BUDGETARY FRAMEWORK IN NIGERIA: LEGISLATIVE IMPERATIVENESS AND INTROSPECTION BY GRACE ILEMONA JOSEPH & ADEYEMO KINGSLEY .A.

SEMINAR PAPER ON BUDGETARY FRAMEWORK IN NIGERIA: LEGISLATIVE IMPERATIVENESS AND INTROSPECTION

 

1.0   Introduction

 

Budgetary framework in Nigeria, over the years, has been subjected to series of reform processes, due to intermittent changes in our political regimes.  The amorphous nature of the political state of the country, necessitated the reform of the institutional framework on the budgetary system to align with each regime’s macroeconomic plan, for the realization of the objectives and goals of governance.  Understandably, the Constitution of the Federal Republic of Nigeria 1999 (as amended), which is the grund norm of the country, unequivocally, provides the paraphernalia for institutional framework, whereby modalities for fiscal responsibilities between the national and sub-national governments in the Federal system that we practice, are anchored upon.  Also, the Fiscal Responsibility (FRA) Act, which was enacted by the National Assembly in 2007, seeks to further strengthen the fiscal discipline in the country with a view to providing prudence in the management of the resources of the country in order to sustain long-term macroeconomic stability for the promotion of transparency and accountability within the Medium Term Fiscal Policy Framework of the Government.

 

This framework provides the procedural rules, relating to the Medium Term Expenditure Framework (MTEF), which fall within the mandate of the Fiscal Responsibility Commission to ensure strict adherence to standards and rules by MDAs.  Accordingly, legislative imperativeness and introspection are sacrosanct for the development of innovative budgetary framework that takes into consideration the peculiarity and divergent nature of the convoluted society like ours.  This is because the Legislature is the assemblage of varied interests of the country.

 

Consequently, this Study is principally focused on the analysis of series of budgetary framework in Nigeria, taking into account, the legislative imperativeness and introspective approach.  Accordingly, the overriding intent of this exercise is to unravel all associated challenges with a view to proffering workable solutions, targeted at reviewing existing budgetary framework vis-à-vis the need to further strengthen the framework in line with modern realities, towards achieving a more resilient and responsive budgetary process that would meet the yearnings and aspirations of Nigerians.

 

2.0   Overview of Budgetary Framework in Nigeria

 

The focal point of this Paper is to pragmatically demonstrate how previous and existing national framework and reform vis-à-vis legislative interventions, through strengthening of institutional framework on budget has brought about improvement in the budgeting process. It also focuses on what should be done to ensure that we have a virile and sustainable national framework on budget for the socio-economic and political development of this country.

 

This is important because budget plays significant role in the running of the affairs of a nation.  That is why it is defined as “the policy document expressed in financial terms, which contains government estimates of revenues and expenditures for a specified period, usually one year” (Malgwi and Unegbu, 2012; Abe, 2012; Ojo, 2012; Okpala, 2012).  Budget is also an essential fiscal mechanism for efficient resource mobilization, allocation and economic management, designed to achieve set objectives (Horngren et al., 2008).  It is the mechanism the government utilizes to oversee the affairs of its populace by using different contrivances whereby budgeting is foremost.

 

Fundamentally, the nation’s development and economic growth, depend essentially, on its system of revenue generation and funds management. However, contrary to expectations, Olajide (2011), Olurankinse (2012), Okpala (2012), Okolo (2012) and Agbonkhese and Asekome (2014) since our independence, Nigerians have consistently decried the abject failure of the nation’s annual budget in fulfilling its fiscal objectives in managing and accounting for public funds.  Doubts are being expressed and queries are raised on the nation’s budgetary process and its implementation strategies (Akpan, 2013; Olomola, 2012; Iredia, 2012).  This, as observed over the years, has been traced to irregularities in governance, poor management of public funds and high level of corruption among public officers (Peter, 1999; Olomola, 2012; Omah et al., 2013; Iredia, 2012; Ugwuanyi and Ewuim, 2012; Agbonkheseand Asekome, 2014; Transparency International, 2015; Central Intelligence Agency, 2016).

