The Budget

DAWODU.COM 

Dedicated to Nigeria's socio-political issues

 

2009 US DIVERSITY VISA LOTTERY INFORMATION

 

October 3, 2007 - December 2, 2007

 

 

LUNARPAGES.COM and IPOWERWEB.COM - Despicable WebHosts - Read My Story

 

 

 

The Budget: Myths, Illusions, and the Reality

 

By

 

Otive Igbuzor

Deputy Director

ActionAid International Nigeria

Plot 461 Kumasi Crescent ,

Off Aminu Kano Crescent ,

Abuja , Nigeria .

Tel: 234 9 4130986/7

otivei@actionaidnigeria.org,

otiveigbuzor@yahoo.co.uk

 

 

 

 

A PAPER PRESENTED AT THE TRAINING OF TRAINERS WORKSHOP ON BUDGET MONITORING AND GOOD GOVERNANCE IN NIGERIA JOINTLY ORGANISED BY WOMEN ENVIROMENTAL PROGRAMME (WEP) AND JUSTICE DEVELOPMENT AND PEACE COMMISSION (JDPC) MAKURDI DIOCESE ON 2ND SEPTEMBER 2004 .

 

 

1. INTRODUCTION

The budget is perhaps the most important instrument in any modern state apart from the constitution. The focus on budget has assumed greater prominence in recent years with increasing democratization, civil society participation and the desire to respond to the development challenge of poverty. In Nigeria , the return to civilian rule after many years of military rule has put issues of budget in the public domain. It is important to point out that even during military rule, budgets are prepared and read to the country every year. But there are a lot of misconceptions, misunderstandings, misgivings and even postulations about the budget, which are far from reality. In this paper, we examine the concept of budget and budgeting and the myths and illusions associated with it especially in underdeveloped and corrupt countries like Nigeria .[i] We argue that the budgeting process in Nigeria is characterized by myths and illusions and posit that there is the need to transform the reality of the budgeting process in Nigeria through citizen participation and monitoring.

 

2. THE CONCEPT OF BUDGET AND BUDGETING

The word budget originated from a French word “bougette” which means little bag. In Britain , it was used to describe the leather bag in which the Chancellor of the Exchequer carried the statement of government needs and finances to parliament. Later on, the budget was used to describe the documents contained in the bag. Today, budget is ascribed a broader meaning and has been defined by various authors in different ways. A budget has been defined simply as a statement of government’s estimated revenue and proposed expenditure for the year.[ii] Bedeian defined budget as plan that deals with the future allocation and utilization of various resources to different enterprise activities over a given time period.[iii] A budget has also been defined as a financial plan embodying an estimate of proposed expenditures for a given period and the proposed means of financing them.[iv] Another definition is one that defined budget as an action plan for a specific period of time covering all departments/functions/facets of an organization and containing targets to be achieved both in physical and financial terms, which serve as important criteria of performance.[v] According to Balmori, the budget of any government is the technical instrument by which commitments are translated into monetary terms.[vi]A comprehensive description was given by Kwanashie:

The budget is a key instrument for macroeconomic management in most economies and its efficacy determines the success of governments in meeting societal goals. The budget is also a tool for the implementation of social, political and economic policies and priorities which impact on the lives of the population…A budget is a plan and we know that plans depend heavily on information, analysis and projections. A successful budget must be a product of a process that is based on sound and quality information, rigorous impact analysis and an effective feedback mechanism to internalize lessons of past budgets. The budget is an integrated output of a dynamic process in which the connections between the various sectors are critical for its ultimate impact and should be looked at in a holistic manner.[vii]

 

 

 

From the above definitions and description, it is clear that budgets serve some purposes. Six main purposes can be delineated for a budget.

1.      It is a short-term financial plan. 

2.      It is a political document couched in figures.

3.      It is a management tool used for both planning and control.

4.      It is a device for ensuring a continuous monitoring procedure, and reviewing and evaluating performance with reference to previously established standards.

5.      It is an agent to enable management to anticipate change and adapt to it.

6.      It is an overall method for improving operations.

It is important to note that as soon as a budget is approved by the appropriate authority (usually the legislature), it becomes a legal instrument through which government can incur expenditure and collect revenue.

 

Budgeting is simply the process of preparing a budget. It refers to the procedures and mechanisms by which the budget is prepared, implemented and monitored.[viii] Budgeting is very crucial for the economic development of any nation. Good budgeting can lead to economic growth and development. But to prepare a good budget requires a responsible leadership, special staff assistance, broad, accurate and reliable information, complete plan, a financial calendar and effective monitoring and control over the execution of the budget plan. The budgeting process traces the budget in one year from conception through to preparation, approval, execution, control, monitoring and evaluation. Scholars have divided the budgeting process into four main stages[ix] viz:

  1. Budget Review

  2. Budget Formulation

  3. Budget Implementation

  4. Budget Monitoring and Control

 

