Budgeting is the principal instrument of fiscal policy used by governments to encourage stable growth, sustainable development, prosperity, and optimum employment in the economy. The budget spells out the degree of activities and costs, as well as the specific programmes required for the implementation of the programmes. A budget guides the government on a developmental plan that most times needs to be consolidated to achieve a meaningful aim. Budget implementation is importance because it assesses government performance over time. An effectively implemented budget improves and strengthens the various macro-economic ingredients like poverty, unemployment, inflation, and the financial systems. During the military era in Nigeria (before 1999), Nigerians both in the public and private sectors looked forward to presentation of budgets in order to determine the policy direction of government for any particular year. Before presentation of budgets around October, there was usually a lull in business activities but once the Federal Commissioner for Finance announces the budget breakdown, businesses boomed.
This trend has unfortunately changed since 1999 as budgets have become mere annual rituals that are no longer is of much significance to the economy. This is because budgets Acts are now implemented more in breach than in conformity. For the eight years that President Olusegun Obasanjo was in office, it was a tug of war between him and members of the National Assembly. President Umar Musa Yar’ Adua ruled effectively for about two years but even within that short period, he was threatened with impeachment by the Assembly over his inability to effectively implement budget. And since President Goodluck Jonathan mounted the saddle at Aso Rock, all have not been well between the two strong arms of government. An aspect of 2013 budget presentation by Jonathan would seem to highlight a strong point of departure between the executive and legislature. While members of the National Assembly and other Nigerians look forward to a 100 percent implementation of budgets, President Jonathan said his own focus was more on tangible outcomes from the implementation of the Appropriation Acts and not the level of implementation.
In a way, budgets in Nigeria have become rituals with lost significance. They are now more like guides and not laws. Since around 2010 when President Jonathan has been in office, average capital budget implementation hovered around 40 percent. When considered that capital aspect of national budgets is less than 30 percent, then it should be clear that Nigeria is not on the path to development. Probably because of the struggle for the 2015 elections, preparations for the 2014 budget had been particularly thorny. First, the National Assembly failed to agree with the President on the Medium Term Expenditure Framework and after a truce was reached, the next battle was the crude oil price budget benchmark. The President had initially proposed $74 as the oil benchmark but the Senate insisted on $76.5 as the oil benchmark, while the House of Representatives also insisted on $79. The two chambers eventually later agreed on $77.5 as crude oil benchmark and also adopted the conference report on the 2014-2016 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
Just as it happened in 3013, the entire capital aspect of 2014 budget is going to rely on deficit financing while available resources would be completely deployed to recurrent (78 percent of estimates).
For the third consecutive year, security operations received the lion’s share of the 2014 budget estimates.
In the N4.91 trillion appropriation bill submitted separately to the two chambers of the National Assembly on behalf of President Goodluck Jonathan by his Finance Minister, Ngozi Okonjo-Iweala, about N1.1 trillion, representing 27 percent, is for capital expenditure, while N2.43 trillion will go for recurrent spending. The remaining amounts are for debt service, N712 billion; statutory transfers, N399.7 billion; and Subsidy Reinvestment and Empowerment Programme (SURE-P), N268 billion. Government’s expected revenue target is N3.73 trillion, while the budget deficit stands at 1.9 per cent of the Gross Domestic Product (GDP), slightly up from that of the 2013 budget, which stood at 1.85 per cent.
A total of N845 billion was provided for recurrent and service-wide votes for the security sector, which includes the Armed Forces, Police, National Security Adviser’s office, and the para-military services.
Recurrent allocation for Defence (including Army, Air Force and Navy), is N306 billion; Police formation and commands: N286 billion; National Security Adviser: N67 billion; Interior ministry: N145 billion; and Police Affairs ministry: N4.5 billion. Also part of the security spending are provisions under ‘service-wide votes’ for Nigerian Army Quick Response Group and arrears, N12 billion; and Operations-Internal for the Armed Forces, N24 billion.
Education got the next highest allocation of N373.4 billion; Works- N28.5 billion; Petroleum Resources- N55.7 billion; Science and Technology- N24 billion; Power- N3.9 billion; and Justice- N19.4 billion. Information got N22.4 billion, Foreign Affairs N46.5 billion, Agriculture N31.4 billion, Water Resources N7.7 billion, and Youth Development N75.9 billion. Office of the Secretary to the Government of the Federation is allocated N46.2 billion, Mines and Steel Development N10.6 billion, Lands and Housing N5.6 billion, Aviation N6 billion, and Finance N216.4 billion Other allocations include the Presidency with N25 billion, whereas the proposed National Dialogue will gulp N7 billion, Stipends for 30,000 ex-militants- N59 billion.
Speaking to journalists shortly after presenting the budget, Okonjo-Iweala said, the 2014 budget was tagged “Budget for Jobs and Inclusive Growth.” Adding that “the budget is going to support the push in agriculture, it will kick-start the housing sector where we can create more jobs, it is designed to our policies that would support manufacturing because jobs would be created there.”Industries will also be created in solid minerals. All these support will continued to be unleashed. Job creation is the key to really solving the problems of the Nigerian economy.”
She was accompanied to the National Assembly by some other ministers like Labaran Maku (Information), Idris Umar (Transport), Sarah Ochekpe (Water Resources), Omobola Johnson (Communications), Chinedu Nebo (Power), Bashir Yuguda (State for Works) and Olajumoke Akinjide (State for FCT) and Director-General of the Budget Office, Bright Okogwu.