 

In Nigeria, each fiscal year, funds are dispensed to each tier of government based on the adopted official allocation formula, wherewith disbursements are made to various ministries, departments and agencies based on the approved budget estimates (ICAN, 2009; Fiscal Responsibility Act, 2007; The Constitution of the Federal Republic of Nigeria, 1999; Public Procurement Act, 2007). These funds, which are meant to provide for recurrent expenditures, capital projects and other developmental initiatives, are most often misappropriated through corrupt practices (Olurankinse, 2012; Peter, 1999). 

 

Obviously, there is a rising interest in the state of governance (Olomola, 2012; Iredia, 2012) and significant interests are being centered on the potency of the nation’s annual budgets in ensuring efficient management and accountability of public funds (Okpala, 2012).  And except we have a progressive and resilient budgetary system to serve as economic blueprint for national reforms and transformation, the Nigerian dream of becoming one of the foremost global economies of the world will be a mere fantasy (Horngren et al., 2008; Olomola, 2012; Abogun and Fagbemi, 2012). It is therefore imperative that the current state of the nation’s budgetary system be examined critically and appropriate measures put in place, through legislative framework to ensure transparency in government expenditure and efficient management and accountability of public funds.

 

In this regard, restructuring of the nation’s budgetary system and its implementation strategies is sacrosanct, as it seeks to scrutinize the state of the nation’s level of development, endemic cases of corruption and money laundering among public officers and the poor implementation of the nation’s annual budgets as evidences of malpractices in the nation’s budgetary system. That is why in spite of consistent rise in the annual expenditure of the government, there are neither notable improvements in the living standards of the citizens nor any commensurate development in infrastructural facilities (Okpala, 2012; Samuel and Kabir, 2011; CIA, 2016). Rather, the corruption perception ranking for Nigeria by Transparency International keeps worsening.

 

This situation negates the Keynesian theory on government expenditure and economic growth, which stipulates that expansion of government expenditure accelerates economic growth (Olomola, 2012; Chude and Chude, 2013). The theory also assumes government expenditure to be an expansive spectrum of investments to develop the economy and improve the living standards of the populace. Keynesian provided an extensive explanation of the demand for output as a whole, which was lacking from traditional theory. The theory holds that in the short run, especially during recessions, economic output is influenced strongly by total spending in the economy (Kregel, 1983; Jahan et al., 2014).  Keynesian economists believed that government spending could be used to increase aggregate demand, thus increasing economic activity, reducing unemployment and depression. Although, total spending does not necessarily equal the productive capacity of the economy, Keynesian economists often advocate an active role for government intervention during recessions (Heise, 2009; Jahan et al., 2014).

 

In the late 1960s, the new classical macroeconomics movement was much critical of Keynesian assumptions.  The movement provided much detailed explanation of certain phenomena, such as the coexistence of high unemployment and high inflation, which were characterized by explicit and rigorous adherence to micro-foundations as well as the use of increasingly sophisticated mathematical modeling. Traditionally, classical economists advocated balanced government budgets. They argued that government fiscal policy does not really affect the growth of national output (Samuel and Kabir, 2011). Cotler (2000).  Similarly, in the 1970s during the oil shock and resulting stagnation, Keynesian suffered a major setback in its assumptions on unemployment and inflation because it had no appropriate policy response for the stagflation of many advanced economies, suffered in the 1970s.

 

However, the dawn of the 2007-2008 financial crisis, caused a re-emergence in Keynesian thought, which continues as new Keynesian economics (Jahan et al., 2014). Regardless of the setback suffered by Keynesian, the theory has been the foremost underpinning in understanding modern economic dynamisms and Researchers have been able to understand complex economic phenomena, applying the Keynesian theory. Keynesian diagnosis of recessions and depressions remains the foundation of modern macroeconomics (Jahan et al., 2014).

 

Similarly, Agbonkhese and Asekome (2014) applied the Keynesian mechanism of income determination and found that credit to the economy positively relates to gross domestic product (GDP) in the sense that an increase in the aggregate net credit to the economy, increases the availability of loanable funds, which leads to more investment and in turn, raises aggregate demand (total spending). Hence, added investment will lead to a higher level of economic activity. With this theory, public expenditure is thought to be an external factor utilized as a policy instrument to promote economic growth.

