THE FEDERAL REPUBLIC OF NIGERIA. Effects of the Conditional Grants Scheme (CGS) on Nigeria's Performance on the MDGs

Transcription

1 THE FEDERAL REPUBLIC OF NIGERIA Effects of the Conditional Grants Scheme (CGS) on Nigeria's Performance on the MDGs June

2 Table of Contents List of Selected Acronyms/Abbreviations... 1 Executive Summary Introduction Rationale, Institutional Structure and Processes of the CGS Rationale and Institutional Structure Accessing the CGS Methodology Analysis CGS Investments CGS to States ( ) CGS to Local Governments Nigeria's Performance on the MDGs Extreme Poverty and Hunger Universal Primary Education Under-5 and Child Mortality Rates Maternal Health Water and Sanitation Findings Relating the CGS to MDGs - Results from the Models Education Health Implications Going Forward References Appendix

3 List of Selected Acronyms/Abbreviations CCT CGS DRGE DRGs ECM FGCAP GDP INFM LG LGA MDA MDGs NCCGS OPEN OSSAP PCAM-MDGs PSE SDGs SPARC SSE SSN TA TCGS VPF αs, βs and ρs μ_ Conditional Cash Transfer Conditional Grant Scheme Debt Relief Gains Appropriation to Education Debt Relief Gains Error Correction Model Federal Government Capital Expenditures Gross Domestic Product Infant Mortality Rate Local Government Local Government Authority Ministries, Departments and Agencies Millennium Development Goals National Committee for Conditional Grant Scheme Overview of Public Expenditure in Nigeria Office of the Senior Special Assistant to the President Presidential Committee on the Assessment and Monitoring of MDGs Primary School Enrolment Rate Sustainable Development Goals State Partnership for Accountability Responsiveness and Capability Secondary School Enrolment Social Safety Nets Technical Assistant Total CGS Expenditures Virtual Poverty Fund The Coefficients of the Independent Variables and the Constant Term The Stochastic Error Term 1

4 Executive Summary Following Debt Relief in 2005 and the consequent pledge to devote at least a billion dollars of resources that would have gone into debt payment each year into Millennium Development Goals (MDGs)-related investments, Nigeria adopted a Conditional Grants Scheme (CGS) through the Office of the Senior Special Assistant to the President on Millennium Development Goals (OSSAP-MDGs). The Scheme, modelled after the country's fiscal federalism, was structured to use (the relatively higher) federal resources to incentivise component states to increase resources allocated to MDGs-related projects. The Scheme started with grants to states (the State track) and eventually incorporated direct grants to Local Governments (LG), mostly for investment in the areas of education, health and water and sanitation. Over the period of eight years between 2007 and 2014, Nigeria has invested approximately 32 percent of the Debt Relief Gains (DRGs) into the CGS. Deliberately, the CGS governance structures at all tiers of government - Federal, State and Local Government - were designed with the aim of minimizing bureaucracy while maintaining control and efficient use of resources. It was equally inclusive, involving the Executive and Legislature as well as Civil Society organizations at all tiers. States initiated applications, which are evaluated by a Technical Committee at the CGS Unit and qualifying projects are approved. The number and cost of projects in an application were therefore important for the amounts approved for each state; implying varying resources went to different states over the period. For the LG track, each LG had a fixed amount of N200 million (comprising N100 million from the Federal Government and another N100 million shared by the State and LGs in the ration of 30:20 respectively). Given this unique structure, the CGS has been able to produce significant array of projects across the areas of focus. The CGS has continued over time to document its outputs, but it also becomes important to regularly evaluate impact of the programme on target outcomes - the MDG goals and targets. This is what this work set out to do. In doing so, it outlines volumes and values of investments in different sectors, states and LGs under the two tracks of the CGS over the period of implementation, using descriptive statistics. Under the CGS to states, counterpart funding amounts by states were same as Federal Government contribution for each year for the first five years. But towards the latter years (specifically 2013 and 2014), the state counterpart contributions became lower than Federal Government contribution, possibly indicating reduced enforcement of control over promptness of state contribution. There were also divergences in amounts received by sectors; with Health (45 percent) and Water and Sanitation (39 percent) taking up a large proportion of funds. Other programmes like Wealth Creation (7 percent), Social Safety Nets (SSN)/Conditional Cash Transfer (CCT) (6 percent), Governance (2 percent) and Special Intervention (1 percent) took the rest of the funds. There was no direct funding to Education under the CGS to states. However, CGS to LGs had Education taking up 33 percent (the highest share). The rest include Healthcare (31 percent), Water and Sanitation (20 percent), Governance (14 percent) and Wealth Creation (2 percent). 2

