Nasir El-Rufai - Budget 2012 – The Rewards of Insurgency

We continue our detailed review of the 2012 Budget proposals today looking closely at the amounts earmarked for three budget heads that are connected to the security and intelligence community, and ostensibly driven by the decisions in the NSA’s office. These are the allocations to the Amnesty Programme, the Presidential Air Fleet and for Maritime Security.

Our objective is first to ask whether we have not become a society that rewards taking arms against the State, secondly to appreciate the huge amounts allocated and then ask the standard quantity surveying question – is Nigeria getting value for the money being spent?

These questions need asking particularly in light of some developments in the last week or so. The first was a text message sent to me from a staff of the Budget Office observing that for the eight years between 1999 and 2007, the cumulative amounts allocated to, and controlled by the NSA’s office were about N29bn,  with a brand new NSA office was built out of that and more  - less than what the office got allocated in just one year in 2012! Either this allocation is for something else other than security, or someone is taking an early, generous pension, the officer opined.  More questions than answers!

The second is the decision of the Jonathan administration to hand over security, regulatory and revenue collection functions of the Federal Government in its territorial waters to a private company allegedly owned or control by the one-time militant known as Tompolo, in what is clearly a dodgy, crony-driven afterthought. This is even when N4bn has been proposed in the 2012 Budget for “Maritime Security”, and in spite of loud objections by sections of media and civil society.  Thirdly, is what appears to be  a half-hearted willingness of the administration to negotiate with the insurgents of Boko Haram days after the Chief of Army Staff has sworn that his military solution will wipe out the sect soon. What is the implication of this and what does the immediate future portend?

In 2012, the Jonathan administration proposed a budget  of some N124.3 billion for the intelligence community. Separately, N4bn has been budgeted for maritime security and N11.2bn for the pensions of the SSS and NIA retirees as consolidated revenue fund charges, and N74.2bn for the Amnesty Programme, now tucked away under the SGF’s office. Thus effectively, we are looking at about N210bn for civil, non-uniformed security spending. We will look at the budgets of the Armed Forces, the Police, and Para-Military services in subsequent articles.

A closer look at the President’s Amnesty Programme (PAP). It was the initiative of President Umaru Musa Yar’Adua as a response to intensified levels of militancy in the Niger Delta, the disruption of crude oil production and exports, and heightened insecurity of lives and property in the region. According to Yar’Adua insiders, the then vice-president was tasked to come up with a plan, which took too long to articulate, and which Yar’Adua found impractical and unworkable. He therefore turned to some individuals, businessmen and ‘serious’ governors in the region to help develop a workable strategy. As soon as that was done, Yar’Adua moved with uncommon speed to roll out the programme and get stakeholders’ buy-in. He made several concessions which included releasing the militants then in detention or on trial in courts in Nigeria. Is that a workable template for engaging Boko Haram?

For Yar’Adua, the failures of successive administrations to address the fundamental developmental and environmental issues in the region is the problem, and he genuinely wanted to draw a fresh basis for engagement. Similar questions need to be raised and honest determinations made regarding the Boko Haram insurgency, identifying the root causes, the ‘dramatis personae’  and how we got to where we are, before developing a workable approach.

With regards the Niger Delta, the  issues in my humble opinion are more complex than that identified by Yar’Adua, and that is why I felt then that the solution was flawed and unsustainable. The strategy of handing out wads of cash to people that (1) have not earned the money through meaningful work and (2) with a pre-existing sense of entitlement may ostensibly amount to rewarding insurgency – what economists call “moral hazard”. Whether the ex-militants are on foreign vacations, attending skill-building programmes (or even military training, as being rumoured), the challenge is to find them jobs that pay better than their previous lives – during militancy and after. That means jobs that pay at least N65,000 tax-free monthly stipend, which with other costs amounted to N3 million per annum – about what we spent per militant in 2011. Boko Haram of course may require a different approach.

Last year, the Programme was allocated N99bn, rapidly up from N2.9bn in 2009 and N28bn in 2010. In all, over N200bn would have been spent on the programme by the end of this year, perhaps another N100bn next year which is said to be the programme’s terminating date. Then what next? Where do we generate the tens of thousands of oil-related jobs for them? What about other youths from the region that have not been captured in the original programme, but suffer from the same hopelessness that pushed their elder siblings to militancy? What signal does this send to youths of other regions? These are key public policy issues that require very deep reflection.