 

In the same vein, Government expenditure on capital will have differential impact on economic growth when the funds are properly managed and invested in more productive sectors (Samuel and Kabir, 2011; Agbonkhese and Asekome, 2014). And with the continuing abandonment of capital projects, unfulfilled governmental promises and misappropriation of public funds, foremost concern hinges on the potency and credibility of the nation’s annual budget in achieving its fiscal objectives (Olomola, 2012; Okpala, 2012; Abe, 2012; Ajibolade and Akinniyi, 2013; Okolo, 2012).

 

2.1   Budgeting Processes and Physical Outcomes

 

It is noteworthy to state that national and sub-national governments in the Presidential system and fiscal federalism we practice in Nigeria, are charged with different expenditure responsibilities and taxing powers by the Constitution (Taiwo, 1999).  Accordingly, the constitutional assignments of fiscal functions between the tiers of government, determine the scope of budgeting at each tier of government.  There are also some overlapping expenditure responsibilities that exist in this system.  However, national government and governments at sub-national levels have independent Executive bodies and the Legislature that prepare and scrutinize the budget within their legal jurisdictions, as defined in the Constitution.  As such, budget processes across the various tiers of government are virtually similar and the purpose revolves round the aggregate fiscal discipline, strategic allocation of resources and efficient and effective service delivery.

 

 

In Nigeria, like most other countries, budget preparation and implementation are the prerogatives of the Executive, which in turn capitalizes on the competence of the bureaucrats in the public service.  The Legislature on the other hand, examines and approve the budget allocations, oversights its implementation and holds the Executive accountable on behalf of the citizens of the country.  The Legislature ensures that the budget reflects the diverse interests of the people.  In view of this intertwined relationship, information asymmetry and conflict of interests expose the process to misconduct on the part of practitioners in the system.  The bureaucrats, for instance, are better informed than political appointees, while political appointees are more informed than their principals that appointed them as agents.  It has also been observed that the Executive arm has the advantage of information on budget over the Legislature, which scrutinizes the budget and authorizes it.

 

Conversely, it is apparent that where budget institutions are weak and the mechanisms for internal and external accountability are also weak and ineffective, the Executive and the Legislature, and in some instances, some members of Legislative Committees, might collude under the guise of protecting party interests, to pursue parochial interests in the budget process.  This often affects the overall outcomes of budget.

 

It is pertinent to note at this juncture that over 75 percent of government’s revenue, comes from the oil sector, which many people consider as nature’s gift to Nigeria.  Thus, distribution of oil proceeds rather than wealth creation has always featured in the front burner of national politics.  The concern has always been “who gets what” in the budget and not “who pays” as obtainable in other jurisdictions like the United States of America, where additional expenditure amounts to increase in taxation.  In this regard, for us as a nation to overcome and or eliminate these problems, strong and effective budget institutions, backed with strong legislative framework is required to be put in place.

 

2.2  Budget Institutions and their roles in the Budget Process

 

Contrary to many misconceptions about budget institutions, such as the Federal Ministry of Finance, the National Planning Commission and the Budget Office of the Federation, their existence and operations transcend beyond mere institutional units.  The institutions also include the entire rules of the game and procedures according to which budget is drafted, approved, implemented, monitored and evaluated (Alesina & Perroti, 1996).  The rules and regulations may be grounded into:

 

1. numerical rules;
2. procedural rules; and

• transparency rules.

 

The set of rules and regulations shape the budget process as well as define the roles of budget actors, provide the incentives and stipulate constraints/sanctions that guide budget actors and the institutional units (MDAs), involved and how they interact in the budget process and what the final budget should look like.

 

The procedural rules on the other hand, specify who does what and what comes first in the budget process.  The rules define the formal and informal procedures and most importantly, set the incentives and constraints that the Executive, Legislature and the Bureaucrats will be subjected to, at the various stages of budgeting process (Yaru, Mobolaji, Kilishi, and Yakubu 2014).