5 Following the outline of investments in the CGS programme is the evaluation of Nigeria's performance under the MDGs. The data used for this analysis were drawn from the World Development Indicators, a publication of the World Bank. This segment covered analysis on four broad goals where CGS investments have been concentrated. These include poverty (using undernourishment among under-5 children and the general population), universal primary education (primary school enrolment and primary education completion rate), heath (under-5 mortality and infant mortality, proportion of births attended by skilled health staff and maternal mortality rate) and water and sanitation (proportion of population with access to improved water source and proportion of population with improved sanitation facilities). The analysis in this section compared Nigeria's actual trajectory with target trajectory over the period and also compared Nigeria's performance in the selected indicators with those of comparable countries. Nigeria improved significantly in reducing undernourishment among the entire population, but malnutrition among under-5 children remains very high. The country was only able to reduce malnutrition among Under-5 children from 35 percent in 1990 to 31 percent in as against 17.5 percent which should have amounted to the target reduction of 50 percent). Meanwhile, countries like China reduced theirs by 72 percent (higher than the 50 percent target) within the period. The country also performed relatively bad in universal primary education, with primary school enrolment and completion rates respectively oscillating between 60 and 65 percent when most of Nigeria's peers have hit 90 percent and above (and Iran having hit the 100 percent mark since 2006). Nigeria's march on the two targets seems to have stalled since In the Health Sector, broad performance was much better. The margins in missing the targets on Under-5 and child mortalities were not as high as those in education. The country's statistics on the health indicators, however, remain much weaker than those of its peers (other emerging markets), many of which (like Brazil, China and Iran) all surpassed the 50 percent reduction target in the targets between 1990 and Proportion of births attended by skilled health staff in 2015 remained where it was in 1999 (40 percent) while other countries moved on, further widening the gap between Nigeria and its peers. However, maternal mortality rate fell, almost on course to meet the target of 75 percent reduction, before it seemed slightly taken off course in This may not have been unrelated to coordinated efforts towards ante-natal enlightenment and support programmes, which the CGS contributed significantly to. Other emerging countries were not able to meet the target either, even though many performed better than Nigeria. But the country has continued to narrow the gap on this indicator. Significant strides were also made on water provision, with the proportion of the population with access to improved water source moving up to 64 percent in 2014 (against the target of 77 percent under the MDGs). But access to improved sanitation actually worsened over the period. Interestingly, no investment was made into the sanitation target under the CGS. Finally, using an error correction approach, the work estimated impact of CGS on education using three outcomes indicators in the sector namely primary school enrolment, secondary school enrolment and school dropout rate. It did the same for health using two outcome indicators infant and adult mortality rates. The sample covered the period from 1981 through Given that DRG appropriations and CGS expenditures started only in 2005 and

6 respectively, the work extrapolated the two data items back to 1981, using the $1 billion dollar per year investment rate and average CGS share of the DRG. Years of CGS implementation were captured using a dummy variable. This helped support a 'what if' analysis while still retaining actual impact of the CGS implementation. The estimation results showed that CGS expenditure significantly matters for enrolments, but not as much as it did for health. However, the CGS period did not; reflecting the relatively low impact of CGS on education (CGS to states did not incorporate education for the whole period of implementation and CGS to LGs is still too young to make the requisite impact on education). The DRG appropriations to education fared worse, possibly indicating the diffuse distribution of the resources in the appropriations to diverse agencies - a situation that tended to drastically reduce the efficiency of investments and produce much weaker results. The results in the two health indicators were much better, with both CGS expenditure and period being very significant determinants of the trends in the health indicators. This seems in consonant with the high attention paid to health under both the state and LG tracks of the CGS and indicates that they paid off. One important fact established by the estimates is the relatively strong impact of local government capital expenditures on virtually all indicators assessed. This fact strengthens the very premise of the CGS i.e. the need to support local government as the most relevant tier of government for putting in place infrastructure that facilitate achievement of MDGs-related targets. Indeed, it was observed that the higher the level of government, the weaker the significance of expenditures and vice versa. Thus, programmes that increase size and support efficiency of expenditure at the lower tiers of government (as the CGS was designed to do) ultimately help accelerate improvement in education and health indicators. The CGS may have had issues in resource distribution (like its exemption of education in the CGS to states track) or in the efficiency of its implementation (there have been questions over organizational efficiency of the programme especially in the last few years of its implementation). These may have affected its ability to influence the outcomes variables it set out to do as much as would have been desired. Nevertheless, evidence of this study supports the premise upon which the programme was founded and has operated. The challenge, therefore, will be to explore innovative options for increasing resources and efficiency of the CGS programme. 4

