By Suleyman A. Ndanusa, PhD, OON
Public borrowing is usually defended with one reassuring adjective of productive. The word appears so frequently in budget speeches, financing plans and project documents that one might assume productivity begins automatically once a loan agreement is signed.
Unfortunately, money does not become productive merely because government calls it so.
A loan may finance a road, power project, hospital or irrigation scheme and still fail the productivity test. The project may have been poorly selected, excessively priced, inadequately designed, slowly implemented or completed without the complementary facilities needed to make it useful. A hospital building without doctors, equipment and medicines is capital expenditure, but it is not yet healthcare. An irrigation project without water management or access to markets may irrigate the budget more successfully than the farms. And a road that stops before reaching the market may improve the contractor’s balance sheet more than the farmer’s journey.
This is why Nigeria’s conversation should move from productive borrowing to fiscal governance. Borrowing is only one source of public money, and project approval is only the beginning of public responsibility. The real concern is the entire chain: what government raises, what it borrows, what it chooses to finance, how efficiently it delivers, what it measures and what ultimately changes in the economy and in citizens’ lives.
Nigeria does not merely need rules governing how much government may borrow. It needs a compact governing how all public resources are converted into public value.
FOLLOWING THE MONEY AND THE RESULT
Every major public expenditure travels through a long chain, a fiscal need is identified; a financing decision is made; a project is selected and included in the budget; procurement begins; funds are released; implementation follows; an asset is completed; a service is expected to commence; and, finally, some economic or social improvement is supposed to occur.
Too often, public accountability examines these stages separately. One institution considers the financing, another the appropriation, another the procurement and yet another the audit. Each may perform its part correctly while the project as a whole fails to deliver the result for which the money was committed.
The chain is only as strong as its weakest link. Sound borrowing attached to poor project selection remains poor fiscal governance. Competitive procurement followed by weak implementation still wastes public resources. Completing an asset without providing for its operation and maintenance merely converts a development project into an expensive monument usually one with a large plaque and a very small public benefit.
The proposed Fiscal Governance Compact should therefore rest on one clear principle that every significant public expenditure must have an identified purpose, a measurable result, a responsible institution, a credible delivery timetable and an independently verifiable impact.
The existing architecture provides a useful foundation. The Fiscal Responsibility Act establishes important principles governing borrowing for capital expenditure and human development, supported by cost-benefit analysis. The debt management framework addresses sustainability, cost, maturity, refinancing and portfolio risk. Procurement rules emphasise transparency, competition and value for money. Budget monitoring institutions examine implementation, while audit seeks to confirm whether public funds were properly used.
These are valuable safeguards. The weakness is that they are often treated as separate administrative stations rather than as one continuous accountability system.
The Debt Management Office may determine that a borrowing proposal is sustainable. The Budget Office may confirm that the project has been appropriated. The Bureau of Public Procurement may certify the process. The implementing ministry may report that work is 80 per cent complete. The Auditor General may later confirm that the expenditure was recorded. Yet the most important question may still be unanswered. Did the project deliver the economic or social result for which public money was committed?
Debt sustainability asks whether government can repay. Fiscal governance must go further. It must ask whether government should finance the proposal, whether the project is ready, whether the responsible institution can deliver it and whether the eventual result will justify the cost.
A country may remain within a conventional debt to-GDP threshold and still experience severe fiscal stress where revenue is weak and debt service absorbs a large share of government income. It may also borrow for something classified as capital expenditure without generating revenue, reducing future costs, expanding productive capacity or producing a measurable social return. Sustainability and productivity must therefore be tested together; neither should be assumed from a label.
FOUR QUESTIONS BEFORE PUBLIC MONEY MOVES
The compact should require every major programme, project or borrowing proposal to answer four connected questions.
The first is necessity; why this project?
The first question should never be how a project will be financed. It should be whether the project deserves to be financed at all. The sponsoring institution must define the problem, establish the existing conditions and demonstrate that its proposal offers greater public value than competing uses of scarce resources. It should show who will benefit, what will happen if government does nothing, whether a cheaper or more effective solution exists, whether the project properly belongs to the federal government and whether a similar project already exists or has been sitting unfinished in previous budgets.
That last question is especially important. Nigeria has sometimes treated the annual budget as a generous guest list,with which new projects are continually admitted even when earlier guests have not been served. The result is a wide spread of thin funding, slow completion and capital projects that age gracefully in budget documents without ever becoming useful public assets.
The second question is financing and why this source of money?
