THE RELATIONSHIP BETWEEN BUDGETING AND NATIONAL DEVELOPMENT IN NIGERIA
THE RELATIONSHIP BETWEEN BUDGETING AND NATIONAL DEVELOPMENT IN NIGERIA
Nigeria has had a relatively long experience in development planning beginning with the Colonial Development Plan (1958-68). Medium-term development plans and national rolling plans were also developed and implemented with mixed results. Other major strategic initiatives – such as the Structural Adjustment Programme; the National Economic Empowerment and Development Strategy; the Strategy for Attaining the Millennium Development Goals; and the 7-Point Agenda – were not seen to have been effectively implemented.
BUDGETING
Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income.
BUDGETING IN NIGERIA
Arguments have raged on over the financial illiteracy hindering most Nigerians from full participation in government and, clearly understanding governance and government activities across all spheres of life. A good financial knowledge is required in todays daily activities if we are to dictate fraud before it happens in our various businesses and avoid the siphoning, which has characterized all facets of government activities, especially in the annual budget preparation.
A budget is the sum of money allocated for a particular purpose and the summary of intended expenditures along with proposals for how to meet them. Usually the government councils translate their services through budget as it has to do with financial plan or estimate of proposed income and expenditure for a particular period normally a year. It is the translation in financial terms of government policies; a fiscal estimation of what government plans to spend, where it plans to spend it on and how it intends to source the funds. Although the success or failure of any government is always measured on the basis of the provision or neglect of the welfare of the people. The principles adopted in budget preparation is one that is aimed at making the entire process transparent and participatory. Budget is an important tool in governance and most relevant to the economic policy. It is the second most important document after the constitution in any nation. It signifies that budget is an expression of the constitution and statutes of government which endow the executive and legislature with designated financial and managerial responsibilities.
Budget undergoes some processes before it becomes both a law and an economic tool. Budgetary process involves all centers, programmes and administrative units of an entity in the development of periodic budget. The process involves all the executive and legislative processes, that is, collection of estimate from the various government departments to the defense before the various committees of the legislatures and debates in the floor of the houses, the passage into law and the final implementation and monitoring.
Preparation of budget primarily involves identification and setting of developmental goals. That is, it involves setting budgetary thrusts and policies based on the development plan. At the Federal level, the responsibility of the president for the preparation and submission of budget is well established. At the state level, it is the statutory responsibility of the governor to prepare and submit the budget. In the local government, the Chairman forms the government and invariably has complete control over budget preparation but assisted by the finance committee and departmental heads.
Though in most occasion, the process varies from State to State. The budget process commences with a call circular from the Executive Committee consisting the Chairman, the supervisory councilors and other officials (Secretary, treasurer, head of personnel and legal advisers). They call on all relevant departmental heads to prepare estimates for the coming fiscal year. Subsequently, the head of departments prepare estimates of expenditure in line with the goals and the estimates of revenue expected as well as the sources expected. As soon as the process is concluded, each department hands its own estimates to the treasurer or finance head.
The executives having gone through the budget estimates present it to legislature for approval. The method of approval also varies from one council to the other, that is, while some require a simple majority, others would require two-third majority for the approval. Now you know this, what will you do when next you hear of national budget?
DEVELOPMENT
Development – a political term
A multitude of meanings is attached to the idea of development; the term is complex, contested, ambiguous, and elusive. However, in the simplest terms, development can be defined as bringing about social change that allows people to achieve their human potential. An important point to emphasis is that development is a political term: it has a range of meanings that depend on the context in which the term is used, and it may also be used to reflect and to justify a variety of different agendas held by different people or organizations. The idea of development articulated by the World Bank, for instance, is very different from that promoted by Greenpeace activists. This point has important implications for the task of understanding sustainable development, because much of the confusion about the meaning of the term ‘sustainable development’ arises because people hold very different ideas about the meaning of ‘development’ (Adams 2009). Another important point is that development is a process rather than an outcome: it is dynamic in that it involves a change from one state or condition to another. Ideally, such a change is a positive one – an improvement of some sort (for instance, an improvement in maternal health). Furthermore, development is often regarded as something that is done by one group (such as a development agency) to another (such as rural farmers in a developing country). Again, this demonstrates that development is a political process, because it raises questions about who has the power to do what to whom.
Development transforms the environment
But development is not simply about the interactions between human groups; it also involves the natural environment. So, from another point of view, development is about the conversion of natural resources into cultural resources. This conversion has taken place throughout the history of human societies, although the process has generally increased in pace and complexity with time. If we use a system diagram to illustrate – in very general terms – what an economy does, we see that the basic function of an economy is to convert natural resources (in the forms of raw materials and energy) into products and services that are useful to humans (see 2.1.1). Inevitably, because conversion processes are never totally efficient, some waste is produced which is usually discarded into the environment as various forms of pollution. Therefore, the environment is both a source and a sink in relation to economic processes: it is a source of raw materials and energy and a sink for pollution.
A representation of a generalized economy
Resources, energy, and waste
An example of this type of conversion would be the extraction of crude oil from the North Sea, its fractionation and distillation in oil refineries, and its conversion to petroleum or diesel. In turn, those products (petrol and diesel) are converted – through combustion processes – into useful work (such as transportation) whilst the waste products are released into the atmosphere as greenhouse gases (such as carbon dioxide). If we add together all of the conversion processes that occur, for instance, in a given country, we would have a sense of the total input and output of that national economy. This could be expressed in terms of the total natural resources and energy consumed, the total products and services created and the total pollution generated. (In fact, the total value of the finished products and services created in a given country is expressed using a widely-used measure, the Gross Domestic Product, or GDP.) If we wanted to increase the creation of products and services, in a given economy, we would require more natural resources and energy, and we would also generate more pollution as a by-product.
Economic growth
From this point of view, development means an increase in the size or pace of the economy such that more products and services are produced. Conventionally, a common assumption has been that, if an economy generates more products and services, then humans will enjoy a higher standard of living. The aim of many conventional approaches to development has been to increase the size of the economy (economic growth) in order to increase the output of products and services. Of course, without any change in the fundamental economic processes involved, the production of more products and services will inevitably require more raw materials and energy, and will generate more waste.
CONCLUSION
The 2017 budget of N7.29 trillion is a vital fiscal tool that has the potential to support the economy. However, implementation of the budget is crucial to its success. Revenue generation needs to be enhanced through the blockage of leakages, improving tax efficiency and implementing clear fiscal reforms that support the business environment and therefore non-oil revenue. The Nigerian government must remove unnecessary recurrent items from the budget; reduce debt servicing cost and channel resources to high priority projects. Going forward, the following are essential in ensuring improved budget impact in Nigeria:
· Disclosure of budget performance
· Legislating the budget process
· Reviewing the procurement
REFERENCE
Organization for Economic Co-operation and Development. Public Governance: Improving the Effectiveness of Public Spending. OECD Better Policies Series. Brazil Policy Brief. Retrieved From
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