7 1.0 Introduction Five years after the MDGs programme was adopted, an important landmark in Nigeria came with the Debt Relief deal negotiated with the Paris Club. This led to substantial savings of US$1 billion per annum that would otherwise have been channelled to debt servicing Consequently, the Government of the Federal Republic of Nigeria pledged to both itself and the international community that the savings from the Debt Relief will be used for pro-poor programmes. The MDGs Programme was identified for support using the DRGs. This initiative is coordinated by the Office of the Senior Special Assistant to the President on MDGs (OSSAP- MDGs). For Nigeria, obtaining debt relief, with the condition to invest the gains from forfeited interest on debt payment into social sector development was a big watershed. Given that the country had grossly retrogressed in most basic infrastructure, particularly in health and education, this was a welcome development. As part of efforts to ensure that the resources gained were optimally utilized, policymakers in the country adopted the Conditional Grants Scheme (CGS) as part of efforts to ensure additional investment into MDGs by all tiers of government. The CGS programme engages the unique feature of the country's fiscal federalism in a manner that increases the chances of meeting the MDGs, with incentives provided to states and local governments to invest more resources in MDGs related sectors. Beginning with conditional grants to state governments in 2007, the programme included LGs in As part of efforts to ensure effective utilization of the DRG funds, a Virtual Poverty Fund (VPF) was designed in the budget to capture the nature of Debt relief expenditures, and concentrate on its activities and outputs. This was later complemented by the Overview of Public Expenditure in Nigeria (OPEN), a monitoring and evaluation mechanism, which added three additional aspects to enhance the effectiveness of the utilization of the debt relief. It seeks to start with the resources at the planning stage (inputs), what the programme does (activities), goods or services provided by the programme (output), effect of outputs on beneficiaries (outcome) and, finally, the long term generalized effects on beneficiaries (impacts) 1. The outcome has been a coordinated response that involved all tiers of government in the achievement of the MDGs in the country. The CGS programme has severally been hailed as very unique, both domestically and internationally. Indeed, in the view of several stakeholders, it is the most direct investment of government that has affected the lives of the rural poor the most. Unlike investments through mainline government ministries, the CGS is not encumbered with either lots of bureaucracies or other responsibilities, increasing ability of implementers to focus easily on the singular objective of improving the MDGs. The investments have been huge and the gaps filled in terms of education, health and water outputs have also been immense. However, Nigeria's overall performance on most of the MDGs has not been as sterling. To what extent the CGS investments may have contributed to the actualization of the MDGs by Nigeria, or by how much Nigeria's performance on the MDGs may have further fallen short of the targets were the CGS not implemented are not known. As the MDGs come to a close, it becomes important therefore to evaluate these. This is what this study sets out to do. 1 MDGS Conditional Grants Scheme Implementation Manual (Revised) 5

8 2.0 Rationale, Institutional Structure and Processes of the CGS 2.1 Rationale and Institutional Structure Due to Nigeria's slow start in implementing the MDGs, the OSSAP-MDGs was created to support the implementation of programmes specifically aimed at fast-tracking the country's ability to meet the goals by implementing the DRGs. OSSAP-MDGs thereafter worked to find a mechanism that would bridge the gap between federal and state governments' MDGs efforts. Discussions with Governors indicated a demand to improve intergovernmental fiscal cooperation and to integrate investment into local development plans. The National Assembly were also keen to find innovative ways to effectively implement public projects. As a result, in 2007, the CGS was introduced. The CGS would allow for both the federal, state and in 2011, the LG to contribute counterpart funding to projects in areas marked to help Nigeria achieve the MDGs. The Federal Government through the OSSAP-MDGs was to provide matching grants to the lower tiers of government while they brought a counterpart funding to implement the projects. This was the framework of the CGS. The CGS is managed by a CGS Unit in the OSSAP-MDGs. The CGS programme set as its core objective levering up investment in the MDGs at the state and local government levels while ensuring ownership and sustainability of the projects at the local levels. The programme is premised on the understanding that impact of investments towards meeting the MDGs is highest when undertaken by governments at the lower levels. Thus, by providing matching grants from the Federal Government, it enhances the capacity of states and LGs to carry out their constitutional responsibilities and improve public service delivery. Concurrently, it will reduce Federal Government's direct investment and control of projects that are mostly local in nature and rather strengthen partnership between the three tiers of government in working to meet the MDGs. But also, given that long years of military rule have weakened capacity of local governments to effectively manage resources, the programme also incorporated aspects aimed at encouraging improvements in public expenditure reform. The CGS programme, more than any other, recognizes and acknowledges that in Nigeria's federal system, states and LGs are responsible, and indeed better suited, for delivery of basic services to communities as they are more familiar with the local conditions, demands and constraints. The institutional structure for the administration of the CGS incorporates all three tiers of government in Nigeria. At the Centre, there is the Presidential Committee on the Assessment and Monitoring of the MDGs (PCAM-MDGs) chaired by the President himself. The line Ministries charged with MDGs related investments (like Health and Education) join the Minister of Finance and nominated members of the National Assembly to complete the representation at the Federal level. The states elect members from the Governors Forum while International Development Partners and the Civil Society also nominate representatives. The Presidential Committee is the highest policy body for the CGS, assessing and monitoring progress on the MDGs, including the CGS. OSSAP-MDGs, domiciled in the Presidency provide secretariat services to the PCAM-MDGs and coordinate all DRG expenditure (including CGS). There is also a National Committee on the CGS (NCCGS) chaired by the Honourable Minister of Finance and with membership from key line Ministries. The NCCGS is responsible for guiding and reviewing performance of the CGS. There are also out structures at the subnational levels, put in place to ensure effective coordination, checks and balances, without undue bureaucratic bottlenecks. At the state level, 6