 

The Third rules relate to transparency rules, which provide general guidelines, regarding public participation, information content and timely publicity at the various stages of budget process.  While these rules help to solve some of the inherent problems regarding principal agency relations and common pool, new set of problems often emerge.  Some of these include, creative accounting over projection of revenue and underestimation of expenditure.

 

Olayide Owolabi Adelami, 2018, summed it up by stating that “the budget process is complex and involves challenging tasks, which are susceptible to misconduct and selfishness of actors in the system.  This makes the existence of strong institutions imperative.  Lack of strong and effective institutions can create behavioural responses that could weaken and help budget actors to circumvent extant institutions and binding constraints to pursue personal interests.  Therefore, continuous institutional reforms are required for budgeting to achieve the four outcomes of sound public finance management system, which are – aggregate fiscal discipline; strategic allocation of resources; and efficient and effective service delivery.”

 

3.0   Budget Reforms in Nigeria

 

From our Independence on October 1^st 1960 to date, the Nation’s budget system has passed through various stages of reforms.   The reforms were geared towards having budgetary framework that accentuates the nation’s diversities and peculiarities.  However, in spite of these reforms, the country is still grappling with myriad of challenges that require multi-dimensional approach to solve if we must have an ideal budget system.

 

Historically, from the outset, the Federal Government set up the Public Service Review Commission (PSRC) when the new public service management and budgeting system was adopted at the wake of our Independence.  The implementers of the report of PSRC focused their attention more on the salaries and wages components of the reform, thereby leaving the budgetary system out, which marked the beginning of the problem we have in our budget system today.  For better understanding, we shall take a critical look at some of these reforms:

 

The Akinyele Reform of 1980: Consequent upon the failure of the Federal Government to implement the “Udoji Report” with regard to the aspect of budget reforms, the Federal Ministry of Finance in 1977, set up a special committee to study and recommend ways of improving government budgeting, which according to Omolehinwa (2005:140-141) is: “The work of this committee is a major landmark in the history of budgeting in Nigeria, as it represented the first attempt at stock taking of the problems arising from budgeting in Nigeria and in particular the explosion in government activities in the 1970s brought by the sudden oil wealth”.

 

In carrying out the assignment, the Committee embarked on research visits to several countries.  Thereafter, the UDOJI recommendation of the Planning, Programming Budgeting System (PPBS) was upheld by the Committee.  However, the implementation of the Report commenced in 1980 under the Civilian Government of President Shehu Shagari, where the introduction of the PPBS was anchored by the Presidential Budget Adviser, Chief Akinyele, who earlier on, pioneered the budget reforms that brought about the introduction of the Performance and Programme Budget in the defunct Western State Government of Nigeria.

 

To avoid drawbacks of the past budget system, the Federal Government decided that its version of the budget system will have the same acronym PPBS (Planning, Programming Budgeting System), but with different meaning as (Planning, Performance Budgetary System).  The new concept emphasized on the word “performance” as the hallmark of budget planning and implementation in the country.  This was explained by the then Adviser to the President on Budget Matters in (Akinyele, 1981, cited on Omolehinwa, 2005:142) thus:

 

One of the key areas where budget reforms are needed most urgently is the problem of measurement of results, performance and achievements.  This need is accentuated in an executive presidential system where clear responsibility is placed on one man who received a definite mandate to produce quick results on the basis of a manifesto impliedly sanctioned by the electorate through his election.  It is, therefore, a matter of supreme importance that the performance should be capable of being measured to indicate level of economy, efficiency and effectiveness achieved….. For the avoidance of doubt often expressed….. almost every cost can be measured in terms of output, every activity will respond to quantifiable measurement.

 

Upon the introduction of the Nigeria’s new budget system at that time, the Federal Government set up a consortium made of teachers and academics to take care of technical and capacity building aspects of the budget.  Officials who were selected, were sent for both local and international trainings and the implementation was phased over three years period – that is, 1981, 1982 and 1983.  The pilot ministries were selected, while budget classification systems for both recurrent and capital expenditure were developed.  However, military intervention that led to the ousting of President Shehu Shagari and other associated subsequent events, affected the implementation of the Federal Government of Nigeria’s Planning, Performance Budgetary System (PPBS).  And even in spite of evidence that implementation continued by the military thereafter, no meaningful improvement was recorded because of the dictatorial style of military rule.

