Creation of Supreme Audit Institution with Participatory Mechanisms (NG0032)

Brief Description of Commitment: To strengthen public financial management in Nigeria through effective Institutional reforms of the legal framework guiding audit processes and creation of supreme audit institution.

General Problem / Challenge Addressed by the Commitment: The legal framework for public auditing at the federal level in Nigeria is obsolete and requires repealing and enactment of a new Audit Law to create an independent supreme audit institution. Also, there is lack of citizens participation in the audit process and lack of transparency in the activities of Public Accounts Committees in the National Assembly. These gaps hinder accountability in the management of public resources in Nigeria.

Specific OGP Issue(s) in Focus: 1. Absence of citizens' participation in the audit process. 2. Inefficient and ineffective management and utilization of public resources. 3. Poor delivery of public services. 4. Low budget performance. 5. Weak accountability mechanism.

Rationale for the Commitment: Enacting a new Audit Law will strengthen the Office of the Auditor-General of the Federation and guarantee its financial, operational, and administrative independence to perform its constitutional functions of ensuring accountability in the management of public resources. This will also aid citizens participation in the audit process and improve transparency in the activities of Public Accounts Committees

Main Objective: To ensure that government spending and processes adhere to the strict compliance of approved budget and that all extant rules of government in the decision-making process and disbursement of public funds.

Anticipated Impact: Improved transparency and accountability in the budget process through independent and participatory audit of government expenditure, processes, and outcomes.

Expected Outcomes | Milestones (Performance Indicators)

1. Improved management of public resources to provide essential services. | Level of transparency of budget process (Means of Verification - Ranking in the Open Budget Index)

2. Increased citizens' participation in budget processes. | Level of citizen's satisfaction with budget process

3. Improved governance, transparency and accountability. | Percentage of citizens aware of budget process and with access to sectoral performance reports

Planned Activities (Start Date - End Date | Expected Output(s) | Output Indicator(s))

1. Timely publication of key audit documents as part of completion of the budget cycle. (January 2023 - December 2024 | All relevant documents published on time. | Number of audit reports produced)

2. Stakeholder engagements to advocate for granting of independence to the Audit Agency (January 2023 - December 2024 | 1. Re-submission, Passage and effective take-off of the New Audit law 2. Strengthening the mandate of the existing Audit Agency | 1. Signed audit law in use 2. Amount of direct funding to the Audit Agency from statutory transfers 3. Number of professionals engaged in the Audit Agency)

3. Timely and public presentation of quarterly audit report (January 2023 - December 2024 | Published quarterly report of audit | Number of Agencies publishing quarterly Audit reports)

4. Timely publication of annual audit reports (January 2023 - December 2024 | Quality auditing process and output | Average months taken for producing Audit report from end of year)

5. Improving citizens' participation in the audit process and Public Accounts Committees' review of audit reports (January 2023 - December 2024 | Citizens are informed and make inputs to audit report review process | Percentage of citizens with access to Audit documents and information)

6. Timely publication of audit recommendations by the National Assembly (January 2023 - December 2024 | Publication of report of Public Accounts Committee of the National Assembly. | Number of Audit recommendations by the National Assembly carried out)

7. Advocate for timely implementation of audit recommendations by Executive agencies (January 2023 - December 2024 | Citizens advocate for timely implementation of audit recommendations | 1. Number of advocacy visits carried out to selected ministries: 1. Health 2. Education 3. WASH 4. Agriculture 5. Power 2. Number of media dialogue around the executive agencies 3. Number of audit recommendations implemented 4. Number of oversight functions carried out by NASS to ensure implementation)

Source(s) of Funding: Federal Government Budget and Donor Agencies

Action Plan Review

Commitment 2. Effective and participatory audit that enhances transparency and accountability

Commitment Cluster 1: Open Budgets [Budget Office of the Federation, Office of the Auditor General of the Federation, BudgIT, Paradigm Leadership Support Initiative, etc.]

For a complete description of the commitment, see Commitments 1 and 2 in Nigeria OGP Action Plan 2023–2025.

