A Critical Examination Of The Management Of Public Funds And Government Budgeting In Nigeria

A Critical Examination Of The Management Of Public Funds And Government Budgeting In Nigeria

Chapiter 1

Introduction

1.1 The Study’s Background

Fundamentally, a budget contributes significantly to the overall management and sustainability of a nation’s affairs. According to Malgwi and Unegbu (2012) and Okpala (2012), it is a financial policy document that includes the government’s projections of income and expenses for a given period of time, often one year. Olomola (2012) asserts that a budget is a crucial economic tool used by the government to support and carry out its agenda within a fiscal year. It is a fiscal economic strategy for efficiently mobilizing, allocating, and managing resources to achieve predetermined objectives (Horngren et al., 2008).

According to tradition, the role of the government is to advance both societal and personal interests (Bello, 2001; Okpala, 2012). The most significant of these systems, budgeting, is used to govern the affairs and welfare of its population. According to Okpala (2012) and Olurankinse (2012), the government uses its annual budget to manage the economy and take advantage of the resources of the country. Therefore, it is believed that a country’s budget should support efforts to reduce poverty, expand infrastructure, create jobs, grow important economic sectors, and raise the standard of living of the populous (Olomola, 2012). The budget and its execution continue to be contentious areas of government in the process of developing a nation, according to Aminu Tambuwal, the former Speaker of the House of Representatives (Nwogu, 2013). This is due to the fact that a country’s development and economic progress are intrinsically tied to its ability to collect taxes and manage its finances.

According to the established official allocation formula, funds are distributed to the various ministries, departments, and agencies in Nigeria each fiscal year in accordance with the approved budget estimates (ICAN, 2009; Fiscal Responsibility Act, 2007; The Federal Republic of Nigeria Constitution, 1999; Public Procurement Act, 2007). These funds are often utilized for personal enrichment when they are assigned to cover recurring costs, capital projects, and other developmental initiatives (Olurankinse, 2012; Peter, 1999), and the budget rarely meets its objectives. Government spending has historically had little to no impact on the standard of living of the electorate (Abe, 2012; Agbonkhese and Asekome, 2014). The Central Intelligence Agency (CIA) (2016) asserts that Nigeria’s economic diversification and rapid growth have not significantly reduced poverty rates.

Nigerian society, according to Okwoli (2004) and Akpan (2013), is corrupt with money-laundering, fictitious people (ghost workers) on government payrolls, contract inflation, and other corrupt practices. Out of 168 countries evaluated in 2015, Transparency International ranked Nigeria as the 32nd most corrupt (Transparency International, 2015). Similar to this, KPMG reported that fraudulent activities cost the government approximately 225 billion (US$1.5 billion) in just 2012. Additionally, it was noted that Nigeria topped the list of the most fraudulent nations in Africa in 2012 and was responsible for the greatest number of fraud cases on the continent. 2012 Randle. Political elites and government employees have been named as the main offenders of fraud in the nation (Bello, 2001; Onuorah and Appah, 2012; Otusanya and Lauwo, 2013; Transparency International, 2015; CIA, 2016).

The dividend of democracy to electorates remains a mirage and a long way from reality with this tendency, along with the problems facing the country and the economy. Doubts appear to have exceeded voter expectations. The state of governance is attracting more attention (Olomola, 2012; Iredia, 2012). The efficiency of the nation’s annual budgets in ensuring the proper management and accountability of public monies is of significant stakeholder concern (Okpala, 2012). Nigeria’s 2020 goal of becoming one of the first global economies would remain a fantasy without a progressive and resilient fiscal system that serves as the economic blueprint for national reforms and development (Horngren et al., 2008; Olomola, 2012; Abogun and Fagbemi, 2012). The nation’s fiscal system must therefore be closely examined, and strict measures must be taken to guarantee fiscal transparency, efficient management, and accountability of public funds.

1.2 Description Of The Issue

According to Agbonkhese and Asekome (2014), Olajide (2011), Olurankinse (2012), Okpala (2012), Okolo (2012), and Olajide (2011), Nigerians have consistently criticized the country’s annual budget for its appalling failure to manage and account for public finances and achieve fiscal targets since independence. Regarding the nation’s financial process and implementation methods, there are concerns and questions (Akpan, 2013; Olomola, 2012; Iredia, 2012). According to several sources (Peter, 1999; Olomola, 2012; Omah et al., 2013; Iredia, 2012; Ugwuanyi and Ewuim, 2012; Agbonkhese and Asekome, 2014; Transparency International, 2015; Central Intelligence Agency, 2016), this is due to issues with governance, poor management of public funds, and a high level of official corruption.

This research highlights the necessity of updating the country’s budgetary structure and execution strategies. As evidence of budgeting system abuses, it looks at the nation’s development position, the prevalence of corruption and money laundering among public officials, and the ineffective implementation of the country’s annual budgets. This is due to the fact that, despite the government’s consistent yearly spending growth, neither the living standards of citizens nor the quality of infrastructure facilities have significantly improved (Okpala, 2012; Samuel and Kabir, 2011; CIA, 2016).

1.3 Study’s Objective

This study’s main goal is to evaluate Nigeria’s public finance administration and budgeting process critically. Consequently, the study will focus on the following particular goals:

1. Determine whether Nigerian public money are managed with real and effective accountability.

2. Ascertain Nigeria’s level of transparency in the administration of public finances.

3. Determine the level of effectiveness of the Nigerian budgeting system.

4. Evaluate how well the Nigerian government’s annual budget satisfies its financial goals.

5. Check to see if the processes in place to regulate how public funds are accessed, used, and reported are sufficiently effective.

1.4 Research Problem

The following inquiries will serve as a guide for the study:

1) Does Nigerian government spending get real and effective accountability?

2) What degree of transparency is there in Nigerian government spending?

3) Is the Nigerian budgeting system effective enough?

4) To what extent does the Nigerian government’s annual budget achieve its financial goals?

5) How well-functioning are the processes in place to regulate how public funds are accessed, used, and reported?

1.5 Importance Of The Research

The first major contribution of this study was to draw attention to the necessity to close identified budgeting system weaknesses among lawmakers and budget implementation and monitoring committees. It also offers empirical data on the accountability of government spending and the level of PFM at the moment. Last but not least, it adds to the body of research on government budgeting (GB).

1.6 Study’s Purpose

This study is set up to look broadly at Nigerian government budgeting and public finance management. However, the study will also determine whether there is genuine and effective accountability in the management of public funds in Nigeria; the degree of transparency in the management of public funds in Nigeria; the effectiveness of the Nigerian budgeting system; the degree to which the annual budget of the Nigerian nation meets its fiscal objectives; and whether there are systems in place to control how public funds are accessed.

The Federal Inland Revenue Service’s (FIRS), Kaduna State, selected staff would provide the respondents for this study.

1.7 Study Restrictions

The researcher encountered some obstacles while conducting this study, including time restrictions, budget limitations, language hurdles, and respondents’ attitudes. To assure the success of this investigation, the researcher was able to overcome these obstacles.

1.8 Term Definitions

Any money that a public entity receives from appropriations, taxes, fees, interest, or other returns on investment is referred to as public funds.

The monitoring and control of a financial institution’s cash flow is known as funds management.

A budget is the total of the funds allotted for a specific goal, a list of the planned expenses, and suggestions for how to pay for them.