9 each state constituted a State Implementation Committee which guide and assess implementation of CGS projects in the state. The Committee is chaired by the Commissioner for Economic Planning/Budget and include Permanent Secretaries of key MDGs-related Ministries, the Chair and Secretary of Association of Local Governments of Nigeria and the State CGS Focal Person. A CGS Project Support Unit, domiciled at the State Planning Commission, serves as the Secretariat to the State Implementation Committee, initiating projects and providing support to Ministries Departments and Agencies (MDAs) and LGs implementing CGS projects and communicating with the Government at the Centre. At the Local Government level there is an MDGs Planning Committee, headed by the LGA Chairman, which reviews and endorses proposals to state CGS Implementation Committee. It also ensures that LGAs obligations for operation of the CGS are met. A Technical Assistant (TA) is attached to each LGA. The TA heads the Local Government MDGs Technical Team, in which are Heads of Technical Departments of the LGA. The TA is responsible for the preparation (including justification) of projects and work plans and budgets (usually in collaboration with leaders of beneficiary communities). Figure 1 summarizes the institutional structures for CGS implementation. Figure 1: Institutional Structure of CGS CGS Structure Federal Structure PCMDGs, NCCGS, NEC OSSAP-MDGs CGS Unit Millennium Development Goals: Putting People First State CGS Implementation Committee LGA Chairman Local Government MDGs Planning Committee State CGS Project Support Unit Local Government MDGs Technical Team MDGs Technical Assistant Zonal Technical Support Community Representatives, Traditional Rulers and Religious Leaders Source: CGS Implementation Manual, Revised Edition, OSSAP-MDGs, Accessing the CGS Accessing the CGS usually follows a structured procedure. For example, the CGS Unit issues a call for submission of application detailing total amount approved for disbursement as Grants to all states for the year, maximum amount each state can submit applications for, approved project areas for which applications are invited and timelines, all signed by the State Governor. The applications are evaluated by a Technical Team constituted by Secretariat of the NCCGS 7

10 within three weeks of receipt of appropriately submitted documents. Application procedures and evaluation indicators are usually defined in the CGS Implementation Manual, which is regularly revised and updated. Projects are scored on the basis of quality and compliance with MDGs. To support the CGS to LGs, the CGS Unit conducted a Baseline Facility Inventory across all states of the Federation. This inventory is used to build a geo-referenced database and maps of all primary healthcare facilities, schools and water supply facilities within each LG. This inventory has been a major basis for initiating and evaluating project applications by LGs under the CGS. However, each Local Government is still expected to conduct a Needs Assessment as part of requirements for accessing conditional grants. This needs assessment feeds into an MDGs-compliant LG Development Plan. The Development Plan evolves through a participatory assessment conducted by the Technical Team in collaboration with leaders of each community (traditional, religious, Women and youth representatives, community based organizations). Targets, priorities and strategies are defined by the technical team, working together with the community leaders. It is expected that this process ensures ownership by all stakeholders, particularly at the local level. Also given that the LG Administration is part of the project identification and selection, identified projects which are not able to make it to the CGS application, owing to paucity of resources, can be integrated into LG budgets thereafter. All applications by all LGs are reviewed technically to ensure compliance with the goals of the CGS. 8

11 3.0 Methodology Two broad approaches are adopted in evaluating the contribution and impact of the CGS on the MDGs in this study. The first are descriptive statistics used for assessment of the progress made in the different indicators of the MDGs, particularly those relating to areas where CGS investments have been made over the years. This approach was also used to show the volume and direction of CGS investments across sectors and years. Such descriptive use both tables and charts. In addition to the descriptive statistics, econometric models linking specific indicators of the MDGs in health and education to broad macroeconomic income, diverse government expenditures as well as CGS and DRG investments were developed. The assumption, based on both the context and broad provisions of the literature is that evolution of these MDGs indicators is largely influenced by the explanatory variables used. The study uses outcome variables. Five equations are specified capturing two sectors - Health and Education. The equations are specified as Error Correction Models (ECM) to take account of the non-mean reverting properties of time series data. Thus, the work establishes the stationarity status of each variables to be used and then tests for co-integration before estimating the ECM. Where co-integration (long-run relationship) is established among the variables, the error correction variable, which captures correction in the long run of short run deviations from equilibrium, is included. Such models are appropriate for forecasting as well. Sector One: Education The first set of model estimates the effects in the education section. They include outcomes in Education Sector (primary and secondary school enrolments and dropout rates) as dependent variables while income, government expenditure and CGS investments are independent variables. The choice of primary and secondary school enrolments and dropout rates is predicated on the fact that the CGS programme is targeted towards basic education (Goal 2) which mainly incorporates primary and junior secondary education. Hence primary school enrolment and dropout rates become very important proxy for measuring outcomes in this area. Another measure of success in achieving primary education is the secondary school enrolment, which shows the number of persons that were successful in completing primary education and transit to the next level of education. The error correction model specified is as follows: Primary School Enrolment PSE t = α 0 + α 1 DRGE t 1 + α 2 TCGS t 1 + α 3 GDP t 1 + α 4 FGCAP t 1 + α 4 SGCAP t 1 + α 5 LGCAP t 1 + α 6 CGSD 1 + α 7 ECM t + ε t (1) Secondary School Enrolment SSE r = β 0 + β 1 DRGE t 1 + β 2 TCGS t 1 + β 2 GDP t 1 + β 3 FGCAP t 1 + β 4 SGCAP t 1 + β 5 LGCAP t 1 + β 6 CGSD t 1 + β 6 ECM t + μ t (2) School Dropout Rate CDO r = ρ 0 + ρ 1 DRGE t 1 + ρ 2 TCGS t 1 + ρ 2 GDP t 1 + ρ 3 FGCAP t 1 + ρ 4 SGCAP t 1 + ρ 5 LGCAP t 1 + ρ 6 CGSD t 1 + ρ 7 ECM t + π t...(3) Where PSE is primary School Enrolment Rate, SSE is Secondary School Enrolment, CDOr is Children Out Of Primary School, DRGE is Debt Relief Appropriation To Education, TCGS is Total CGS expenditures, GDP is Gross Domestic Product, FGCAP is the Federal Government 9

