Nigeria: Agelong Budget Cycle Conundrum


Friday, August 23, 2019   /10:59AM / By CSL Research / Header Image Credit: Abmlimited

Reappointed Minister of Labour and Employment, Dr Chris Ngige at his inaugural meeting with departments and agencies under the Ministry of Labour announced that 60% of the 2019 budget would be moved into the 2020 budget. This was disclosed at the presidential retreat that was organized for ministers-designate at the Presidential Villa. We recall the 2019 budget (N8.9tn) was passed in April 2019 but was not assented to by the President until May 2019, implying that 5 months into the fiscal year, budget spending would have been constrained.

This has been the agelong story in Nigeria with the public finance managers failing to adhere to the fabled January - December fiscal year- regarded as an organic budget calendar. Since 2014, it has taken an average of 5months for the budget to be approved between presentation date and approval date.

Over the years, the impact of operating an inorganic budget calendar has been that key capital projects have to be rolled over into subsequent fiscal years. A typical example is the Mambila Hydropower Project which has dragged on for years. In 2019, a combination of election activities, lack of cooperation between the Executive & the Legislature as well as delayed appointment of ministers have delayed the passage and in turn implementation of the budget. Consequently, several capital expenditure plans will be rolled over to 2020 even as government has not been able to implement the minimum wage bill.  

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In a move to put an end to the budget cycle conundrum, the Senate president earlier this month promised the Presidency that the budget would be returned in December provided they can receive it by September. While we note such promises have been made in the past, we reckon that the 9th assembly since inauguration has shown signs of a willingness to cooperate with the Executive. Thus, provided the budget is presented in good time, we may finally see an end to the budget cycle conundrum.

However, will the executive be able to present the budget by September? The earliest budget presentation time in the past six years was in November 2018 and surprisingly was not signed until 218 days later (the longest time gap in six years).

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