Public Funds Management And Government Budgeting In Nigeria

Project and Seminar Material for Economics

Abstract

This study was carried out on public fund management and government budgeting in Nigeria. To achieve this, five significant research objectives were formulated. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of all the staff of FIRS, Kano State. In determining the sample size, the researcher conveniently selected 70 respondents while 55 were received and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and percentage. The result of the findings reveals that there is not true and effective accountability in the management of public funds in Nigeria; the level of transparency in the management of public funds in Nigeria is poor; the extent to which the Nigeria nation’s annual budget fulfills its fiscal objectives is low; also the systems in place to control how pubic funds are accessed, expended and accounted for are not adequately effective. In regard to the findings, the study recommends that the government must strive for a progressive and resilient budgetary system which will promote true accountability of public funds. Steps must be taken to move the country toward achieving accrual-based accounting and budgeting system.In addition, as specified by the IPSASB, the international public sector accounting standards should be fully implemented in all government Ministries, Departments and Agencies. This will help limit the tendency of theft of government assets and properties. It will also facilitate prudency in government expenditure.

Chapter One

Introduction

1.1 Background of the Study

Fundamentally, a budget occupies a significant and strategic position in the holistic administration and sustenance of a nation’s affairs. It is a policy document expressed in financial terms which contains government estimates of revenues and expenditures for a specified period, usually one year (Malgwi and Unegbu, 2012; Abe, 2012; Ojo, 2012; Okpala, 2012). According to Olomola (2012), a budget is an indispensable economic instrument used by the government to facilitate and realize its agenda in a given fiscal year. It is an essential fiscal mechanism for efficient resource mobilization, allocation and economic management to achieve set objectives (Horngren et al., 2008).

By tradition, the government exists to serve the interest of the nation and its citizens (Bello, 2001; Okpala, 2012). It oversees the affairs and welfare of its populace using different contrivances of which budgeting is foremost. The government makes use of its annual budget to appropriate the nation’s wealth and manage the economy (Okpala, 2012; Olurankinse, 2012). It is therefore believed that a nation’s budget should help reduce poverty, improve infrastructures, create job opportunities, develop key sectors of the economy and improve the living standard of its populace (Olomola, 2012). According to the then Speaker of the House of Representatives, Aminu Tambuwal, budget and its implementation remain sore points of governance in nation building (Nwogu, 2013). This is because a nation’s development and economic growth substantively depend on its system ofrevenue generation and funds management.

In Nigeria, each fiscal year, funds are dispensed to each tier of government based on the adopted official allocation formula, wherewith disbursements are made to the various ministries, departments and agencies based on the approved budget estimates (ICAN, 2009; Fiscal Responsibility Act, 2007; The Constitution of the Federal Republic of Nigeria, 1999; Public Procurement Act, 2007). These funds, which are meant to take care of recurrent expenditures, capital projects and other developmental initiatives, when disbursed, are usually siphoned for personal enrichment (Olurankinse, 2012; Peter, 1999), and seldom does the budget ever achieve its objectives. This has been the trend over the years, where government expenditure has only little or no commensurate impact on the living standard of the electorates (Abe, 2012; Agbonkhese and Asekome, 2014). According to Central Intelligence Agency (CIA) (2016), economic diversification and strong growth have not translated into a significant decline in poverty levels in Nigeria.

According to Okwoli (2004) and Akpan (2013), the Nigerian society is filled with stories of corrupt practices, such as fictional characters (ghost-workers) on government payrolls, contract inflation, budget padding and money laundering amongst others. In 2015, a report by Transparency International ranked Nigeria amongst the most corrupt countries in the world, being positioned as 32nd most corrupt nation out of 168 countries surveyed (Transparency International, 2015). Likewise, KPMG reported that in 2012 alone, over ₦225 billion (US$1.5 billion) was lost to fraudulent practices in the country. It was also reported that, on the continent, Nigeria accounted for the highest number of fraud cases, topping the list as the most fraudulent country in Africa in 2012 (Randle, 2012). To account for top fraud cases in the country, the political elites and public officeholders were identified to be among lead culprits (Bello, 2001; Onuorah and Appah, 2012; Otusanya and Lauwo, 2013; Transparency International, 2015; CIA, 2016).

With this proclivity, coupled with the challenges confronting the nation and its economy, the dividend of democracy to the electorates is still a mirage and far from reality. Doubts appear to have overtaken the expectations of the electorates. There is a rising interest in the state of governance (Olomola, 2012; Iredia, 2012). Significant interests are being centered on the potency of the nation’s annual budgets in ensuring efficient management and accountability of public funds (Okpala, 2012). Except for a progressive and resilient budgetary system which will serve as economic blueprint for national reforms and transformation, the Nigerian vision 2020 of becoming one of the first global economies of the world would only be a fantasy (Horngren et al., 2008; Olomola, 2012; Abogun and Fagbemi, 2012). It is therefore imperative that the current state of the nation’s budgetary system be examined critically and exigent measures taken to ensuring transparency in government expenditure and efficient management and accountability of public funds.