 

According to Omolehinwa (2005), by the end of 1986, six years after the introduction of the reform exercise, the status of PPBS can be summarised as follows:

 

• objectives of expenditure had not been identified, let alone the means of achieving them;

 

• the multi-year aspect of PPBS, which the budget office had hoped to introduce had not materialized;

 

• the anticipated targets which appeared at one stage had disappeared;

 

• the willingness to “spread the gospel of budgetary reform according to PPBS continued only in the Ministry of Defence” (Omolehinwa, 2005:149).

 

3.1  Failure of the Shagari Budget Reform Initiative

 

The Planning, Performance Budgeting System introduced by the Shagari Government in the Second Republic failed principally because of the military overthrow of his administration, as it did not allow the initiators of the programme to establish virile modalities for the swift implementation of the budget system.  There were also other extraneous factors responsible for the failure of the Shagari’s Planning, Performance Budget System.  These are:

 

1. the economic downturn occasioned by the recession, which the Government had to contend with at that time;

 

2. the skepticism on the outcome of the new approach even from the inception of the new budget system;

 

3. parochial and self-serving interests of the political class to sway budget to fit into their whims and caprices;

 

4. lack of continuity in government policy either due to military interruption of democratic process or total disregard for the policies of the previous administration; and

 

5. inability to develop roadmap or yardstick to measure performance, which was the hallmark of the new budget system.

 

All these factors were part of the impediments that characterised the failure and frustration of the Shagari’s PPBS, among other factors.  However, some of the vestiges of the budget reform, especially the budget coding and classification systems were adopted by successive administrations in the country.

 

3.2  Budget Reforms in the Third Republic

 

Upon the restoration of democracy in 1999, after 16 years of military rule, the country was faced with internal and external challenges.  Consequently, the Obasanjo’s administration from the onset saw the compelling need to address the inherent challenges and the general weaknesses in financial management, as they relate to budget approach and processes in Nigeria.  This led to the setting up of the Budget System Review Committee (BSRC) in the year 2000 under the chairmanship of Prof. Dotun Philips, a Professors of Economics and one time Director General of the Nigerian Institute of Social and Economic Research (NISER), along with eminent professionals and technocrats as members.

 

The Committee, at the beginning of its mandate, observed that “the Federal Government budgeting system would have collapsed totally by the year 2000, if democracy had not been restored in 1999” (cited in Omolehinwa 2005).  Therefore, the Committee emphasized the need for government’s budgeting system to undergo “urgent massive reconstruction and rehabilitation on all fronts” (BSRC, 2000, cited on Omolehinwa 2005).

 

 

 

 

4.0   Current Budget Approach and Practice

 

Following the consolidation of democratic administration in the country and the renewed vigour by the international development partners to participate in the development of the country and nurture the nascent democracy, tremendous interest in building and strengthening the institutions of democratic governance, including budgeting and financial management in the country’s public sector were introduced.  Accordingly, the current development in the budgeting practices in Nigeria, is an outcome of collaborative efforts of both the government and the international development partners, such as the Word Bank, International Monetary Fund (IMF), the European Union, etc.  Their interventions in the areas of skills acquisition and provision of other technical supports in line with international best practices, have helped to ensure an enduring budget process in the country. However, whether this approach has helped in the realization of an effective and efficient budget system, remains one of the burning issues for public discourse.