Not every useful project should be financed by debt, and not every public asset must be built, owned and operated exclusively by government. The appraisal should compare the realistic options, budget revenue, borrowing, public- private partnership, concession, guarantee or blended finance. Where borrowing is proposed, the decision should disclose the cost, tenor, currency exposure, repayment source and effect on the broader debt portfolio.
Debt is easier to justify when the asset will expand productive capacity, generate or protect revenue, reduce recurrent costs, remove a major economic bottleneck or yield a measurable long-term social return. Foreign currency borrowing deserves an additional test. Will the project earn foreign exchange, save foreign exchange or generate benefits strong enough to absorb the exchange rate risk?
The analysis must also recognise that public money is fungible. Even a facility formally tied to a particular project may release other budgetary resources for unrelated expenditure. Fiscal assessment should therefore examine the government’s overall position, rather than focusing only on the attractive name printed on the loan document.
The third question is readiness; can government actually deliver the project?
An economically desirable project that is institutionally undeliverable is not yet investment ready. Before it enters the budget, there should be credible evidence of design completion, land availability, regulatory approval, procurement preparation, counterpart funding, implementation capacity and arrangements for operation after construction.
Large projects should not enter the budget as political aspirations carrying preliminary cost estimates. They should pass through a project readiness gateway, moving from concept and appraisal to design, financing, procurement, delivery, operation and evaluation only when the evidence required at each stage is available.
Budget releases should then be linked to independently verified milestones. Cost variations above an agreed threshold should return for review instead of disappearing quietly into revised project figures. Persistent delay should lead to restructuring, reassignment or cancellation. There is little fiscal virtue in continuing to fund a project simply because government has already spent money on it. Yesterday’s expenditure is not a sufficient reason for tomorrow’s waste.
The fourth question is impact. What actually changed?
Government reporting is often strongest at counting inputs and outputs. It tells us how much money was released, how many contracts were awarded, how many items were purchased, how many kilometres were constructed and how many people attended a training programme. These figures matter, but they do not by themselves establish public value.
For a road, the output may be the kilometres completed. The relevant outcomes include shorter journey times, lower vehicle operating costs, increased traffic, improved market access and reduced post harvest losses. The larger impact may be higher agricultural income, new investment and stronger regional integration.
For education, classrooms, teachers recruited and enrolment figures are outputs. Attendance, completion and learning achievement are outcomes. Improved employability, productivity and lifetime earnings are part of the longer-term impact.
For healthcare, a completed facility is an output. Increased access to treatment, shorter waiting times, better coverage and lower mortality are the outcomes that justify the expenditure. A ribbon cutting ceremony may announce the building, but only a functioning service can announce success.
This distinction would change the language of fiscal accountability from “How much did we spend?” to “What did the spending change?”
GIVING EVERY MAJOR PROJECT A PUBLIC VALUE PASSPORT
Every project above an agreed threshold should carry a short Public Value Statement from approval to final evaluation. It would serve as the project’s public value passport, a stable record of why the project was selected, what it will cost over its entire life, how it will be financed, who will benefit, what will be delivered and how success will be judged.
The statement should identify the baseline conditions, annual milestones, intended outputs and outcomes, operating and maintenance arrangements, major risks, responsible accounting and delivery officers, and provisions for independent evaluation. It should include the total lifecycle cost not merely the construction price and, where debt is involved, the repayment implications.
Keeping this statement attached to the project throughout its life would prevent the objectives from changing conveniently between approval, implementation and evaluation. A project approved to improve food security should not later be defended merely because a warehouse was completed. The warehouse is the asset; improved storage, reduced losses and greater food availability are the purpose.
ONE PROJECT, ONE IDENTITY, ONE RECORD
The compact should also establish a common digital identifier for every major public project. That identifier should connect the original approval, budget provision, procurement record, treasury releases, debt funded disbursements, contractor information, physical progress, audit findings, operational status and outcome indicators.
At present, different institutions may hold accurate but disconnected pieces of the same story. A project may have one description in the budget, another in procurement records and a third in implementation reports. Following public money then becomes an exercise in administrative archaeology: the information exists, but someone must excavate several systems before the project can be reconstructed.
A unified fiscal governance dashboard would allow authorised institutions to see the approved and revised project cost, financing source, disbursement history, contractor, planned and actual milestones, physical and financial completion, outstanding liabilities, operational status and emerging outcomes. A public facing version need not disclose commercially sensitive or national security information, but it should provide enough to strengthen accountability and confidence.