1.2 Statement of the Problem

Olajide (2011), Olurankinse (2012), Okpala (2012), Okolo (2012) and Agbonkhese and Asekome (2014) noted that each year, since independence, Nigerians have consistently decried the abject failure of the nation’s annual budget in fulfilling its fiscal objectives and in managing and accounting for public funds. Doubts are being expressed and queries are raised on the nation’s budgetary process and its implementation strategies (Akpan, 2013; Olomola, 2012; Iredia, 2012). This, observably, has been traced to irregularities in governance, poor management of public funds and high level of corruption among public officers (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 study therefore stresses the need for a restructuring of the nation’s budgetary system and its implementation strategies. It scrutinizes the state of the nation’s level of development, the endemic cases of corruption and money laundering among public officers and the poor implementation of the nation’s annual budgets as evidence of malpractices in the nation’s budgetary system. This is because, despite the consistent rise in the annual expenditure of the government, there are neither notable improvements in the living standard of the citizens nor any commensurate development in infrastructural facilities (Okpala, 2012; Samuel and Kabir, 2011; CIA, 2016).

1.3 Objective of the Study

The overall aim of this study is to critically examine public fund management and government budgeting in Nigeria.

Hence, the study will be channeled to the following specific objectives;

Ascertain whether there is true and effective accountability in the management of public funds in Nigeria.
Determine the level of transparency in the management of public funds in Nigeria.
Ascertain whether the Nigerian budgeting system is adequately effective.
Determine the extent to which the Nigeria nation’s annual budget in fulfills its fiscal objectives.
Ascertain whether the systems in place to control how pubic funds are accessed, expended and accounted for is adequately effective.

1.4 Research Question

The study will be guided by the following questions;

Is there true and effective accountability in the management of public funds in Nigeria?
What is the level of transparency in the management of public funds in Nigeria
Is the Nigeria budgeting system adequately effective?
What is the extent to which the Nigeria nation’s annual budget fulfills its fiscal objectives?
Are the systems in place to control how pubic funds are accessed, expended and accounted for adequately effective?

1.5 Significance of the Study

Significant contributions of this study include the following: first, to call the attention of the legislators and budget implementation and monitoring committees to the need to hedge identified loopholes in the nation’s budgetary system. Second, it provides empirical evidence on the current state of PFM and accountability in government expenditure. Finally, it extends the body of literature on government budgeting (GB)

1.6 Scope of the Study

This study is structured to generally examine public fund management and government budgeting in Nigeria.

However, the study will further ascertain whether there is true and effective accountability in the management of public funds in Nigeria; determine the level of transparency in the management of public funds in Nigeria; ascertain whether the Nigerian budgeting system is adequately effective; determine the extent to which the Nigeria nation’s annual budget in fulfills its fiscal objectives; and ascertain whether the systems in place to control how pubic funds are accessed, expended and accounted for is adequately effective.

The respondents for this study will be obtained from selected staff of Federal Inland Revenue Service, Kano State.

1.7 Limitation of the Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.

1.8 Definition of Terms

Public funds means any money received by a public entity from appropriations, taxes, fees, interest, or other returns on investment.

Funds management is the overseeing and handling of a financial institution’s cash flow.

A budget is the sum of finances allocated for a particular purpose and the summary of intended expenditures along with proposals for how to meet them

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

In this study, our focus was on public fund management and government budgeting in Nigeria. The study is was specifically carried out to ascertain whether there is true and effective accountability in the management of public funds in Nigeria; determine the level of transparency in the management of public funds in Nigeria; ascertain whether the Nigerian budgeting system is adequately effective; determine the extent to which the Nigeria nation’s annual budget in fulfills its fiscal objectives; and ascertain whether the systems in place to control how pubic funds are accessed, expended and accounted for is adequately effective.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent were all staff of FIRS, Kano State.

5.2 Conclusion

Based on the findings of this study, the researcher concluded that;

There is not true and effective accountability in the management of public funds in Nigeria.
The level of transparency in the management of public funds in Nigeria is poor.
The Nigeria budgeting system is not adequately effective.
The extent to which the Nigeria nation’s annual budget fulfills its fiscal objectives is low.
The systems in place to control how pubic funds are accessed, expended and accounted for are not adequately effective.

5.3 Recommendations

Based on the responses obtained, the researcher proffers the following recommendations:

The government must strive for a progressive and resilient budgetary system which will promote true accountability of public funds. Steps must be taken to move the country toward achieving accrual-based accounting and budgeting system.
In addition, as specified by the IPSASB, the international public sector accounting standards should be fully implemented in all government Ministries, Departments and Agencies. This will help limit the tendency of theft of government assets and properties. It will also facilitate prudency in government expenditure.
The Nigerian government should also restructure its approach to budgeting and adopt a PPBS with a view to moving to a properly implemented Zero-Based Budgeting which will help eliminate the tendency of padding the budget or creating slacks in the budgetary process. Stringent measures should be put in place to curb budget lobbying during the budgetary process. This will help fortify the process of checks and balances in government finances. There should be adjunct machineries in place to enforce strict budget monitoring and implementation processes.
Finally, the rule of law should reign supreme in all government dealings. Public officers should adhere to their tenants in the administration of the nation’s affairs. Likewise, all appropriation laws and procurement Acts should be enforced in all government transactions and spending without respect for persons. The budget directives should be followed strictly in expending public funds and must be expended for the purposes they are meant to achieve. The budget implementation process must be done within the confine of value-for-money, accountability and transparency.

