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Budget Implementation
Wilson Erumebor, Economist
rumewilson@gmail.com, @rumanio; May 2016
Nigerias economic reality suggests the need for an expansionary budget to stimulate
economic activities. Signed into law in May 2016, the federal government budget is
significant for a number of reasons. First, it covers a number of the campaign promises
that were made prior to the 2015 general elections. Second, it is an expansionary fiscal
policy tool that has the potential to cure the uncertainties that has trailed the Nigerian
economy since early 2015 even as each Ministry can begin work to deliver their plans to
Nigerians. Third, the budget remains important in complimenting monetary policy,
which has struggled to keep the economy afloat since 2015.
One of the biggest risks facing the budget is the poor implementation of capital projects.
In Nigeria, annual capital budget implementation has never achieved 65%, whereas
recurrent expenditure has always achieved over 95% performance annually and in some
cases exceeded its budgeted figure. The following factors are responsible for the poor
performance of capital budgets in Nigeria:
Undue elongation in the process to pass the Appropriation Bill into law
Inadequate revenue
For the 2016 budget to have the desired impact on the economy, it is essential for the
government to address these challenges with the goal to improve performance of the
capital budget.
What should we do as a country going forward?
Place emphasis on growing the capital component of the budget and enhance
its implementation. Given the importance of capex, the government must set
target to ensure that capital budget implementation exceeds 85% each year and
address its poor performance. To do this, the government must reform the
procurement process to remove bottlenecks, undue bureaucracy that causes
delays. If unnecessary recurrent items are removed from the 2016 budget as
presented by the President, capex could be as high as N2 trillion, which would
have a much more bigger impact on the economy.
Budget assumptions must be realistic and take into cognisance current and future
economic developments.
Despite the challenges that the 2016 budget might face, the budget is unique in its
disclosure of specific cost items of MDAs. This is a huge step towards ensuring
accountability and transparency in the public sector. However, more disclosure is
needed on the spending plans of the National Assembly and the Universal Basic
Education Commission (UBEC). Whether the budget will meet up to the expectations of
Nigerians and deliver the promised change depends largely on the implementation of
institutional and structural reforms targeted at improving the budget process.
Wilson Rume E. is an Economist with years of experience in research, finance and advocacy. He is a member
of the Global Colleagues, Academics Stand Against Poverty (ASAP).