Context and objectives

Commitments 1 and 2 aim to reinforce responsible management of Nigeria’s financial resources by strengthening transparency, civic participation, and public accountability in budget and audit processes. Nigeria has a legal framework and institutions that support transparency and accountability in the budget process. Yet the government often falls short of transparency and accountability requirements, such as those laid out in the 2007 Fiscal Responsibility Act, Policy, and Guidelines. [49] With the Budget Office of the Federation and civil society at the vanguard—and support from the Public Expenditure and Financial Accountability Program ^[50]—the government has made progress towards meeting these requirements in recent years. [51]

This commitment builds on open budget reforms advanced under the previous two action plans. [52] Under the last action plan, the government streamlined the budget timeline, increased timeliness in the publication of key budget documents, and modestly strengthened public participation. [53] The Open Budget Survey has reported a steady improvement in the transparency score, from 17% in 2017 to 21% in 2019 and 45% in 2021. [54] However, many of these positive practices are not institutionalised, and public participation in the budget process lags behind transparency efforts.

Nigeria continues to face the competing economic pressures of high levels of poverty, public debt, inflation, and corruption. Nigeria’s change of administration in 2023 has resulted in a shift in government priorities. Yet responsible public financial management remains a priority for Nigerian citizens and civil society. [55] Open budget reforms were identified as a priority in a citizen survey conducted during the co-creation process. [56] Civil society organisation BudgIT highlights that a lack of coherence, timeliness, and openness in Nigeria’s budget process contributes to financial waste and mismanagement. [57]

BudgIT specifically notes the need to strengthen government entities’ compliance with audit recommendations, monitoring and evaluation reports, and Budget Office of the Federation circulars and guidelines. Additionally, civil society notes the need to increase the scope and timeliness of published budget documents and audit reports to enable the government and the public to play their accountability role. In particular, Nigerian CSOs underscore the necessity to further strengthen and update the legal framework underpinning the budget process. [58]

Potential for results:Substantial

This analysis focuses on the milestones under Commitments 1 and 2 that have the greatest potential for results. While several milestones under this cluster are a continuation of existing practices, others aim to implement reforms not achieved under previous action plans or strengthen those underway. This reform’s greatest potential lies in its promise to institutionalise open budget and audit practices and strengthen public participation in budget processes.

Institutionalising open budgeting

Under the third action plan, the Office of the Attorney General of the Federation commits to advocating for the passage of the Federal Audit Service Law. For this commitment to achieve its full potential, the IRM recommends that reformers also seek opportunities to institutionalise open budgeting through the passage of the Organic Budget Law and revising the Public Accounts Committee Act of 2004. Consequently, the National Assembly has a key implementation role in this reform to fulfil its full potential. Identifying and working with champions within the National Assembly will be vital to achieving significant results.

The government’s commitment to pass the Federal Audit Service Law is one of the most promising elements of this reform. A lack of timely and regular performance auditing in Nigeria is a major obstacle to the government’s anti-corruption aims. Factors undermining public audits include a lack of funding for the Auditor General of the Federation, accommodations for audit officers, compliance with recommendations, and a legal mandate to audit government entities established by an Act of the National Assembly. [59] The Federal Audit Service Law would give the Auditor General of the Federation additional powers and resources to carry out its mandate. It would also include provisions for citizen participation in the audit process. The Act was passed in the National Assembly but not signed by the former president under the last action plan. As of October 2023, the Act had passed the House of Representatives. [60]

Commitment 2 aims to enable citizen participation in the Public Account Committee of the National Assembly’s review of audit reports and timely publication of their recommendations. The Public Accounts Committee currently has unlimited time to deliberate on the Auditor General’s Annual Report, which has delayed reports being made public by years. Therefore, opportunities for public participation can be established, and the Public Accounts Committee Act of 2004 could be amended to set a specific timeline for review. [61] Revising the act would be a concrete step to facilitate the timely publication of audit reports as aimed for under this cluster.

While outside the commitment scope, a key opportunity to increase the ambition of this reform would be to pass the Organic Budget Law to institutionalise the Budget Office of the Federation. [62] Government and civil reformers agree that the Budget Office is a leader in government transparency and openness. [63] However, there is low compliance among ministries, departments, and agencies (MDAs) with the Budget Office of the Federation’s budget circulars and guidelines. Moreover, the Budget Office does not oversee government-owned enterprises’ budgets. In 2023, Former President Buhari instructed the Ministry of Finance, Budget and National Planning to mainstream open budget reforms and work with the National Assembly to pass the Organic Budget Law. [64] BudgIT suggests that a Presidential Circular could help to mandate MDA compliance with the Budget Office’s instructions. [65] Either way, reformers agree that a law that backs the Budget Office of the Federation [66] could institutionalise positive open budget practices. [67]

Citizen participation

This reform has the potential to strengthen and institutionalise public participation in the budget process. The Open Budget Survey notes that Nigeria’s score for public participation modestly increased from 21 in 2019 to 26 in 2021. The report showed that public participation was better at formulation (score of 40/100) and approval (score of 33/100). With a low score of public participation at implementation (25/100). [68] Establishing channels for informed and inclusive public participation in budget and audit processes would be a notable departure from existing practice.

