THE purpose of budgeting is to provide a forecast of revenues and expenditures, construct a model of how government or a business might perform financially speaking if certain strategies, events and plans are carried out. It enables the actual financial operation to be measured against the forecast.
Budgeting is a veritable instrument for ensuring the judicious allocation of the nation’s scarce resource for development. Unfortunately, in spite of its overarching role as a tool for economic development, Nigerians have regrettably, yet to feel the positive impact of budget. Consequently, many are no longer bothered about the budget because they know that at the end of the day, nothing will come out of it.  One chief executive officer of a blue-chip company who preferred anonymity, told our correspondent that he no longer comments on the national budget. He stated that, “Budget has become a ritual in this country. I have stopped speaking on budget for the simple reason that at the end of the day nothing good will come out it. Check the last 10 years if you can see any budget that has been faithfully implemented”.
This democratic dispensation has consistently witnessed poor implementation of economic policy. This habit assumed greater dimension when the present administration came to power on May 29, 2007, as the year’s budget was being implemented. It merely added a supplementary budget which was   poorly executed. And since it was not the author of the budget, it could not be held responsible for the implementation.
The real test of the administration was the 2008 budget, which analysts have reckoned was a disaster. The budget was not passed into law until September 2008 after greater part of it had been spent through extra-budgetary expenditure. While the Senate added N500 billion to the N2.4 trillion proposed by President Umaru Yar’Adua, the House of Representatives topped it with N491 billion.
At the end of the fiscal year, nothing concrete was achieved. For instance, the government said the budget was going to focus on infrastructure but today the nation is bereft of good network of roads.  No significant progress has been made in the area of railway project  just as power problem which  was to be addressed  by  a greater part of the budget continues to linger.
The 2009 budget, which was tagged a Budget of Hope has not faired any better. President Umaru Yar’adua, in his presentation of N2.87 trillion budget to the National Assembly, said the deficit would be financed by outstanding signature bonuses, proceeds from on-going privatisation, recall of $200 million from the Nigerian Trust Fund of the African Development Bank, unspent balances from 2008 budget, domestic borrowing and naira denominated international bond issue of $500  million.
The high point of the budget included reversal of crude oil revenue from  N2.59 trillion projected in 2008 to N1.778 trillion. joint venture cash calls of $5 billion, GDP growth rate of 8.9 per cent, and inflation rate of 8.2 per cent. It also comprised of N140.7 statutory transfer, N283.6 billion debt service, N1.649 trillion for recurrent, non-debt expenditure and N796.7 billion for capital expenditure. However, experts who spoke to our correspondent on likely effect of the budget on the economy next year expressed mixed feelings.
On the allocation of $5 billion for cash calls, Austin Avuru, managing director of Platform Petroleum, said the allocation was not enough. His position was that if truly Nigeria was to increase its proven crude oil reserves from 35 to 40 billion barrels, increase production from three to 4.5 million barrels per day by 2010, the allocation was definitely not enough.
The Organised  Private Sector (OPS) whose  secretariat  is  currently  directed by  the Nigerian Association of Chambers of Commerce, Industry  Mines and Agriculture (Naccima)  is not  satisfied  with the 2009 budget implementation. In its reaction to the statement by Dr. Mansur Muhtar, minister of finance, who stated that the provisions of the budget had been fully implemented, the OPS expressed reservation on the position of the minister.
“To say the least, and despite the clause inserted in the 2009 Appropriation Act compelling the minister of Finance to render quarterly reports on the performance of the budget, the report surprisingly covered only the first quarter of 2009, when we are already into second half of the fourth quarter. This leaves much to be desired and does not augur well for the growth and development of the economy,” said Naccima.
Naccima  noted that it  is equally disturbing and worrisome to note in the report that just 20.68 per cent  of the budget for the first quarter was implemented and that only four out of the forty-five  Ministries, Departments and Agencies (MDAs) utilised over 50 per cent of the funds released to them for their on-going capital projects. This is in spite of the revelation by the Finance minister that projected aggregate revenue by government during the period fell short by just 27 per cent .
Senator Ayogu Eze,  Senate spokesman at a news briefing recently in Abuja  said the budget performance of about 15 and 35 per cent was not acceptable to the Senate even as he blamed civil servants whom he said lack the capacity to understand the budget for the failure. He said both the Senate and the minister were not satisfied with the performance of the 2009 budget adding that such failure was largely responsible for the lack of infrastructure in the land.
Experience from the budgeting process since the beginning of the current democratic dispensation underscores the need for Nigeria to evolve a viable and efficient budgeting procedure.  As has been the case over the years since the beginning of the current democratic dispensation, the 2009 budget was not signed into law until the tail end of the first quarter.
According OPS, “This is definitely unacceptable to us (private sector operators) whose business plans and projects are directly dependent on the policies and provisions in the Federal Government Annual Budgets. It is a known fact that the passage into law of the Appropriation Bill and assent of the budget every year is of serious concern to the business community, as it drives business activities and investment in the economy.  Therefore, yearly delays associated with the release of the federal budget often dislocate business plans and the direction of the economy.”
Government should therefore evolve a new budget process strategy that would govern the budgetary process and define the roles of the key players in the preparation, presentation and approval of annual national budgets, with a clear time frame.  Under this arrangement, the budget should be ready for implementation by January of each ensuing year.
The report rendered by the minister of Finance indicated that the aggregate revenue available for distribution to the three tiers of government fell short of projected estimate of N895.85 billion by N241.30 billion (or 27 per cent), the report said in part. Moreover and according to the minister of Finance, the total revenue available for implementation of the Federal Government budget (including the budgeted unspent balance of N75 billion for the first quarter of 2009 from the 2008 financial year), consequently fell short of its budgeted estimate of N566.30 billion by N182.24 billion.
“The question in the minds of Nigerians, especially we in the private sector is: what has been done with this money and what can government show for the amount it realised as against its expectation?  We should note that the real and social sectors comprising Agriculture & Water Resources, Education, Power & Energy, Health, Manufacturing, Solid Minerals among others, are yet to experience any significant improvements”, Naccima said.
Naccima observed that since the beginning of the year that appreciable growth was yet to be witnessed in productivity because the environment for doing business continues to remain relatively hostile to investors.  This is evident by the low purchasing power in the system, rising cost of products, poor infrastructure, especially acute shortage of power supply to industries and inadequate credit facilities and incentives, among others, thereby distorting business activities in the country.
In 2010 the federal government plans to spend N4.07 trillion. The 2010 budget, according to the bill that President Umaru Yar’adua’s special adviser on National Assembly Matters, Senator Mohammed Abba Aji, laid before the two chambers of National Assembly in Abuja recently, was based on an average oil price of $57 a barrel and an exchange rate of N 150 to the dollar. As at  weekend crude oil is  trading at about $75 a barrel. 
The figure   provides that N180.2 billion is for Statutory Transfers, N517.07 billion for Debt Services. Total recurrent expenditure is to receive N2.01 trillion; capital expenditure is N1.37 trillion. The inflation rate is projected at 11.2 percent, and GDP growth rate is pegged at 5-6 percent
These objectives may only be achieved if the budget is well implemented. But poor implementation of the budget will only turn these projections and objectives into wishful thinking.