The objective is not another decorative dashboard. It is a single project record that allows government, the National Assembly, oversight institutions and citizens to follow the same undertaking from approval to delivery and from delivery to result.
CONNECT THE INSTITUTIONS; DO NOT CREATE ANOTHER ONE
The Fiscal Governance Compact should not begin by creating a new agency. Nigeria already has institutions working across the fiscal cycle: the Ministry of Finance, Ministry of Budget and Economic Planning, Budget Office, Debt Management Office, Bureau of Public Procurement, Office of the Accountant-General, Office of the Auditor-General, Fiscal Responsibility Commission, implementing ministries and the National Assembly.
What is missing is not another institutional signboard. It is a connected system built around a shared project record and a common definition of performance.
The Ministry of Finance should coordinate the fiscal and financing assessment. The Budget Office should enforce strategic alignment and the readiness gateway. The DMO should assess borrowing cost, portfolio risk and sustainability. The BPP should protect competition, procurement integrity and price reasonableness. Implementing ministries should remain answerable for delivery and operation. The Auditor-General and Fiscal Responsibility Commission should provide independent assurance, while the National Assembly should use the same evidence in appropriation and oversight.
Responsibilities must be clear enough that failure cannot disappear into that famously accommodating phrase, “government process.” A process cannot be held accountable. Institutions and responsible officers can.
CONSEQUENCES, CORRECTION AND INSTITUTIONAL MEMORY
A compact without consequences may become another excellent document resting peacefully beside previous reforms.
Persistent non performance should affect future budget allocations, project approvals and the performance assessment of responsible institutions and officers. Contractors with repeated delivery failures should face proportionate restrictions. Unauthorised changes in scope and unjustified cost escalation should trigger timely review rather than post mortem concern years later.
The system must, however, distinguish misconduct from genuine implementation difficulty. Its purpose should not be to criminalise every delay or punish officials for taking responsible decisions. It should detect problems early, correct projects while they can still be rescued and improve the quality of future choices.
Post completion reviews should therefore feed into new cost benchmarks, procurement design, implementation planning and sector policy. Government should not pay repeatedly to learn the same lesson. Institutional memory is itself a public asset.
FISCAL GOVERNANCE IS ALSO MONETARY POLICY’S ALLY
This compact is closely connected to the debate about inflation, interest rates and monetary policy transmission.
Large and poorly coordinated fiscal deficits can add liquidity to the economy, strengthen demand pressures and complicate the Central Bank’s inflation mandate. Heavy domestic borrowing can raise sovereign yields, increase the pricing benchmark for private credit and make government securities more attractive to banks than lending to businesses. Delayed projects may add to public debt without expanding supply, leaving the country with the liability but not the productive capacity that was supposed to justify it.
Fiscal governance is therefore also an instrument of monetary stability.
Better project selection and faster delivery can expand food production, electricity supply, transport capacity and other productive infrastructure that interest rate policy cannot manufacture. The policy rate can restrain demand; it cannot complete an irrigation canal, repair a transmission line or move tomatoes to market. Credible expenditure and borrowing decisions can also reduce fiscal risk and, over time, support lower financing costs across the economy.
The Ministry’s engagement with the CBN would consequently be stronger if it could show not only that important sources of inflation are supply driven, but also that fiscal policy is being reorganised to address those constraints credibly. Monetary policy should not be asked to compensate indefinitely for projects that were financed but never became productive.
THE COMPACT NIGERIA NEEDS
The central undertaking can be stated simply: government will raise, borrow, allocate and spend public resources only through processes that establish necessity, affordability, readiness, transparency and measurable public value. Every major expenditure will be traceable from approval to delivery and from delivery to outcome. Performance will be reported in terms of what was financed, what was completed, what changed and whether the result justified the cost.
Nigeria’s fiscal debate has concentrated heavily on the size of the budget, the level of borrowing and the percentage of implementation achieved. These are important measures, but they are incomplete.
A budget is not successful merely because money was released. Borrowing is not productive merely because it financed something classified as capital expenditure. A project is not complete because the contractor has left the site and a plaque has arrived.
The true fiscal test is whether public money has become public value.
That is the purpose of the proposed Fiscal Governance Compact: to replace fragmented compliance with end-to-end responsibility, and to ensure that what government finances, what it measures and what citizens experience finally become part of the same account.
Suleyman A. Ndanusa, PhD, OON, is an economist, lawyer, strategic studies scholar, and public policy thinker and practitioner with extensive experience in financial markets, regulation, governance, national Security and development.