12 Capital Expenditures, SGCAP is State Governments Capital Expenditures, LGCAP is Local Governments Capital Expenditure, CGSD1 is the dummy for the period of implementation of the CGS, ECM t is the error correction term while the αs, βs and ρs are the coefficients of the independent variables and the constant term and ε t, μ t and π t are the stochastic error terms. Sector Two: Health The second set of equations is estimated to ascertain the effects on the Health Sector. Health outcome variables (infant mortality and adults deaths) as used as dependent variables while DRG investments on health, CGS expenditures, government expenditures and income as the explanatory variables. These are aspects of Goals 4 through 6 of the MDGs. For these, trends in infant mortality and adult death broadly capture overall improvement or otherwise in health. Maternal mortality would have been added but the available data is too scanty to be used. The error correction model for these set of model are as follows: Infant Mortality INFM r = α 0 + α 1 DRGH t 1 + α 2 TCGS t 1 + α 3 FGCAP t 1 + α 4 GDP t 1 + α 5 SGCAP t 1 + α 6 LGCAP t 1 + α 7 ECM t + μ t.. (4) And Adult Death AD r = β 0 + β 1 DRGH t 1 + β 2 TCGS t 1 + β 3 FGCAP t 1 + β 4 GDP t 1 + β 5 SGCAP t 1 + β 6 LGCAP t 1 + β 7 ECM t + ε t...(5) Where INFM is Under-5 Infant Mortality Rate, DRGH is Debt Relief Gain Appropriation to Health and μ t is the stochastic error term. The rest are same as in equations 1 through 3. The independent variables are broadly grouped into three namely; (a) DRG appropriations and CGS expenditures, (b) Macroeconomic output and population and (c) Government expenditures at all tiers. The DRG expenditures are chosen because they are the core source of funding for MDGs programme in Nigeria. The DRG expenditures include DRG appropriation on education, on health and on water resources. Although the CGS also covers areas in agriculture through agro-credit scheme and governance, this study focuses on the Education, Health and Water sectors. Also as part of the expenditures of the study, CGS expenditures are added as part of explanatory variables. This group of variables is included to reflect impact of these expenditures on the various outcomes outlined above. The coefficients are expected to be positive for primary and secondary school enrolments and negative for school dropout rate. It is also expected that the parameter sign will be negative for infant mortality and adult death. Income and population variables include GDP, GDP growth, GDP per capita and population. The population variable is particularly important as affecting primary and secondary enrolment as well as dropout rates. But equally important, they show tendencies towards increased pressures on facilities which may hinder their utilization and realization of expected outcomes. The parameter sign for the coefficient of population could be positive or negative for primary and secondary school enrolments. The income variables are important in showing the extent to which increases in income affect access to the facilities provided under the CGS and their coefficients are expected to be positive for primary and secondary school enrolments and negative for dropout rate, infant mortality and adult deaths. 10

13 The third group of independent variables are the government expenditures variables which include federal government s capital expenditures, summary of state government s capital expenditures and summary of local government expenditures. The rationale is to understand the extent to which other government expenditures support the actualization of the MDGs. The federal, state and LG are expected to make complementary investment in the CGS related sectors. Capital expenditures are chosen because they are the component of government expenditure that reflect investments and impact on the MDGs as against recurrent expenditures that cover the cost of running government. The parameter signs of the coefficients of these set of independent variables are expected to be same as those of the CGS investments. Data Sources Most of the data used for this work (including primary school enrolment, secondary school enrolment, adult death rates, infant mortality, school dropout rate, GDP, GDP per capita, GDP annual growth rates, access to water, and population) are drawn from the 2015 World Development Indicators of the World Bank. Others like the Government expenditures are from the Statistical Bulletin of the Central Bank of Nigeria while DRG appropriations and CGS expenditures for Education and Health are drawn from the CGS Unit of OSSAP-MDGs. The data set covered the period Given some gaps in some of the data, some extra- and interpolations became necessary. However, attempts were made to limit these in order to ensure the consistency and integrity of the data. Greater details of the treatment of the data is given in Appendix Table Analysis 4.1 CGS Investments CGS appropriations and disbursements are broadly classified along those given to states and those given to LGs. However, there is a third component which is direct transfers to individuals under the Conditional Cash Transfers termed Wealth creation and SSN/CCT. In this section, we summarize the disbursements and some of the investments made with the resources under the CGS to states and LGs CGS to States ( ) CGS to states began in 2007 and designed to have states compete for available resources under the programme. Since then, some modifications have been made to the original structure with a view to accommodating increased participation and using the system to incentivize other reforms that build capacity at the state level. Over the period of the eight years of the implementation of the programme the aggregate disbursement amounts to as much as N196.82b (approximately USD1.23 billion). This is significant by any standards. Table 1 below summarizes the disbursements to states and contributions by states for each year since Table 1: Summary of Conditional Grants to State (2007 to 2014) (All Figures in Billions of Nigerian Naira unless otherwise specified)

