By Tony Onyema Ishiekwene
Organisations, whether Private or Public set up objectives and goals each year and it is important to measure performance to see if such goals have been achieved at year end. In the private the goal is to maximise Shareholders wealth; whereas in the Public or Not-for-profit sector, the aim is to maximise VALUE to the public (Citizens) which the public sector organisation is meant to serve- in order words public sector organisations need to measure “Value for Money” and show fiscal responsibility to the public.
There have been issues around bloated procurement budgets in Lagos state and across various sub-nationals following the publication by Lagos state of Budgeting the whooping sum of N440million to acquire a Bullet proof Lexus SUV for the Chief of Staff to the Lagos State Governor, amongst many ridiculously over priced line items in the 2024 state Budget of over N1.7Trillion.
Even when there is financial recklessness by both the Executive and the Lagos State House of Assembly that approved such Budget padding, the state need to be commended for their transparency as many states, including my dear Delta state refused to complete or reveal their procurement data to the public via their websites.
Budgets or Approptiation bills in Nigeria have become a legitimate means by which the Executives, in connivance with the rubber stamp Legislatures, steal the public blind and get away with it as padding and over-bloated Expenditure becomes the Law after approval by the Legislatures both at the National and sub national levels across Nigeria.
On 28th May, 2015 at Buhari’s pre-inauguration night at Transcorp Hilton Abuja, in my speech as Head of Diaspora Nigerian Economy and Strategy Committee, titled: “Buharinomics, pathway to Nigerian Economic Recovery and Development, I spoke on the need for Nigeria to adopt “Value Based Budgeting” (VBB). I noticed that Nigerian Budgeting Systems were not working for ordinary Nigerians.
VBB is based on the concept of Value for Money audit and the 3Es- Economy, Efficiency and Effectiveness of spending or inputs. On Economy, an expenditure on an item in the Budget must be the cheapest price possible for the same quantity and quality of the procurement; For Efficiency of spending, the output must be the highest for a given amount of spending or input; and for Effectiveness, the expenditure or input must meet the objectives for which the Budget was set.
In auditing Value Based Budget, the Auditor General will not only test whether B
Procurement or spending match the Budget, but must also test the Economy of the spending- Is the price paid for the item of expenditure, the cheapest available in the market? On Efficiency of spending, he will test whether the output is the highest obtainable for the input(amount spent). Let’s assume two schools are budgeted to spend N1billion each, and School A has 1000 students while School B has only 800 students- for Efficiency of spending School A has been more efficient than School B because its Cost per Student is lower. For Effectiveness of spending, this measures how the objective of the organisation has been met or not. Using the School example, School B would have been more Effective, if it turns out more students with 5 Credits than School.
I also believe, both the National and sub-nationals (States and even LGs) should have an “Office of Budget Responsibility” (OBS) like you have in the UK and other Western Democracies, where Budget items are analysed and Scrutinised before the Parliament passes or approves those Budgets. That way, the citizens won’t be shortchanged as is currently the case across Nigeria.
From: Chief Tony Onyema Ishiekwene
BSc; MSc; ACMA; CGMA
Tel: +44 7438 047760; +234 808 2782738
Email: tonykwene@aol.com