Importantly, the National Assembly commits to holding public hearings on five or more priority sectors of the budget and to mobilising CSO and public participation in the hearings. Consistent and inclusive public budget hearings would mark a significant improvement from current practices. In recent years, public budget hearings were either cancelled due to the COVID-19 pandemic and, when held, only select organisations were invited to attend. Gabriel Okeowo from BudgIT observed that on some occasions, CSOs who would ask difficult questions were not allowed to speak during the hearings. [69] Alfred Okoh from the Budget Office acknowledged that there could be better attendance. This could be addressed by providing advance notice through a calendar and ensuring that the government explains how public input was acted upon. [70] Meaningful participation in National Assembly budget hearings would be a significant step, as the National Assembly’s budget amendments often disregard earlier consultations held by the Budget Office. This not only distorts the coherence of the decisions but also reduces public confidence in the budget process, thus negating the public participation gains. [71]

The Budget Office of the Federation also commits to continuing to hold public forums to collect citizen input on the pre-budget Medium Term Sector Strategies (MTSS) and Medium-Term Expenditure Framework (MTEF) documents. These documents inform the annual budget. Public consultations on the draft MTEF have been held since 2019. Alfred Okoh [72] reported that the law mandates two public consultation meetings, hosted and funded by the government in a year. He shared examples of the MTEF public consultations [73] and the Public Presentation and breakdown of the 2023 Appropriation Act. [74] Physical meetings have been in public buildings with the capacity to host 300–500 citizens. Complimentary online sessions were hosted, and these reported peak attendance of 1,000–3,500 on Zoom, 20–500 on YouTube, and approximately 10 million live TV broadcasts. [75] These included a question-and-answer session. Of note is the virtual poll feedback that gauged citizens’ perceptions of the MTEF. Findings were shared at the public consultation. [76] As previously noted, the Budget Office can continue deepening participation in MTEF and similar discussions by ensuring communication on how public input is considered and acted on. [77] The government should demonstrate how public consultations influenced these budget documents; otherwise there is a risk that participants will be disillusioned that their efforts are not worthwhile.

Additionally, the government commits under Commitment 1 to continue improving “technology-based feedback platforms.” The government of Nigeria established the Eyemark platform [78] under the previous action plan, which aims to strengthen public oversight of federal capital projects. BudgIT reports that over 50,000 public infrastructure projects have been abandoned by the federal government. [79] Generally, government entities responsible for monitoring and evaluation face inadequate funding and inattention to their findings. [80] As of March 2023, 45,637 federal capital projects had been uploaded to the Eyemark platform. [81] However, the government and CSOs agreed that Eyemark is underused due to low public awareness. In the short term, the government and civil society will need to sensitise the public on Eyemark and demonstrate responsiveness to citizen concerns raised through the platform. Clarity on the government body responsible for updating and responding to citizen input and sufficient resources are key to the platform serving its intended aim. [82] In the longer term, Nigerian civil society recommends that the government’s monitoring and evaluation framework is backed by law to ensure transparency and accountability in government spending. [83]

Milestone 6 continues the aim under previous action plans to conduct annual citizen budget satisfaction surveys. Alfred Okoh [84] highlights that the Citizens Budget Satisfaction Survey was not implemented under the previous action plans because of limited resources and unclear ownership of the survey. He stated that implementation ownership rests with CSOs, who have a mandate to hold the government accountable. [85] The IRM did not find information on milestone 13 to build community capacity using the community charter.