14 Year No of Benefiting States Federal Grant State Contributio n Total Disburse d Amount Received by State Amount Contribute d by State Average Invested per State Source: CGS Unit, OSSAP-MDGs As the table shows, the number of benefiting states varied significantly over the period of implementation of the scheme. For the first year (2007), only 19 out of the 37 States (i.e. including the Federal Capital Territory) met the conditions for accessing the funds and were given resources. Interestingly, this first group of states did not provide any matching contribution. However, the number of participating states increased sharply to 34 the next year as many more worked to meet the conditions, including providing counterpart funding. By 2010, no funds were disbursed as the programme was paused for evaluation and repositioning, as the government transitioned. When it was reintroduced in 2011 following the coming on board of the new administration, all 37 states accessed the funds. But the number again sharply dropped to 14 in 2012 and 15 in By 2014, only eight states accessed the funds. The amounts disbursed and invested each year varied with the number of qualifying states, increasing or decreasing with the number of states. Given the limited resources, as the number of states varied, the amount available per state also varied. Average investment per state (Column 8), which is the sum of federal grant and contribution by states equally varied correspondingly. The requirement for state contribution to exactly match federal grant, which was part of the design of the scheme, was sustained for most of the years. However, that started going down in 2013 and 2014, with the states' contributions trailing federal grant (significantly so in 2014 see column 4). Either of two possible reasons account for such a change a change in the underlying framework of the CGS or a relaxation of the application of terms and conditions for accessing the grant. It seems likely that the latter was the key cause as there has been no change to the CGS framework. Interestingly, the average calculation of amounts invested per state shown in the table largely masks the huge differences in funds that went to each state for the eight year period of implementation of the state CGS. As Figure 2 shows, there are very huge variations in the actual amount disbursed to each state. States like Bayelsa, Taraba and Kebbi took the top three positions with grants of up N10.6b, N9.9b and N8.2b respectively within the period. This means that Bayelsa had an annual average flow of N1.33b while the likes of Ogun got only N2.17b throughout the eight years, an annual average of N270m. Others like Benue and Ondo did not fare much better with only N2.95b and N2.51b throughout the period. While the quality and contents of a state's technical proposal for the grant is a key factor, it is not clear to what extent such huge variations in allocation can be attributed to this factor alone. Nor is it clear 2 There was no CGS to state in

15 that the resource flows strictly followed the hierarchy of needs of each state as the country corporately bids to achieve the MDGs. Fig. 2: Total CGS Funds Accessed by States ( ) Zamfara Yobe Taraba Sokoto Rivers Plateau Oyo Osun Ondo Ogun Niger Nasarawa Lagos Kwara Kogi Kebbi Katsina Kano Kaduna Jigawa Imo Gombe FCT Enugu Ekiti Edo Ebonyi Delta Cross River Borno Benue Bayelsa Bauchi Anambra Akwa Ibom Adamawa Abia 5,473,183, ,494,823, ,903,714, ,555,209, ,829,597, ,818,127, ,728,346, ,392,413, ,508,790, ,171,176, ,254,830, ,819,567, ,231,236, ,140,002, ,439,667, ,228,927, ,684,607, ,107,153, ,346,229, ,685,648, ,921,505, ,056,102, ,298,712, ,953,080, ,685,135, ,453,329, ,586,881, ,701,916, ,266,328, ,330,662, ,925,509, ,600,356, ,925,297, ,751,079, ,649,696, ,058,194, ,831,674, Source: CGS Unit, OSSAP-MDGs 13

