The Nigerian economy has overtime distorted its budget cycle process by achieving a complete budget cycle only four times in 18 consecutive years according to BusinessDay analysis of available data.
The budget cycle refers to the life of a budget from its formulation, through its legislative approval to its execution and evaluation.
Unfortunately, scarcely has the budget implementation at the federal level commenced officially in January of any fiscal year for the past 18 years from 2000 – 2017 except in 2001, 2007, 2009 and in 2013.
“Late submission of the budget to the National Assembly over the years has led to late commencement and thus poor budget implementation and its attendant consequences,” said Jonson Chukwu Managing director Cowry Asset Management Ltd.
“Thus, we are seeing very low budget implementation of not more than 20% because the preparation process is a big flaw to the extent that the consultation that should have taken place to proceed the budget preparation doesn’t seem to be taking place leading to misunderstanding and disagreement between the national assembly and the executive,” Chukwu said.
Furthermore, Chukwu told BusinessDay on phone that since the advent of the civilian government, Nigeria has had situations where the party that controls the executive, also controls the National assembly.
“Thus, we have a situation where there is nonchalance towards submission of budgets to the national assembly,” Chukwu said.
Analysis by business day reveals that Nigeria could barely implement 21 percent of capital expenditure in 2017. Also, actual capital expenditure as a percentage of total expenditure fell to a 5-year low of 3.9 percent in 2016.
In 2015, actual capital expenditure as a percentage of expenditure was 12.6 percent (N601 billion vs N4.77 trillion).
In 2014 and 2013, the percentage was 14 percent (N587 billion vs N4.12 trillion) and 21 percent (N958 billion vs N4.56 trillion) respectively.
In 2012, the percentage was 18 percent (N744.42billion vs N4.13 trillion).
Ayo Akinwumi Head of research FSDH said “The major implication of a distortion in the Budget cycle process is that development will be slowed down because the capital expenditure will hardly be implemented and without the capital expenditure budget, you cannot improve the ease of doing business in the country and this will result in a low level of productivity as the economic environment won’t be attractive to investors as a result of shortage in infrastructure.”
Thus, year in year out, the Nigerian economy has not been able to execute infrastructural projects accompanying in the budget because of its late approval and before major disbursement are done, the budget would have ran out of time Akinwumi said.
Data compiled by business day, shows that the time frame between the President’s presentation and assent of the budget is about 4 months, and the time lag between 1st Jan and date of take-off is about 3months.
Another major implication of a distortion in the budget circle is the structural twist it causes in the medium term expenditure framework (MTEF), and the 12 month calendar year circle of annual budgeting, Akinwumi said on phone.
ETHEL WATEMI & MICHEAL ANI
