Fixing Nigeria's Budget Failures for 2025
As the Senate resumed on Tuesday following a two-month break, the focus quickly shifted to the 2025 appropriation bill. Various ministries, departments, and agencies are expected to submit their budget proposals by October for review, approval, and subsequent assent from President Bola Tinubu.
During a training session for budget officers on the preparation of the 2025 budget, Tanimu Yakubu, the Director-General of the Budget Office of the Federation, emphasized that security will be a key priority. He highlighted the importance of enhancing capital accumulation, meeting investor expectations, and empowering citizens through the effective mobilization and deployment of development resources.
Yakubu acknowledged that concerns regarding the quality of Nigeria’s national budget are not new. Stakeholders have often raised questions about the relevance, execution, and effectiveness of budget proposals.
He pointed out a glaring reality: Nigeria’s budgeting system has yet to yield the desired outcomes or significant improvements in citizens’ living standards. Despite annual budgets amounting to trillions of naira, the country grapples with a severe infrastructure deficit, with 230 million people relying on only 5,000 megawatts of electricity.
Much of the railway infrastructure still reflects colonial legacies, and public hospitals and schools are in disarray. Access to clean water is scarce, even in Nigeria’s largest cities.
The budget serves as a vital economic policy tool for the government to provide social goods, promote economic growth, foster sustainable development, and attract investment.
However, systemic issues in Nigeria’s budget preparation, planning, execution, evaluation, and monitoring—exacerbated by entrenched corruption—have led to the abandonment of over 56,000 projects across the country.
As poverty levels rise alongside national debt, the influx of development funds aimed at bolstering Nigeria’s public financial management systems seems ineffective.
The Collaborative Africa Budget Reform Initiative has identified several reasons for the failures in Nigeria’s budgeting process, including the non-release of funds, inadequate procurement practices, corruption, and insufficient planning and execution capabilities. Additionally, a lack of policy continuity between administrations hinders progress.
Delays in budget preparation often result in late approvals by the National Assembly and the President. Political pressures frequently lead to the simultaneous execution of numerous projects without adequate funding, resulting in many being left unfinished. Capital projects, in particular, suffer due to delayed fund releases.
Oversight by legislators is often lacking, as they tend to prioritize securing funding for constituency projects without accountability.
There are increasing calls to abandon the envelope budgeting system, which allows funds to be allocated to ministries, departments, and agencies (MDAs) while officials often scramble to find projects to justify spending. This leads to MDAs consistently budgeting the same amounts for items like computers, office furniture, and vehicles as if they are regularly consumed.
Billions have been lost to fraudulent contracts and inflated consultancy fees through budget padding. It is crucial that budgeting is needs-based to eliminate waste.
Lawmakers must take responsibility for erasing absurd insertions. For instance, BudgIT reported that the Cocoa Research Institute of Nigeria in Ibadan received N250 million for solar streetlights in Lagos in the 2024 budget, along with N100 million for motorcycles in Osun, N100 million for health center construction in Ondo, and N200 million for classroom renovations in Rivers. Such allocations undermine the integrity of the budgeting process.
As Yakubu noted, Nigeria’s economy faces significant pressures from multiple fronts, including a volatile global market, reduced oil revenues, rising debt servicing costs, and disrupted primary production due to insecurity in food-producing states. Citizens and businesses are struggling with inflation and high energy costs, while the unemployment rate continues to climb.
Historically, previous military regimes ensured that the budget was finalized by December 31 each year. For the budget to achieve its objectives, preparation must commence early, with timely submissions. Most federal budgets since 1999 have faced delays amid allegations of fraud and inconsistencies.
The Tinubu administration has a critical opportunity to ensure that the budget truly benefits the citizens this time around.
