established and prosecuted of late. One reason is that there’s hardly a pre-spending assessment, and definitely little thorough post-spending assessment or what is generally referred to as Expenditure Assessment. Wastage is inevitable in this situation, and it indirectly contributes to the financial crunch that has compelled, since 2014, different administrations to resort to taking CBN loans in order to finance basic activities.

Now, an expenditure assessment is a process of estimating how much a specific programme will cost and how much it will produce in terms of benefits. There are different types of expenditure assessments. One is the financial aspects of a particular activity, and the others are on the environmental or social impacts of the activity. I focus on the first. An expenditure assessment is basically used by governments, businesses, and other organisations to make informed decisions about how to spend money. As FasterCapital, a financial expert entity explains, there are several steps involved in undertaking an expenditure assessment. The first is to develop a budget which is a detailed estimate of how much money is available to be spent on a programme, as well as an estimate of the costs associated with the programme. The budget should be based on information about the programme such as its objectives and desired outcomes. Is this always empirically done using all necessary details in Nigeria’s public administration? It hardly happens to even the national Appropriation Bill, as it is alleged that what is mostly done is an estimate and approximate cost year after year.

After developing a budget, the second step is to develop estimates of how much money will be spent on a programme and how many benefits will be generated. This is an expenditure profile, and it includes information about the costs of goods and services purchased, wages paid, and other expenses incurred by participants in the programme. The third step in undertaking an expenditure assessment is to compare the costs and benefits of the programme against each other. This helps make informed decisions about which programmes to invest in and which to discontinue. In Nigeria’s public administration the last, especially, hardly happens. So, one is inclined to hope the current administration will establish it starting with the outcome of its forensic audit into the utilisation of Ways and Means.

Meanwhile, the finance minister cited Ways and Means taken by the immediate-past administration for audit. But public records showed that taking Ways and Means began with the President Goodluck Jonathan administration (which was of a different political party, and now in the opposition). In fact, the reason for taking the CBN loans was announced by the then Minister of Finance, Dr Ngozi Okonjo-Iweala, now the Director-General of the World Trade Organisation. One would think this forensic audit should cover that pre-2015 administration too in order to have a holistic outcome that puts all doubts to rest regarding the utilisation of Ways and Means. Yet there is another doubt the audit can help clear. In utilising Ways and Means, was a single naira looted? This is an important question to find answers to for two reasons.

One, there is a general situation among Nigerians that whenever an official audit is embarked upon regarding the utilisation of public funds, it is believed funds have been looted. This happens because the nation’s public service is such that hardly does anyone see what doesn’t belong to them and fail to loot. Scandal after scandal has lent credence to this. So, it is difficult for citizens to believe that a Nigerian can be in an office, or have access to funds and yet be transparent and honest, adhering to best global practices. Nonetheless, this nation has such individuals who are unsung for their probity.

These are people who know they have a reputation to protect, people known to have left behind a record of transparency wherever they have served. Under the Goodluck Jonathan and Muhammadu Buhari administrations, did the CBN loan find its way into private pockets? The audit Edun mentions will help answer this question and many Nigerians are eager to know the outcome. The second point regarding the need for this audit was the impression created after a report of the special investigator appointed by the current government was said to have been leaked. There were new reports online (not by any serious media platforms in Nigeria) making insinuations about government officials which the so-called leaked report itself didn’t make in any way. With the outcome of the forensic audit such insinuations too will either be established or dismissed.

It’s interesting to hear another observation the minister made in the course of his interaction with lawmakers. He said the government was also interrogating the revenues due to it from everybody in view of the fact “that Ways and Means is going down rather than up” and that the government “is servicing all the debts.” What stands out here is that the current government is servicing all debts, including the Ways and Means taken under the Buhari administration and for which a forensic audit is being conducted. The inference can thus be drawn that the current government, because it has all the records of what was done under previous administrations, has a fair idea of where the CBN loans ended up since it has decided to service all debts. Those debts include the CBN loans the current administration also has taken, and one therefore wants to believe that it has an impression of what financial pressures previous administrations too were under which made them take the loans.

I stated it on this page in the past (which is what the finance minister is now saying) what we should focus on as a nation, even as efforts were being made to ascertain how Ways and Means was utilised. Now that the CBN loans have been taken, how to stop taking more by growing our revenue should be the focus. That Ways and Means is going down is therefore good news. As this happens, the point that the government strives to bring in every revenue due to it is also important. The humongous amount retained in bank accounts by MDAs is staggering. The amount looted is shocking going by what the head of an anti-graft agency publicly said lately. So bringing all revenues in is one way to get us off loans as well as reduce the financial pressure. And following the outcome of the audit, one expects the minister to bring closure to every controversy Ways and Means has generated. Official silence shouldn’t end it.