The truth is that unless the quality of governance in the region improves and the resources allocated used by the State Governments, Niger Delta Development Commission (NDDC) and Ministry of Niger Delta Affairs judiciously used for physical infrastructure and human capital development, nothing will ever change for the better. Last year, quite apart from the huge funds from federation account that went to the State Governments in the region, the NDDC received N56bn from the federal government and the Ministry of Niger Delta Affairs collected and spent about N39bn.

Like the rest of Nigeria, the binding constraints are quality of governance, accountability in the use of resources and attitude of the leadership and followership – and when these are resolved locally as Governor Rotimi Amaechi is said to be trying to do, the task environment improves for everyone., and insurgency and violence lose their attraction. Throwing money at any problem, which ends up getting diverted to a few people’s pockets is simply postponing the evil day, and compounding the moral hazard problem. In 2012, the NDDC gets N55bn and the Niger Delta Ministry another N57bn. These funds should be spent addressing fundamental problems, not on spurious contracts with a “share-the-money” attitude. I will return to the Niger Delta in a future article, by God’s Grace.

The Presidential Air Fleet (PAF)’s budget is under the office of the NSA. This year, PAF envisages spending N20.4 million for staff costs and N665 million for overhead without any breakdowns. The capital budget is some N2.9bn thus bringing the Fleet’s total allocation to some N3.5bn. The PAF has since its establishment gone through several mutations. It has had civilian pilots from the defunct Nigeria Airways side by side with military personnel (due to fear of in-flight coups like the 1985 aborted plot!), but is today largely manned by Nigeria Air Force personnel.

The PAF’s capital budget has been earmarked for motor vehicles (N113.5 million), office equipment (N11.2 million), purchase of sports and games equipment (N15 million), Installation of cameras and related equipment (N12 million), and construction of PAF staff quarters (N241.5 million). Other items of expenditure include construction of new hangar (N550 million), computerization of aircraft spare parts inventory (N14 million) and the balance of N1.9bn for purchase of Hawker 4000XP aircraft, which was first budgeted for in 2007 and delivered in 2010. What is interesting is that even after delivery in 2010, the sum of about N17bn (US $110 million) was budgeted for it in 2011, and now another $12 million! The N17bn is the amount I mistakenly assumed was in the 2012 budget. This is a very expensive plane indeed that we have been budgeting and paying for across five fiscal years. There is need to know how much this plane costs bearing in mind the market prices of similar or better, fully-loaded executive jets – information now freely available on the web.

Some have asked the question whether Nigeria’s president needs to maintain a fleet of aircraft. After all, they say, the Queen of England and the British Prime Minister flies everywhere in the world on British Airways, UK’s national carrier. Such views forget to mention that the USA has a fleet of aircraft dedicated for the president. Even the secretary of state travels on official assignment from that fleet.  We should look at our environment and choose what will work for us, but without waste and impunity. Should our president be made to suffer the usual several hour delays when travelling even within Nigeria? I do not think so. Last time I checked, we had 5 aircraft in the fleet, some of them nearly 20 years old. Do we need five planes? Is the usage of the planes for shopping sprees by presidential friends and relations legal and justifiable? Should private visitors to the president have access to the fleet? What is the framework for accountability and use of these aircraft? These are the questions that need to be answered to make the system work better.

The last item is the N4bn earmarked for Maritime Security as a charge on the consolidated revenue fund (CRF) without any breakdown or details. Based on budgets prepared some years back, it is my natural assumption that this item is the continuation of investments in boats and related equipment for the use of the Joint Task Force and the Nigerian Navy for use in policing our territorial waters and the creeks of the Niger Delta. These are constitutional roles for our military that I do not think the president can privatize or outsource to any private company. And it is therefore surprising that no one reminded the president that regulatory, security and revenue collection matters are not in any of the Schedules to the Privatization & Commercialization Act 1999. Indeed, the use of private companies to collect revenue has been specifically outlawed in Nigeria last time I checked. But I forget that like Napoleon in Animal Farm, laws, rules and regulations do not apply to some people that are more equal than the rest of us. Welcome to our new Jonathanian Republic!

by Nasir El-Rufai