Budget transparency

The government of Nigeria and its civil society partners have made notable progress in advancing transparency of budget documents and information under previous action plans. The 2021 Open Budget Survey report notes that Nigeria has improved on budget transparency from a score of 21/100 in 2019 to 45/100 in 2021. Of the eight budget documents considered in 2021, seven were available to the public, except for the Audit Report. Of those published, five of the seven documents received an average of 78.4 for their comprehensiveness. [86] Most milestones relating to budget transparency under this action plan are a continuation or expansion of existing practices. Reformers are encouraged to fill the remaining budget transparency gaps, institutionalise good practices, and ensure transparency efforts ultimately support informed participation and accountability.

Timely publication of a broader scope of budget and audit documents would continue Nigeria’s positive trajectory towards budget transparency. Under Commitment 1, the government of Nigeria commits to continuing to publish key budget documents promptly and to publish budgets as well as quarterly and annual budget reports for MDAs (milestones 7 and 8). The Budget Office also commits to continuing to publish the Citizen’s Guide to the Budget, as carried out since 2019. [87] Civil society organisation BudgIT notes opportunities to improve include timely publication of the Budget Implementation Report and budgets of state-owned enterprises in the publicised federal budget. [88] Under Commitment 2, the Auditor General of the Federation committed to timely publication of seven quarterly and annual audit reports under milestones 1, 3, and 4. Annual audit reports for 2019, 2020, and 2021 were all published late. Thus, timely publication of the Audit Report during implementation would mark an improvement from existing practice. Notably, the passage of the Federal Audit Services Act [89] would make it mandatory for the Auditor General to publish audit reports as soon as they are submitted to the National Assembly, giving citizens the full picture of the use of public funds.

The Federal Ministry of Finance, Budget, and National Planning developed the Open Treasury platform [90] under previous action plans, enabling citizens to track budget allocations by government MDAs. BudgIT developed a complementary platform [91] to help citizens follow government spending, linked to data in the portal. [92] Opportunities to strengthen the portal under this action plan include building the technological infrastructure to ensure the portal is consistently available and functioning, as well as improving the comprehensiveness and consistency of MDA budget documents. [93] With these improvements, the Open Treasury platform can support the broader aims of informed participation by the public and civil society in Nigeria’s budget process.

Several milestones under Commitment 1 (10, 11, 12, and 14) advance the important aim of increasing government tax revenue but lack a strong connection to open government. These include enhancing transparency on Import Duty Exemption Certificate and other customs revenues, enhancing awareness around TaxPro Max, creating an online Tax Risk Dashboard, and creating an information cycle to mobilise for the Significant Economic Presence (SEP) uptake. Milestone 1, to conduct a needs assessment survey in sectors such as health and education, was continued from the previous action plan as it was not implemented.

Opportunities, challenges, and recommendations during implementation

Open budget reforms in Nigeria benefit from a strong coalition of government, civil society, and international partners who have sought to advance open budget processes across the previous two action plans. However, implementation of the most ambitious activities will depend, in part, on whether this reform continues to receive high-level political support under the new administration. Experience thus far indicates that opportunities for strong implementation include:

· Identify parliamentarians to champion open budget reforms in the National Assembly. Key opportunities to institutionalise open budget reforms will require legislative action by the National Assembly. These include passing the Federal Audit Services Act [94] and the Organic Budget Law [95] and amending the Public Accounts Committee Act. This will require a coalition of advocates within and outside the National Assembly.

· Continue advocacy for political support in the current administration. With the remaining gaps in the legal framework, the change of administration presents a risk to the gains in budget transparency. Therefore, the OGP Secretariat can undertake advocacy activities targeting key leaders in the executive and National Assembly.

· Strengthen feedback to close the loop in public participation. The Budget Office is encouraged to undertake systemised consolidation of feedback received from CSOs and citizens—such as in MTEF and MTSS consultations—with clear processes to report back to citizens on how their input has been acted upon.

· Leverage the strong CSO movement. Nigeria has strong CSOs in the public financial management space, such as Open Alliance, [96] which provides a platform for CSOs to share budget information, conduct pre-budget consultations, and develop a common position. Where government-led spaces are limited, CSOs create spaces and coalesce to push back. There is an opportunity for the Open Alliance to lead the Citizen’s Satisfaction Survey that would hold government accountable.

· Continue existing partnerships for technical support. Nigeria’s journey of fiscal transparency has benefited from technical support from various expert organisations, including PEFA, the World Bank, and the International Budget Partnership. There is an opportunity to continue leveraging these partnerships to deepen transparency and citizen participation.