 

It should be clearly stated that our budget system had undergone series of reforms from the year 2000 to date and series of institutional frameworks have been developed in order to further strengthen our budget system and approach.  This led to the enactments of the Fiscal Responsibility Act and Public Procurement Act, etc.  After the enactments of this Acts, some noticeable improvements in our budget system have been recorded, and are as summarised below:

 

1. The Fiscal Responsibility Act has contributed immensely to re-invigorating the budgetary process in compliance with the requirements of both Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP);

 

2. The huge dichotomy in the budgeting process has been drastically bridged because recurrent budgeting has been integrated with capital budgeting;

 

3. Budgeting is still based on incremental/line-item structure and process at both the Federal and State government levels;

 

4. There has been incremental changes in both the content and context of budgeting in Nigeria even in the face of the traditional line item budgeting approach;

 

5. Budgeting both at the Federal and State government levels are largely top-down in nature and the budgetary process is still not all-inclusive;

 

6. The approach to budgeting at the level of the Federal Government has witnessed wide scale changes when compared to State governments; and

 

7. A noticeable positive development in the budgeting practice at the State levels is the significant reduction in repetitive budgeting.

 

4.1  The Impact of Fiscal Responsibility Act

 

The Fiscal Responsibility Act (FRA) 2007, inter-alia, seeks to reposition the budgeting process in a more coordinated and responsible manner.  Since the enactment of the Act and in view of the laudable successes recorded at the Federal level, state governments have also enacted Fiscal Responsibility Laws to consolidate on the gains achieved by the Federal Government in that regard.

 

The Fiscal Responsibility Act contains two major components upon which the budgeting processes are structured on.  These components are the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy paper (FSP).  The MTEF requires that budgets are prepared on a three-year framework, as required under approaches like Performance Budgeting, Programme Budgeting, PPBS, etc.  The Fiscal Strategy Paper on the other hand, compels budget authorities to provide a policy and resource profile on which annual budgets are anchored upon.  Most of the provisions of the Act are designed to support budget preparation and implementation.

 

However, it is pertinent to state that the above framework, even though it has repositioned our budgeting system, it has not achieved the desired result yet.  Undoubtedly, approaches like the plan, performance and programme budgeting, PPBS and Zero-Based Budgeting have had varying degree of impact, which have not substantially change the fundamental basis of budgeting.  The traditional line item budget, which the new procedures seek to replace, has continued to endure but the various reforms have succeeded in impacting on some aspects, either in structure and classification system.  All these reforms are aimed at strengthening the capacity and efficacy of budget in the conduct of public financial and economic management in the country.

 

5.0   Zero-Based Budgeting in Nigeria

 

The zero-based budgeting practice, which is currently undertaken by the present administration of President Muhammadu Buhari, is an approach to planning and decision-making that reverses the working process of traditional budgeting (Wikipedia).  In traditional incremental budgeting, departmental managers justify only variances versus past years, based on the assumption that the “baseline” is automatically approved.  By contrast, in zero-based budgeting, every line item of the budget must be approved, rather than only changes. (Ibid) Zero-based budgeting requires that the budget request be re-evaluated thoroughly, starting from the zero-base; this involves preparation of a fresh budget every year, without reference to the past. This process is independent of whether the total budget or specific line items are increasing or decreasing.

 

There is no doubt that zero based budgeting has a lot of advantages, including efficient allocation of resources, as it is based on needs and benefits rather than history.  Some of the advantages of Zero-Based Budgeting are:

 

1. It drives managers to find cost effective ways to improve operations;

 

2. It detects inflated budgets; increases staff motivation by providing greater initiative and responsibility in decision-making;

 

3. It increases communication and coordination within the organization; and

 

4. It identifies and eliminates wasteful and obsolete operations; and identifies opportunities for outsourcing, etc.

 

However, there are some challenges with the adoption of zero based budgeting as practiced in Nigeria, as it is very time consuming.  It is also doubtful whether it is possible for the Federal Government to do a proper zero based budgeting in view of the budget line items that are often seen in our budgets.  Secondly, zero based budgeting requires specific training especially, as it is different from the traditional or incremental budgeting that has been used over the years in Nigeria. Additionally, the level of information that is required to back up zero based budgeting, is huge and can overwhelm public servants that are not used to this kind of budgeting. It must also be emphasized that it is often difficult and problematic for departments with intangible outputs like education, health, human rights issues and value re-orientation, which are service driven, to justify every line item in this context.

 

It has also been argued over the years that the national budget in Nigeria is a copy and paste kind of budget because of the type of budgeting that is done in the country. The type of budgeting that is practiced in Nigeria is line budgeting. This kind of budgeting does not require justification from the scratch as in zero based budgeting or linkage to performance as in performance budgeting. The end result is that the line budgets are increased slightly or decreased, depending on the priorities.

