INVESTIGATION: Akwa Ibom State Government Spends N114.5bn On Ghost Emergencies

Also, the position of the Commissioner that pension and gratuities are sometimes covered by a margin of increase as emergencies are questionable. 

By Ekemini Simon

The scrutiny of the financial statements of Akwa Ibom State between 2008 and 2023 has revealed questionable spending by the Government.

A careful examination of the financial reports from the office of the Accountant General and Budget office of the State for the last 16 years lay bare a revelation that an item tagged “Margin of Increased Cost/Emergency Provision” has served as an outlet to splurge public funds.

Besides the government being unable to provide evidence of what the billions of naira retired through this subhead was used for, there are no known items, programs, and projects that are attributed to the expenses or show value for the billions this budget line has gulped over the years.

The Genesis And Revelation Of Ghost Emergencies 

Checks into the budgets and financial statements of the State show that budgeting and subsequent expenditure on this recurrent item “Margin of Increase Cost/Emergency Provision” in the fiscal life of Akwa Ibom State commenced in 2008.

This was the first budget designed by the administration of Governor Godswill Akpabio. Right from the time onward, in each fiscal year, the government of Akwa Ibom State has been retiring public funds on the subhead through three disbursement lines tagged “Margin of Increase Cost/Emergency Provision (subvention), Margin of Increase Cost/Emergency Provision (overhead cost), Margin of Increase Cost/Emergency Provision (personnel cost). 

The amount retired on this subhead amounts to N114.5bn within the last 16-year period under review.

This period covers the administration of Governor Godswill Akpabio, Governor Udom Emmanuel, and the last seven months of Governor Umo Eno in 2023. The amount spent in 2023 ranks the highest within the last 16 years. The fourth quarter Budget Performance Report of Akwa Ibom State shows that N22.4bn was disbursed under this subhead within 12 months. 

Akwa Ibom State Government Fails To Give Evidence Of Expenditure

Surprisingly, the three offices responsible for the disbursement of this money could not provide evidence of how the money for these items was spent.

This newspaper in early January 2024 through a Freedom of Information (FOI) request to the Head of Budget Office, Akwa Ibom State, Mr. Otu Asuquo; Accountant General of Akwa Ibom State, Mr. Uwem Andrew-Essien; Commissioner for Finance, Akwa Ibom State, Mr. Nsikan Nkan had sought hard evidence on what these funds were spent on.

TheMail Newspaper had specifically requested clarifications on the specific recurrent items that have been enjoying the sector-wide vote on the three aspects of the Margin of Increase Cost (MIC), what warranted expenditures on the subhead each fiscal year, and the actual items or Ministry, Department, or Agency which had the Margin of Increase cost spent on per fiscal year.

The Budget office is responsible for the formulation of recurrent items in the budget with the Accountant General disbursing the required funds under the supervision of the finance ministry. The Accountant General is responsible for safekeeping account books and ensures internal control procedures are maintained to detect and prevent fraud and other irregularities. Yet, the request for evidence from these three offices has been ignored to date.

The failure of these offices to respond to the FoI request is a familiar practice of public institutions in Akwa Ibom State despite the right to freedom of Information being provided for in the Akwa Ibom State Fiscal Responsibility Law (2020). Section 48 (5) of the law provides that “No official secrets law, rule or practice shall operate or be invoked or relied upon by any person to deny, limit or in any way negatively affect the exercise of the right to information conferred by this Law or the Freedom of Information Act upon any person, group. persons, institution, body or agency.”

Regardless, TheMail Newspaper went further to contact the three offices for comment during the period of the investigation. The head of the Budget office who leads the preparation of the recurrent budget and execution of the state’s budget policies declined to comment when he was visited in his office for clarification on the expenditure. He said that he is not authorised to speak on the matter hence all queries should be directed to the Commissioner for Finance.

Efforts to get comments from the Accountant General were also unsuccessful. This newspaper had visited his office in late February but the office had told the newspaper that he was indisposed to attend to our reporter. His phone line rang out without response in early February. A reminder to his WhatsApp line in late February was not also responded to.

Margin Of Increase Spent On Emergencies – Commissioner for Finance

After several postponed meetings with TheMail Newspaper for clarification on the expenditure since January 2024, the Commissioner for Finance, Mr. Nkan finally spoke on the issue during an interview session with our newspaper on February 29, 2024, after his keynote delivery at a seminar on Public Finance Reporting for Journalists in Uyo.

The Commissioner for Finance told TheMail Newspaper that the expenditure covers projects among other spending of the government that were never anticipated.

“I have always said that a budget is just an estimate. The government cannot anticipate everything. When there are emergencies, the government uses the margin of increase to address those things”, he said.