3. MYTHS AND ILLUSIONS ABOUT BUDGET

There are a lot of myth and illusions about the budget. In this paper, myth refers to something that many people believe but that does not exist or is false while illusion is a false idea or belief.[x] According to Krafchik, in many developing countries, the range of inaccurate and misguided assumptions include:

bullet

The perception that public budgeting is the exclusive preserve of the executive.

bullet

 Budgets must be formulated in secret or they may upset financial markets.

bullet

Non-government intervention can destroy the integrity of the budget envelope;

bullet

Legislators and civil society have a greater interest in advancing the interests of their constituents as opposed to the interests of the country as a whole;

bullet

It is the government’s mandate to produce the budget internally in a closed process; and the government’s prerogative to have it rubber- stamped by the legislature.[xi]

A critical analysis of the ideas above will reveal that they are mere myths and illusions that are not grounded on facts. While it is true that it is the responsibility of the executive to formally make proposals to the legislature, the process of formulation of budget ought to involve the participation of interest groups and citizens in general. In this way, the debate on the budget process is deepened and new information is brought into the process of making decision on the budget.  The argument that openness of the budget making process will upset financial market is an illusion. In fact, budget secrecy will encourage speculation while transparency will make known the policy choices which will make it easier for investors and business people to make more informed decision. The assumption that non-government intervention can destroy the integrity of the budget envelope cannot be sustained because budget by definition is a plan based on certain assumptions whose integrity is not caste in stones. Non-government intervention brings in fresh perspectives that cannot be discountenanced. The view that legislators and civil society will pursue interests opposed to the common good challenges the whole concept of representative democracy and popular participation. The appropriate response cannot be exclusion from the process especially as there is no guarantee that the executive will not pursue a narrower interest.

 

4. THE REALITY OF BUDGET AND BUDGETING IN NIGERIA

The reality of budget and budgeting in Nigeria is that it is dominated by the myths and illusions discussed above. There is a strong perception in Nigeria that public budgeting is the exclusive preserve of the executive. According to the Special Assistant to the President on Budget matters, budget formulation is entirely the responsibility of the executive.[xii] In 2003, a widely read newspaper in Nigeria wrote an editorial arguing that budget making is a technical process and Civil Society Organisations (CSOs) have no business being involved in the process. Similarly, there is little or no involvement of CSOs in the formulation stage of budgeting in Nigeria even though attempts are being made to intervene in the process after submission of the proposals by the executive to the legislature. Meanwhile, budget like other government business is still regarded as secret in Nigeria . Edetean Ojo aptly captured the situation when he pointed out that:

The environment under which the budget process takes place in Nigeria is one in which legal and institutional frameworks impede public access to official records, documents and information…Nigeria continues to retain numerous laws with secrecy clauses which prohibit the disclosure of information, usually under very broad “public interest claims, even when no justification for such prohibition exists. Sometimes, even the courts of law are precluded from compelling the disclosure of such information.[xiii] …Besides, certain categories of government officials are obliged upon taking office to subscribe to an oath of secrecy under which they undertake not to disclose any information, which comes to their knowledge or custody in the course of their duties, unless specifically authorized to do so. The situation has engendered a culture of secrecy in government institutions, which insulates governments and their actions from public scrutiny. This has also resulted in a severe restriction on the ability of members of the public, including the media, to access information about governmental activities, programmes and policies.[xiv]

Another reality with the budgeting process in Nigeria is that despite the fact that budget in a democracy is supposed to be a law, an act of parliament that must be obeyed, there are a lot of extra-budgetary expenditure. This actually formed one of the grounds of the threat to impeach president Olusegun Obasanjo in 2002. One of the fallouts of this reality is that budget performance is very poor. Finally, the reality of the budgeting process is that the legislature is a mere rubber stamp especially at State legislatures. In Enugu State for instance, the 2003 budget was passed within three days of presentation to the State House of assembly by the Governor Dr. Chimaroke Nnamani. There is no way the house would have completed a thorough scrutiny of the budget in three days.

 

Some scholars have argued that the myth and illusions about budget is being challenged in several developing and transitional countries with CSOs and legislators playing more roles in the budgetary process.[xv]  Examples of such countries include Indonesia , Russia , South Africa and Uganda . In addition, the increased emphasis on decentralisation which is bringing budgeting closer to the people thereby fostering greater citizen participation; growth of independent budget institutions and the emerging consensus on the role of non-government actors in development especially in the face of growing poverty in the world underscores the necessity of CSO participation in the budgeting process.

 

In Nigeria , the myth and illusions about budget is also being challenged. During the military era, most CSOs in Nigeria are Human Rights Organisations (HROs) focused on fighting the military and entrenching democracy. With the return to civilian rule in 1999, many CSOs have sprung up to address wider development issues. In addition, many of the HROs are increasing repositioning to address economic, social and cultural rights in general and budgetary issues in particular. Some CSOs that are now working on Budget issues in Nigeria include Human Rights Law Service (HURILAWS), Women Advocate Research and Documentation Centre (WARDC), Women Environment Programme (WEP), Justice Development and Peace Commission (JDPC), Centre for Democracy and Development (CDD), ActionAid International Nigeria, Socio-Economic Rights Initiative (SERI), CBD NGO Forum, DEC, Gender and Development Action (GADA), Community Action for Popular Participation (CAPP), ANEEJ etc.