 

Although the adoption of zero-based budgeting is a commendable initiative by the Federal Government of Nigeria, however, there are requirements for the successful implementation of zero-based budgeting as noted above. Moreover, the problem of the budgetary process in Nigeria goes beyond the type of budgeting approach, which has been adopted. There are problems with citizen participation, openness of the budget, priorities, frivolous expenditure and ineffective oversight. The Federal Government must go beyond the announcement of the adoption of zero-based budgeting to implement a comprehensive reform of the budgetary process in line with its policy for us to have the ideal system of budgeting.  I said this because the Zero-Based Budgeting approach, being propagated by the Government is seen more in policy pronouncement than in reality, owing to the fact that when you carry out a comparative analysis of the traditional incremental budget and the current Zero-Based Budgeting, it is difficult for you to see any major difference.

 

6.0   Budget Deliberations and Passage

 

Budget deliberations and passage represent one of the vital checks and balances in the governance structure. In this context, the seamless participation of both the Legislature and the Executive is the key determinant of a good budget, which perhaps is the most important piece of legislation passed by the Legislature.  It is important because all activities of government resolve round the budget. As such, processes leading to its passage are often a cause of significant friction between the Legislature and the Executive Arm. Obviously, budget development is typically the domain of the Executive branch, subject to amendments and or approval by the Legislature. In most countries, the Legislature exerts its influence over the budget through the amendment process with considerable varied powers.

 

The United States Congress, for example, possesses unlimited amendment powers in the budget process.  However, in most parliamentary systems, the legislatures are allowed to amend the budget by either reducing or increasing spending/taxes.  But this is often done only within specific limits (e.g. that the deficit may not exceed the target, proposed by the government). Even more restrictive are some legislatures in the Westminster model, which must either approve the budget in its entirety or defeat the government in a no confidence vote.

 

From the overview of international experiences, argument that the legislature cannot alter budgetary estimates, is only half-truth; it represents the practice in some countries where their legal framework so provides. An International Survey prepared by the National Democratic Institute, examples from other jurisdictions are given to buttress the role of the legislature in budget making.  For instance, the Namibian Constitution requires the Finance Minister to submit the annual budget to the legislature, which in turn is mandated to “consider such estimate and pass, pursuant thereto, such Appropriation Acts, as are in its opinion, necessary to meet the financial requirements of the state from time to time”. The Malawian Constitution effectively prohibits the legislature from considering any bill or amendment for the imposition of any charge upon the Consolidated Revenue Fund or any alteration of such charge, unless the recommendations come from the government. This effectively prohibits amendments to the minister’s budget.

 

The Constitution of Ghana prohibits the imposition of a charge on the Consolidated Fund of Ghana or the alteration of any such charge other than by reduction. The 1996 South African Constitution, empowers the legislature to offer amendments to the executive’s budget but the legislature must provide the procedure to exercise this power under a framework law. The Polish House of Representatives under the 1997 Constitution has broad powers to increase or decrease spending and revenues in the executive’s budget. The only limitation is that the changes may not increase the budget deficit or decrease the surplus proposed by the executive. The budgets, if they are increased, must have corresponding increase in revenues.

 

 

 

7.0   Pragmatic Steps to be Taken in Developing Ideal Budgetary Framework

 

To develop a workable budgetary framework, all the relevant stakeholders must evolve a system whereby allocation of resources based on projected revenue are structure among the competing needs of MDAs who to be guided by their Medium Term Sector Strategies MTSS.  This is a component of Medium Term Expenditure Framework (MTEF).  The Medium Term Sector Strategies (MTSS), which commenced in 2005 clearly articulated a system whereby MDAs were requested to develop and articulate their MTSS, consistent with high policy document.  The process involves the following, to wit:

 

• clear articulation of goals and objectives by MDAs against the background of the overall goals of NEEDS and the attainment of the MDGs;

 

• identification and articulation of key projects and programmes, necessary for the achievement of their goals and objectives, bearing in mind their expenditure envelope;

 

• costing of the identified key initiatives in a clear and transparent manner;

 

• phasing of the implementation of the initiatives over the medium term (three years) plan;

 

• defining the expected outcomes in clear measurable terms; and

 

• proper linkage of expected outcomes to their objectives and goals.

