One of the major issues raised in the report on Special Drawing Rights (SDR) recently released by the Africa Network for Environment and Economic Justice (ANEEJ) has to do with the age-long call for inclusiveness, transparency, accountability in the use of public funds. In this specific case, the focus of the report titled; Report on Utilization of Special Drawing Rights in Nigeria is on what Nigeria, Africa’s economic powerhouse utilized its SDR for in 2021. Accessed at the height of the COVID pandemic, which ravaged world economies, it was important for civic actors to pay close attention to how the fund was used, and if its impact was felt directly in the lives of long-suffering citizens.
Although there are no specific smoking gun allegations of corruption and grand scale larceny, which usually characterize use of public finance in Nigeria, the report nonetheless explores key issues, which constitute the crux of responsive and accountable governance driven by the needs of citizens. Published in August 2023, the report holds significant lessons, especially in the light of the several cases of misuse of funds and the various corruption scandals, which have undermined the trust of citizens in public institutions. The concise 17-page report contains a treasure trove of quantitative and qualitative data captured both in text and graphics. The report shows that US$3.35 billion equivalent of the SDR received by Nigeria in August 2021 translates to N773.25 billion.
It goes on to note that evidence from the Budget Office of the Federation and the Office of the Accountant General of the Federation indicate that of the N4.096 trillion for capital projects in the 2022 budget, only 22.14% have been implemented as of September 2023.
“Likewise, while the government projected that the budget deficit would be N4.65 trillion as of the third quarter of 2022, the actual budget deficit as of September 2022 was N5.99 trillion, which exceeded the pro rata amount by 28.2%.” Importantly, the major finding from the report points to the Nigerian government’s use of the SDR for the purpose of financing the budget deficit in the 2022 fiscal year. The report authors make the point that this approach is fundamentally different from the expectations of stakeholders, when the funds were allocated to Nigeria in August 2021. The report indicates that stakeholders expectations were in favour of channelling of the SDR funds into projects in sectors such as power, health, agriculture, education, and water resources.
It is pertinent to underscore the fact that these critical sectors were believed to be the ones, which would address the poverty and destitution, which were stalking Nigeria, especially given the challenge of the COVID pandemic. Apparently, the failure of the governance actors to utilize the SDR in these sectors, removed the value for money elements from its disbursement, thereby discountenancing the needs of historically vulnerable and marginalized groups.
https://www.aneej.org/wp-content/uploads/2024/01/ANEEJ-SDR-Study-Report-Nigeria.pdf
The report notes that: “whereas the SDR were targeted at sectorial interventions that are domiciled in Ministries, departments, and Agencies, the funds were not appropriated by the National Assembly. Rather, it served as part of the funds used for financing the budget deficit through domestic borrowing from the Central Bank of Nigeria.” As such, one of the recommendations of the report is on the need to amend the CBN Act, 2007, to ensure that monies provided for sectoral interventions are channelled through the MDAs and are laid before the National Assembly to be appropriated.
The report goes on to state: “the context in which Nigeria and other countries received the SDR allocation in 2021 showed that the IMF laid out the overall context for the fund but did not provide specific details on how the funds should be used. While this is an appropriate step by the IMF, there is a need for a legislative framework on how SDRs should be used when received. CSOs and other stakeholders involved in development and sustainable finance should therefore lead the advocacy to call for reform in how the SDR from the IMF is used in countries such as Nigeria.”
Another critical issue raised in the report has to do with the fact that the data also shows most developed countries with higher SDR allocations have no need for them. The report subsequently argues that there should be quicker action in reallocating such SDRs to less developed countries like Nigeria, which have a dearth of funds.
“At the international level, therefore, iNGOs and development partners may collaborate with governments to lead discussions calling for developed countries to donate their SDR allocations to less developed countries such as Nigeria. Options such as channelling SDR through multilateral development banks like the African Development Bank (AfDB) to the target countries may also be considered,” the report notes. It goes on to stress that the gender and youth dimensions of how the funds should not be ignored in subsequent use of such monies.
It read: “Women and youth bear the brunt of economic downturns and the COVID-19 pandemic. CSOs and the government should therefore engage in ensuring that SDR allocations are utilized in an inclusive manner. In light of the above, it is important to develop a framework for tracking the utilization of SDR funds from allocation to release and utilization. Stakeholder engagement to determine the area of priority would also be vital. It is apparent from the utilization of SDR funds allocated to Nigeria in 2021 that these processes were lacking.”