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Frequently Asked Questions

What is the management and control of funds in the public sector?

The management and control of funds in the public sector revolves around towards: responsibility and accountability. This has to do with the honest application of funds and in compliance with proper procedures, ensuring that these funds are spent on properly approved items and within the budgeted level.

What is the main focus of Federal Mortgage Bank of Nigeria?

Being the main focus of Federal Mortgage Bank of Nigeria, was established by decree No 3 of 1992 (now an acts), primarily to address the constraints to the mobilization of long term funds of housing development and to ensure that every Nigeria has access to housing loan at affordable rates of interest.

What is public sector in Nigeria?

For instance, it accounts for approximately two-third of gross national products (GNPs) in Nigeria. Pubic sector includes all government ministries and departments, extra-ministerial department, parastatals agencies, commissions and public enterprises. Being a service-oriented sector, it is usually budget financed.

What is government budgeting?

What is government budgeting? Government budgeting is the critical exercise of allocating revenues and borrowed funds to attain the economic and social goals of the country.

What are funds in public sector?

Essentially, funds, in the public sector, refers to the sum of money or other resources segregated for the purpose of carrying out specific activities in accordance with special regulations, restrictions and limitations.

What is public funds management?

Brianna has a masters of education in educational leadership, a DBA business management, and a BS in animal science. Public funds are government expenditures focused on public goods and services programs.

What is the role of budget and Budgetary Control in public sector?

The role of budget and budgetary control has become very important financial control and accountability device in public sector and provide a formal basis for monitoring the progress of the entire economy. The organization must economize resources and discover the means of achieving a specific plan.

What do you mean by public sector management?

The Public Sector is the principal actor in macro socio-economic policy making infrastructure and an architect of an enabling environment for national development. Public Sector management covers such aspects of management as productivity management, and management of human, financial and other resources.

What does the Federal Mortgage Bank of Nigeria do?

The Federal Mortgage Bank of Nigeria was actually established with a number of functions assigned to it, and the most fundamental among these functions, was that of addressing housing challenges in the country, as well as, meeting the housing needs of all Nigerian citizens.

When was the first mortgage bank of Nigeria established?

The bank was established in 1956. By that time, the Federal Mortgage Bank of Nigeria was known and called, the Nigeria Building Society NBS, which was of course, a joint venture of the Government of the Federal Republic of Nigeria and that of Eastern Governments of Nigeria, including the Commonwealth Development Corporation.

Is fmbn a good bank to buy a house?

Although FMBN is a secondary mortgage institution, it is certainly worthy of mention here. The bank is involved in supplying the mortgage markets with sustainable liquidity for the advancement of home ownership among Nigerians anchored on mortgage financing.

Who owns fmbn bank?

The FMBN is owned by the Federal Government of Nigeria. Although FMBN is a secondary mortgage institution, it is certainly worthy of mention here. The bank is involved in supplying the mortgage markets with sustainable liquidity for the advancement of home ownership among Nigerians anchored on mortgage financing.

What is the public sector?

Public sector consists of organizations where control lies in the hand of the public, as opposed to private owners, and whose objectives involves the provision of services, where profit is not a primary objective.

What is public sector accounting in Nigeria?

In Nigeria public sector accounting is government by the following regulatory frame work. 1. Nigerian Constitution (1999) The 1999 constitution of the Federal Republic of Nigeria is one of the legal frameworks that regulates the receipts and payment of public funds.

What is the role of government in business in Nigeria?

The government also takes charge in areas that require huge investments that are beyond the reach of private enterprises. Examples of private enterprises in Nigeria are the Nigerian Ports Authority (NPA), Nigerian Railway Corporation (NRC), Power Holding Company of Nigeria (PHCN), State water corporations and so on.

What is the structure of public corporations in Nigeria?

Structure and Organization of Public Corporations In Nigeria The government is in charge of policymaking machinery of each establishment through the minister of the supervising ministry. The board of directors is appointed by the government through the supervising minister.

What does government budget stand for?

OMB stands for Office of Management and Budget. OMB. Office of Management and Budget. Abbreviation is mostly used in categories: Medical Government Technology NASA Engineering. Rating: 165.

What does a budget reveal about a government?

The government budget is an annual fiscal statement depicting the revenues and expenditures for a financial year that is often moved by the legislature, sanctioned by the Chief Executive or President, and given by the Finance Minister to the country. The budget is also known as the Annual Financial Statement of the nation.