 

Also, there is need for the establishment of the National Assembly Budget Research Office (NABRO) to strengthen the institutional capacity of the Legislature in view of its strategic role in the budget process, as enshrined in the Constitution of the Federal Republic of Nigeria, 1999, as amended.

 

7.1   Circular Flow on Budgetary Framework

 

A graphical representation that reflects the flow of information as it relates to national framework on budget/implementation and feedback system has been provided below, for guidance and ease of understanding:

 

 

 

 

 

 

                                        Source: Self-Generated

 

The outer arrows in the above illustration, represent how feedback mechanism from stakeholders, which also include Nigerians and civil society organizations, goes through the Budget Agencies to the Executive.  The Executive on their part, develops the framework based on the feedback in the form of policy or proposed legislation, and forward same to the Legislature for enactment.  On the other hand, the inner arrows represent enactment of the framework by the Legislature, after due consultations with stakeholders/civil society organizations and budget agencies.  Thereafter, it is forwarded to the Executive, whose responsibility it is to release the Act of the National Assembly for implementation, upon approval.

 

8.0   Recommendations

 

Flowing from the subject of this Paper, which is entitled: “Budgetary Framework in Nigeria: “Legislative Imperativeness and Introspection” and all the issues raised therein, I hereby recommend as follows:

 

1. That the complementary roles of all relevant stakeholders in the conceptualization of budgetary framework, policies and fiscal plans are sacrosanct. As such, all stakeholders should be carried along in order to stimulate an all-inclusive budget system in the country;

 

2. That there is the urgent need to re-invigorate the institutional capacity of the National Assembly, through the establishment of the National Assembly Budget Office (NABRO), to serve as a link between the National Assembly and the budget agencies of the Government for effective synergy and collaboration; and

 

3. That there should be coherent coordination, consistent with policy directions across all levels of government in order to engender comprehensive national overview of the public finance management in the country that suits the country’s peculiarities.

 

9.0   Conclusion

 

In conclusion, it is apposite to state that the National Assembly has a fundamental role to play in authorising budget decisions and holding government accountable, through the performance of oversight responsibilities. As such, in budgetary governance, the strategic roles and responsibilities of the Legislature must be clearly outlined and articulated in view of the fact that budget governance is an important pillar of the overall framework of public governance.  Undoubtedly, this will promotion other key components of the public governance framework, for an ideal budget system.  Finally, it is also appropriate for the country to determine and manage its national budgetary framework in the light of its specific circumstances, while taking due cognisance of the higher-level principles and guidelines, regarding budgetary governance in the country.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

 

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Olusegun Obasanjo “The Presidential Legacy” – 1999-2007

 

The Constitution of the Federal Republic of Nigeria 1999, as amended;

 

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“Towards a More effective Budget Implementation in Nigeria” – Proceedings of the House of Representatives Stakeholders’ Forum on Budget Implementation in Nigeria, July, 9-10, 2012.

 

Ajibolade S.O. and Oboh, C.S. (2017),“A critical examination of government budgeting and public funds management in Nigeria”, International Journal of Public Leadership, Vol. 13 No. 4, pp. 218-242.

 

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Public Management Review, Vol. 4 No. 2, pp. 167-186. Business Day (2013), “Reps mandate committees to examine budget system in Nigeria”, available at: www.businessdayonline.com (accessed July 5, 2013).

 

Central Intelligence Agency (CIA) (2016), “Population below poverty line”, available at: www.cia.gov/library/publications/the-world-factbook/geos/ ni.html (accessed August 15, 2016).

 

Deloitte (2015), “Zero-Based Budgeting: Zero or Hero?”, Available at: www2.deloitte.com/content/dam/Deloitte/us/Documents/process and operations/us-cons-zero-based-budgeting.pdf (accessed May 26, 2017).

 

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