16 As there are divergences in the shares of states, so are there diversities in the share of sectors from the CGS to states. Primary health care and water and sanitation took the lion shares of allocation across board, with the first gulping as much as 45 percent of all allocation while the second took 39 percent. Wealth creation and SSN/CCT took distant third and fourth positions with 7 percent and 6 percent respectively. Two others Governance and Special Intervention complete the cycle with both taking up a combined 3 percent of the allocation. Under the CGS to states, no amount was allocated to education and help shape expectation about the impact or outcome of funds allocated to states on each MDG indicator. Fig. 3: Share of Sectors from the CGS Funds to States ( ) Special SSN/CCT Governance Intervention 6% 2% 1% Wealth Creation 7% Water & Sanitation 39% Primary Health Care 45% Source data obtained from CGS Unit, OSSAP-MDGs CGS to Local Governments ii. CGS to Local Governments ( ) The second component of the CGS is to LGs. The CGS aimed to move even closer to the grassroots and deliberately help LGs build capacity in providing services directly related to the MDGs. The CGS to LGs started as a pilot project with 113 Local Governments spread across the six geopolitical zones, with approximately three LGs from each state. The sum of N200 million Naira (about USD1.25 million) was allocated to each participating LG, with half of that coming as Federal grant and the other half being the LG's counterpart funding. Expectedly, owing to the joint account framework that states operate with component LGs, states are usually liable to that counterpart fund on behalf of the LG. Thus, there had been very little variations and discrepancies among participating LGs (and states) in terms of allocation of the resources under the CGS to LG. Table 1: Available Funds to the Local Government for the Period of (All figures in Billions of Nigerian Naira except where otherwise indicated) Year No of Benefiting LGAs (Units) Federal Grant State/LGA Contribution Total Average Investment per LGA 14

17 The number of participating LGs under the pilot initiative has continued to increase, first from 113 (approximately three LGs per state) in 2011 to 148 (an additional four per state) and to 210 (about six per state). The number fell in 2014 to One of the key determinants of the number of participating LG has been the amount of funds available for the CGS to LGs in each year. With amount receivable by each LG pegged at N200 million(including the 50% counterpart funding), increased resources at the Centre means increased capacity to take on larger number of participating LGs, subject to counterpart funding by the Governments of the states where the LGs are. By this same token, should the Federal Government wish to increase the number of participating LGs, it simply has to divide the amount available to it by the number of LGs that it can carry at the rate which it gives to each LG. The sharp fall in number of participating LGs in 2014 is a curious development. However, beyond amount of resources available under the CGS to LGs for the year, it is not known what else could have contributed to it, neither is it known what factors define amount of resources available beyond contending items in the DRG budget. In terms of sectors of investment, the CGS to LGs was equally spread among a range of sectors, including education. In fact, investment in education is the highest, with 33 percent of all investments going into that sector alone. Healthcare expectedly took the next highest share at 31 percent while water and sanitation took another 20 percent, bringing the total to these three important sectors to 84 percent of all expenditures. Governance and wealth creation took the other 16 percent (at 14 percent for the former and 2 percent for the latter). In absolute terms, as the resources and number of Local Governments increased, each of these sectors also had increased allocation. 3 CGS began to reinvest in some local governments that had benefited earlier. 15

18 Fig. 4: CGS to States: Shares of Sectors from Funds ( ) Governance 14% Primary Health Care 31% Education 33% Water & Sanitation 20% Wealth Creation 2% Source data obtained from CGS Unit, OSSAP-MDGs Though there were increases across board for all sectors in absolute terms, the rate of such increases was not uniform across sector or year. Indeed, a number of sectors witnessed decreased resource allocation in some years as shown in Table 2. In 2012, for instance, the amount spent on primary health care increased by 33 from its 2011 value and then on to 40 percent from its 2013 value, but dropped by 63 percent in Allocation for water and sanitation, education and governance all went almost the same way, with increases in amounts between 2011 and 2012 and between 2012 and 2013, only to fall sharply in Interestingly, allocation for wealth creation was the only one that fell in 2013 (by 35 percent) when all others increased only to rise again in 2014 (by as much as 202 percent) when all others decreased. The reason for this countercyclical variation is not clear since it is difficult to attribute same to increases or decreases in available funds. The reasons may simply be related to changing priorities of the CGS office, given that all expenditures under the CGS to LGs were approved by the CGS Unit of OSSAP-MDGs. Indeed, it is difficult to explain the changing shares of allocations to each sector as emanating from changes in available funds. The explanations lay somewhere else; and changing priorities seems to be the most probable culprit. Table 2: Percentage Increase and Decrease of the CGS Investment to LGAs by Sectors Year Primary Health Care Water & Sanitation Wealth Creation Education Governance Sum Total Source: CGS Unit, OSSAP-MDGs 16

19 4.2 Nigeria's Performance on the MDGs Nigeria's performance in the achievement of the MDGs has been a mixed grill, with predictions that the country would not be able to meet a number of goals quite rife (see Nwobodo et al, 2011, for example). This section highlights the country's performance on some of the indicators. This is done using two broad approaches. The first is to juxtapose trend analysis (with graphs and charts) showing the country's ideal trajectory if it were on track to achieve the specific target with trend of actual performance between 1990 and The second approach (equally using charts) compares Nigeria s efforts in achieving the goals with those of other emerging economies of the world, with greater focus on other oil producing/exporting countries. All data used for analysis in this section are from the 2015 World Development Indicators, a publication of the World Bank Extreme Poverty and Hunger There are three targets under this goal, but discussions underneath shall focus on the third (Target 1C - Halving, between 1990 and 2015, the proportion of people who suffer from hunger). This target summarizes the end and essence of the goal. Two important indicators prevalence of undernourishment among under-5 children and prevalence of undernourishment among the larger population - are picked out to show extent of achievement of the target. Figures 5 captures performance of the country relative to the target while figure 6 captures the country's performance relative to its peers. P e r c e n t a g e Fig 5: Prevalence of Malnutrition leading to weight loss among under-5 Nigerian children (% of Children population) Linear (Optimal Path to Achieving Goal) Linear (Actual Path) Source: World Development Indicators, 2015 As part of Goal 1 of the MDGs, it is expected that Nigeria will reduce the proportion of people who suffer from hunger from its value in 1990 to half in As at 1990, the proportion of under-5 children suffering from malnutrition leading to loss of weight was 35 percent. It therefore, follows that Nigeria is expected to reduce this proportion to only about 17.5 percent of under-5 children by Figure 5 shows that between 1990 and 2014, Nigeria reduced the proportion of under-5 children suffering from malnutrition from 35 percent in 1990 to about 31 percent in This is significantly above the 17.5 percent prevalence rate expected as at 17