When our reporter reminded the Commissioner that the margin of increased cost in Akwa Ibom State financial books which our reporter referred to are recorded exclusively for recurrent items and not capital to which projects belong, he said that there are times some payments are made on issues like pension and gratuities which were never anticipated.

Commissioner’s Claims Misleading 

The claims by the Commissioner for Finance, Mr. Nsikan Nkan are misleading. According to the financial statements of the period under review, the expenses on the “Margin of Increase Cost” did not cover capital expenditure but rather recurrent items hence the Commissioner’s mention of “projects”, is questionable.

In addition, this is not the only budget line item that the Government of Akwa Ibom State has claimed is used for emergencies. When this newspaper in 2021 had investigated what billions of naira spent on the “Government Special Development Project” domiciled in the Akwa Ibom State Governor’s office is used for, the government said it is used for emergencies. 

Also, the position of the Commissioner that pension and gratuities are sometimes covered by a margin of increase as emergencies are questionable. Scrutiny of the financial statements shows that each fiscal year during the 16 years under review, the Government of Akwa Ibom State has never recorded 100 percent budget performance for pension and gratuities.

This is the same for overall overhead items and personnel costs in each fiscal year thus questioning how the government will have emergencies for personnel cost and overhead when it has not always exhausted what is approved in the budget for personnel and overhead.

Besides, the stand-alone item of Margin of Increase Cost recorded among Ministries Departments and Agencies (MDAs) that receive subvention annually leaves a question on the particular MDA that receives emergency subvention different from that which is published in the government’s financial books.

Expert’s Explanation Opens Loopholes On Government Claims 

While the government of Akwa Ibom State claims that the expenses made on the back of the Margin of Increased Cost are for emergencies, experts differ on the concept of the MIC.

A Professor of Finance at the Federal University, Otuoke, Bayelsa State, Prof Emmanuel Bush said the margin of increase is simply the difference or change in the cost of an item or service in a particular period as compared to another time.

The expenses for margin of increase, he said can be caused by inflation but there must be a comparison to other years to determine the margin.

He said “For us in finance, we don’t look at the amount, we look at the margin of increase in percentage terms, which is the price today minus yesterday’s price over yesterday’s price. Whatever you have, you multiply by 100 which will give you the margin.

“In having a margin of increase, you must choose a particular year in your comparison. If you say increase margin, then it is a plus because you can also have decreased margin. Margin is difference or change and you cannot make a difference if you do not have a two-time situation.”

In reporting its expenditure on the margin of increase, the government of Akwa Ibom State has neither made the comparison to other fiscal years in determining any margin for the year nor noted what may have caused the increase for each of the years recorded.

Akwa Ibom, The Only State That Spends Billions On Margin Of Increase

What is more, an analysis of the financial statements of other 35 states of the federation between 2015 and 2022 Akwa Ibom State stands out as the only State that has spent up to a billion naira on margin of increase. 

Within this period, no State besides Abia has recorded any expenses on margin of increase. 

Although Abia State made a total expenditure of N34.7 million on the margin of increase in two fiscal years (2018 – N23.2m, 2022 – N11.5m), the State did not tie it to any emergency in personnel cost, overhead, or subvention. 

Refusal To Give Details Of Expenditure Exposes Akwa Ibom Government As Unaccountable, Not Transparency – CSO

A Civil Society Organisation, Citizens Solution Network has said that the failure of the government of Akwa Ibom State to give details of the spending on its margin of increased cost exposes the government as telling its citizens that they are not transparent or accountable.

Briefed by the concerns, the Country Director, of Citizens Solution Network, Richard Inoyo said the government not responding to the FoI request for details of the expenditure is a red flag.

He added “This is what some of us call the magic of public finance. That is where journalists and activists must interrogate the Accountant General of the State and Commissioner for Finance to explain where these monies went.

“As TheMail Newspaper had written FoI for details of the expenses, the Government should disclose the expenses in terms of black and white for further interrogation and deliberations. The government needs to be clear on who the beneficiaries or recipients of the money for these emergencies.

“The people need to have the details of these overhead, personnel, and Subvention. Without accountability in public finances, there will be so many irregularities. We expect the government to furnish citizens with an explanation of the details of those subheads they claimed money went into. Refusal simply means the Government is telling the people of Akwa Ibom State that they are not transparent and accountable”.

The organization called on TheMail Newspaper and other citizens to explore legal options in compelling the government of Akwa Ibom State to give details of how the N114.5bn was used.

TheMail Newspaper produced this investigation through TheInvestigator’s Environmental and Accountability Reporting (EAR) project with support from CITAD and the MacArthur Foundation.