 

5. TRANSFORMING THE REALITY OF BUDGET AND BUDGETING IN NIGERIA

Karl Marx once said that Philosophers have interpreted the world in different ways, but the point is to change it. As noted above, the reality of the budgeting process in Nigeria will not lead to transparency, good governance and development. Therefore, just describing that reality is useless unless there are prescriptions to transform that reality. In order to transform the present reality, the following are necessary:

bullet

Increasing participation in the budgetary process

bullet

Promotion of transparency and accountability in the budgetary process

bullet

Promoting basic rights through the instrumentality of the budget

bullet

Building the capacity of CSOs and legislators to intervene in the budgetary process

bullet

Conduct participatory researches with the involvement of citizens

bullet

Promulgation of a budget law which will provide for participation of citizens

bullet

Advocacy for pro-poor redistributive budgets (in favour of the poor, marginalized, excluded and disabled)

bullet

Advocacy for Gender Budget Initiatives

bullet

Advocacy for children Budget Initiatives

bullet

Enactment of the Freedom of Information Act (It was passed by the House of Representatives on August 5 and 25, 2004. We commend the House and call on the Senate to pass the bill and for the President to give assent).

bullet

Production of alternative budgets

 

 

6. CONCLUSION

The budget is an important instrument of governance in any modern state. It has the potential of aiding planning and contributing to development. But it is shrouded in a lot of myths and illusions, which essentially excludes citizens from participation and promote secrecy, corruption and underdevelopment. There is there fore the need to interrogate the reality of budgeting in Nigeria with a view to transforming it in such a way that it will not only become participatory, transparent and accountable but will also lead to poverty eradication and sustainable development.  

 

 

ENDNOTES


 

horizontal rule

[i] For many years, Nigeria has been rated by Transparency International as either the most corrupt or the second most corrupt country based on Corruption perception Index.

[ii] UNIFEM (2002), The Budget Process in Nigeria : Issues and Challenges for Gender Responsive Budgeting.

[iii] Bedeian, G. A. (1987), Management. Chicago, CBS Publishing Japan Ltd.

[iv] Adamolekun, L. (1983), Public Administration: A Nigerian and Comparative Perspective. NewYork, Longman Ltd

[v] Ndubuisi, W. C.(1996), The Practice of Federal Finance: The Nigerian Dimension. Aba , Walcom Services(Nig)

[vi] Balmori, H. F.(2003a), “A Practical Tool to Advance Towards Equity” in Gender and Development in Brief Bridge Bulletin Issue 12, March 2003

[vii] Kwanashie, M. (2003) “Connections and Disconnects in Budgeting Information: Issues for Budget Sectoral Analysis in Nigeria ”. A Paper presented at the Seminar on Budget Knowledge for Civil Society in Nigeria organized by the Centre for Democracy and Development (CDD) from February 28- March 1 2003 .

[viii] Nana, J. O.(2003), The Role of the Central Bank of Nigeria in the Budgetary Process”. A paper presented at the Civil Society Seminar on Budgeting Process in Nigeria organized by the Centre for Democracy and Development (CDD) from February 28 to March 1 2003 .

[ix] Nana, J. O. Ibid

[x] Wehmeier, S. (Ed) A. S. Hornby  Oxford Advanced Learners Dictionary. Oxford University Press

[xi] krafchik, W. (2002), “Can Civil Society Add Value to Budget Decision-Making?” in Gender Budget Initiatives: Strategies, Concepts and Experiences. New York , UNIFEM

[xii] Ezekwesili, O. (2004)

[xiii] Instances of such secrecy clauses are contained in legal provisions such as section 168 of the Evidence Act; Section 2 of the Federal commissions (privileges and Immunities) Act, Cap 130 LFN, 1990; Section 10 (2) of the Public complaints Commission Act; Section 12 (2) of the architects (Registration, etc.) Act; Sections 53 and 55 of the Nigerian Railway Corporation Act; and Section 13 of the Statistics Act, Cap 416, LFN, 1990.

[xiv] Ojo, E. (2004), Access to Information and budget Transparency in Nigeria . A paper presented at the Consultative meeting on Budget law Initiative in Nigeria organized by WARDC in collaboration with Joint House Committee on Appropriation and Finance held from 31 august – 2 september, 2004 at Nicon Hilton Hotel, Abuja .

[xv] Krafchik  Op. Cit.

RETURN TO HOME PAGE

horizontal rule

© 1999 - 2006 Segun Toyin Dawodu. All rights reserved. All unauthorized copying or adaptation of any content of this site will be liable to  legal recourse.

Contact:   webmaster@dawodu.com

Segun Toyin Dawodu, P. O. BOX 710080, HERNDON, VA  20171-0080, USA.

This page was last updated on 10/27/07.