20 2015 under the MDGs. Figure 6 shows the country's performance relative to select other countries of the world. 80 Fig 6: Comparing Rates of Reduction in Under-5 Malnutrition in Selected Countries ( ) P e r c e n t a g e Source: World Development Indicators, 2015 While Nigeria reduced its under-5 malnutrition by no more than 11 percent (from 35 to 31) between 1990 and 2014, China reduced Under-5 mortality by as much as 72 percent, far surpassing the 50 percent target reduction. A few developing countries like Brazil were able to hit 40 percent reduction as against a global average reduction of 39 percent. Iraq (at 34 percent) also made remarkable efforts in reducing the prevalence of malnutrition among under-5 children within the period. Nigeria fared better in overall prevalence of undernourishment, which stood at 10 percent as at 1990, but which was reduced to 6 percent as at 2013 as against 5 percent target for Figure 7 shows the trend analysis and indicates that the country was on target between 2003 and 2011, but started moving away from the path of achieving the target thereafter. Given the country's high dependence on imported food, this may not be unconnected with trends in global oil market which may have affected the country's ability to pay for imported food. Brazil seems to be the only country in the global South that met and surpassed the 50 percent target in reduction of undernourishment, actually exceeding it (at 60 percent reduction over the period). However, other countries like Indonesia and China also performed creditably, with 46 percent and 37 percent respectively, exceeding the global average reduction which stood at 30 percent. Thus, relative to its peers, Nigeria's performance on the indicator is appreciable. Indeed, as at 2013, the proportion of Nigeria's total undernourished population shrank to only 6.4 percent as against Indonesia's 8.7 percent, China's 10.6 percent and a global average of a little above 10 percent. 18

21 Fig 7: Prevalence of Undernourishment among Nigeria's Population P e r c e n t a g e Actual Linear (Path to Achieving the Goal) Source: World Development Indicators, Universal Primary Education The target under this goal is to ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling. The idea is to achieve a 100 percent access to primary school for all citizens. Two main indicators to assess the level of achievement of the target are primary education enrolment rate and primary education completion rate. Figure 8 shows Nigeria's trajectory relative to the target. As the figure shows, it is clear that the country is still very far from achieving the goal of having all children acquire basic education. Over the period between 2000 and 2014, primary school enrolment has continued to oscillate between 60 and 65 percent. Consequently, the gap between actual and target path to the goal has been widening. Indeed, it seems the country has been wholly unable to take enrolment beyond 64 percent since As Figure 9 shows, Nigeria's enrolment rate has been one of the weakest among emerging countries of the global south. Enrolment rates in India, Indonesia, Iran and United Arab Emirates have all been inching up from around 80 percent in 1990 (at which time Nigeria s enrolment rate stood at about 60 percent). In fact, Iran moved from around 85 percent in 1999 and hit the 100 percent around 2005 and has remained there. Most emerging countries converge around the global average of 90 percent. India specifically presents a good case study, with enrolment as at 1999 below the global average, but which rose to surpass the global average in 2006 and has since maintained a higher-than-global average enrolment rate. By contrast, Nigeria remains way below the rest, retaining its average 63 percent enrolment rate and only making marginal movements around the figure

22 P e r c e n t a g e Fig. 8: Primary School Enrolment Rate in Nigeria Actual Path Linear (Optimal Path to Target) P e r c e n t a g e Fig. 9: Primary School Enrolment Rate in Emerging Countries NGA UAE IDN IND IRN WLD Source: World Development Indicators, 2015 Primary school completion rate has fared no better. Persistence to the last grade of primary education is of utmost importance in achieving goal 2 of the MDGs. And here again, as shown in Figure 10, Nigeria's primary school completion rate, which hit 90 percent in 2006, has consistently dropped, dropping to and remaining flat at around 70 percent since Since 2007 when the plunge began, the gap between the trajectories of the target and that of the country's actual performance has been widening. Thus, with all the attention and efforts towards enhancing primary education, even through the CGS, the country has been unable to make much progress either in increasing enrolment or in keeping children in school throughout the years of primary school. Meanwhile, such countries as the United Arab Emirates, Indonesia, Argentina, Iran, China and a host of other emerging countries have, at some point between 2004 and 2014, hit the 100 percent mark and remained on it. Nigeria, which was at about the 20