Problems of Budget Implementation In Nigeria And Solutions

A budget is a document that lists all the expected revenue as well as intended expenditures for a period of time. So, why go into details of problems of budget implementation in Nigeria? A budget is the core of public finance in a country. Annually, the federal, state and local governments of Nigeria prepare a budget to itemize their basic expenditure profile, revenue estimation, channels, and evaluation. After the budget has been reviewed and approved by relevant arms of government, it moves to the implementation stage.

Budget implementation refers to the actual functioning, performance, and execution of a specific revenue and expenditure estimation as documented in the budget. It is a known fact that the implementation of the budget in Nigeria is very poor. A budget performance which is another term for Budget implementation is very low in Nigeria and some of the factors responsible for this unfortunate trend are looked at below.

PROBLEMS OF BUDGET IMPLEMENTATION IN NIGERIA

  • Unrealistic Budget

Often times, projects inserted into our budget are elaborate and unrealistic. When such budgets enter the implementation phase, these approved white elephant projects become difficult to execute and maintain. They often drag and are passed over from budget to budget effectively affecting the overall performance of such budgets. We often hear of 60%, 55% budget performance, and the likes which indicate the government spending for that fiscal year falls well below the intended and approved limits.

  • Extreme Uncertainty Concerning Available Resources

It is known that some of the factors on which our budgets are made are often unreliable and prone to sudden changes. Factors such as the rate of foreign exchange and also the price of crude oil can significantly impact the performance of our national budget.

Problems Of Budget Implementation In Nigeria
  • Extra-Budgetary Funds Outside The Budget Process, Hoarded By Spending Units.

The aim of preparing budgets is to have a guide on revenue generation and spending so as to prevent chaos. Every arm, tier, and agency of government prepares its own budget for the fiscal year and they are not expected to spend above the approved limits. Often times, some agencies of government go against this and spend money which has not been approved for them.

  • Late Budget Preparation And Approval

This is among the key problems of budget implementation in Nigeria. As the budgeting process is a yearly occurrence, it is expected that to know the process will be well enshrined in our democracy and is carried out smoothly each year. This has proven not to be the case. Every year we hear stories of late budget preparation and submission to the National assembly, delay in passing the budget on the part of the National assembly as well as the late signing of the approved budget by the executive led by the president. This process is often chaotic leading to several negative allegations and accusations from all parties involved.

  • Lack Of Adequate Monitoring

Often times when projects are approved and money is disbursed, there is not proper monitoring mechanism in place to ensure that the money is judiciously used. This has created a cover for corrupt politicians and government official to hide under and divert government funds. These projects that are not carried out are then reinserted into the next budget for another fiscal year and funds are again approved for them. This creates an opening through which government funds are continually siphoned.

  • Significant Discrepancy Between Actual And Reported Expenditure For Certain Activities.

Under-reporting on project status. Some of the government agencies that execute projects in Nigeria tend to intentionally lower their progress reports on projects they are handling so that they can continue to inflate costs and collect more money from the government. Some even go as far as quoting significantly higher amounts than they have actually spent on such projects.

  • Lack Of Civil Society Involvement In The Budget Preparation And Implementation Process In Nigeria.

The primary role of government is to carry out projects and activities that are aimed at improving the quality of lives of citizens in the country. It is therefore important that citizens through civil societies and organizations are involved in the entire budgetary process. This will ensure that projects to be covered by the budget are essential projects that will have the most impact of the living conditions of citizens.

  • Lack Of Transparency And Accountability

Lack of transparency and accountability stands at the top among the problems of budget implementation in Nigeria. Budgetary process in Nigeria is often carried out secretly. Only the total sum approved is announced. The relevant government agencies that are supposed to display the breakdown of the budget will refuse to do so until much later in the year when the budget is far spent and public interest has waned.

  • Non-inclusion Of Economic And Financial Experts In The Budgetary Process To Accurately Forecast Economic Variables.

A budget is a futuristic document hence it is important that all the parameters used in its formulation are as close to reality as possible so as to ensure the budget performs well. Hence, the best minds in local and global economics and finance are supposed to be involved in the preparation of the Budget. This is not the case in Nigeria and it is one of the reasons why our budgets fail to perform well.

SOLUTIONS TO PROBLEMS OF BUDGET IMPLEMENTATION IN NIGERIA

  1. A more transparent, effective and inclusive budgetary process should be developed. This means that all the relevant bodies, agencies, civic organizations, and societies, as well as financial experts, are carried along during the process of developing our national budget. This will help to significantly improve our budget performance
  2. Adequate supervision of projects being executed should be put in place. It is not just enough for the government to approve and release money for projects. There should be proper monitoring of the execution of these projects at all stages so as to prevent fraud and poor project execution.
  3. The feasibility and usefulness of each project to be accommodated in our budget should be considered before approval so as to prevent wastage of scarce resources through the abandonment of such projects when it becomes clear they cannot be executed.
  4. Adequate record keeping of all transactions carried out from the budget should be ensured so that the whole process is transparent and credible.
  5. Late preparation, passage, and approval of our budgets should be stopped completely
  6. Lastly, the spending of government funds outside of the budget should be frowned at and any government official or political office holder caught indulging in such acts should be punished.

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CONCLUSION ON THE CHALLENGES OF BUDGET IMPLEMENTATION IN NIGERIA AND SOLUTIONS

The budget of a nation is key to its economic performance and welfare of its citizens hence issues surrounding budget implementation must be promptly addressed. Some of these issues that have been observed to affect the performance of our budget in Nigeria have been identified above as well as possible solutions preferred.

Tags: Factors Affecting Problems Of Budget Implementation In Nigeria

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