Nigeria Budget & Nigeria Budget & Nigeria Budget & Nigeria Budget & IIIIts Componentsts Componentsts Componentsts Components

A budget is an essential aspect of Individual,Organisation and Government financials. It is a planstated in monetary terms.

TheTheTheThe purposepurposepurposepurpose ofofofof BudgetBudgetBudgetBudget isisisis totototo::::� Provide a forecast of revenues and expenditures� Enable the actual financial operation of thebusiness to be measured against the forecast.

� Establish the cost constraint for a project,program, or operation

Source: wikipediawikipediawikipediawikipedia

Why do we produce budgetsWhy do we produce budgetsWhy do we produce budgetsWhy do we produce budgets????� To control resources� To communicate plans to various Stakeholders� To motivate and strive to achieve budget goals� To evaluate the performance� To provide visibility into performance

The Nigeria budget is made up of fourcomponents:

� Part A – Statutory Transfers� Part B – Debts Service� Part C – Recurrent Expenditure (non-debt)� Part D – Capital Expenditure

Statutory Statutory Statutory Statutory TransferTransferTransferTransfer

Debt ServiceDebt ServiceDebt ServiceDebt ServiceRecurrent Recurrent Recurrent Recurrent ExpenditureExpenditureExpenditureExpenditure

Capital Capital Capital Capital ExpenditureExpenditureExpenditureExpenditure

Consolidated Revenue Fund of the FederationConsolidated Revenue Fund of the FederationConsolidated Revenue Fund of the FederationConsolidated Revenue Fund of the Federation

MDA ExpenditureMDA ExpenditureMDA ExpenditureMDA Expenditure

The Federal Government is required by law to makecertain mandatory expenditures annually in respect of:

Statutory Transfer

Statutory Statutory Statutory Statutory Transfer:Transfer:Transfer:Transfer:

NJCNJCNJCNJC

NDDCNDDCNDDCNDDC

UBECUBECUBECUBEC

INECINECINECINEC

NASSNASSNASSNASS

NHRCNHRCNHRCNHRC

The National Judicial Council

The Niger Delta Development Commission

The Universal Basic Education Commission

The Independent National Electoral Commission

The National Assembly

The National Human Rights Commission

Whenever the Federal Governmentspends more money than the revenues itearns, it must find the financial resourcesto pay for this additional spending.

Debt Service

Debt Service:Debt Service:Debt Service:Debt Service:

Domestic Domestic Domestic Domestic DebtsDebtsDebtsDebts

Foreign Foreign Foreign Foreign DebtsDebtsDebtsDebts

Moneys borrowed within Nigeria

moneys borrowed from outside Nigeria

When the government pays interest and principal on its debts, this is referred to as Debt Debt Debt Debt Service.Service.Service.Service.

StatutoryStatutoryStatutoryStatutory TransferTransferTransferTransfer &&&& DebtDebtDebtDebt ServicesServicesServicesServices

Statutory Statutory Statutory Statutory TransferTransferTransferTransfer

Debts Debts Debts Debts ServicesServicesServicesServices

18.73%

Statutory Transfers Statutory Transfers Statutory Transfers Statutory Transfers and Debt Service Debt Service Debt Service Debt Service currently make up on average about

18.73%18.73%18.73%18.73% of Federal spending

Spending by the Ministries, Departments and Agencies(MDA)(MDA)(MDA)(MDA) of Government on SalariesSalariesSalariesSalaries, PensionsPensionsPensionsPensions & OverheadsOverheadsOverheadsOverheads

Recurrent (non-debt)

Recurrent Expenditure (nonRecurrent Expenditure (nonRecurrent Expenditure (nonRecurrent Expenditure (non----debt):debt):debt):debt):

SalariesSalariesSalariesSalaries

OverheadsOverheadsOverheadsOverheads

PensionsPensionsPensionsPensions

The Federal Government employspeople to work in the various MDAs andpays them salaries in order to maintainthe administration of government andcontinue to provide public goods andservices.

In addition to the pension contributionspaid on behalf of workers under theContributory Pension Scheme, theFederal Government continues to paythe pensions of existing pensionersunder the old Pay-As-You-Go System.

Payment for electricity, water,telecommunications, office rent, officeequipment and consumables, stafftraining, transportation, etc.

Capital Expenditure is used to provide infrastructure such asroads, water and power; fund educational services such asschools, colleges and universities; and provide healthcarefacilities and services among others.

Capital Expenditure:Capital Expenditure:Capital Expenditure:Capital Expenditure:

Capital Expenditure

InfrastructureInfrastructureInfrastructureInfrastructure

HealthcareHealthcareHealthcareHealthcare

Educational Educational Educational Educational ServicesServicesServicesServices

Recurrent & Capital Expenditure:Recurrent & Capital Expenditure:Recurrent & Capital Expenditure:Recurrent & Capital Expenditure:

Recurrent Recurrent Recurrent Recurrent ExpenditureExpenditureExpenditureExpenditure

Capital Capital Capital Capital ExpenditureExpenditureExpenditureExpenditure

81.27%

The balance of 81.27% is MDA Expenditure, that is, money spent by the MDAs of Government to

provide public goods and services

Nigeria Budget in a nutshell:Nigeria Budget in a nutshell:Nigeria Budget in a nutshell:Nigeria Budget in a nutshell:

Statutory Statutory Statutory Statutory TransferTransferTransferTransfer

Debt Debt Debt Debt ServicesServicesServicesServices

Recurrent Recurrent Recurrent Recurrent ExpenditureExpenditureExpenditureExpenditure

Capital Capital Capital Capital ExpenditureExpenditureExpenditureExpenditure

MDA ExpenditureMDA ExpenditureMDA ExpenditureMDA Expenditure

NJCNJCNJCNJCNDDCNDDCNDDCNDDCUBECUBECUBECUBECINECINECINECINECNASSNASSNASSNASSNHRCNHRCNHRCNHRC

Domestic Domestic Domestic Domestic DebtsDebtsDebtsDebtsForeign Foreign Foreign Foreign DebtsDebtsDebtsDebts

SalariesSalariesSalariesSalaries

PensionsPensionsPensionsPensions

OverheadsOverheadsOverheadsOverheads

InfrastructureInfrastructureInfrastructureInfrastructure

Educational Educational Educational Educational ServicesServicesServicesServices

HealthcareHealthcareHealthcareHealthcare

≈ 81.27%≈ 18.73%

Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components

YEARYEARYEARYEAR BUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTS ALLOCATIONALLOCATIONALLOCATIONALLOCATION %%%% %%%%

2007200720072007

TOTAL - STATUTORY TRANSFERS 102,300,000,000 4.51%18.90

TOTAL - DEBTS SERVICE 326,000,000,000 14.38%

TOTAL - RECURRENT (NON-DEBT) 1,056,563,540,997 46.62%81.10

TOTAL - CAPITAL EXPENDITURE 781,530,882,480 34.48%

AGGREGATE EXPENDITURE 2,266,394,423,477

2006200620062006

TOTAL - STATUTORY TRANSFERS 86,460,000,000 4.61%20.04

TOTAL - DEBTS SERVICE 289,500,000,000 15.43%

TOTAL - RECURRENT (NON-DEBT) 961,108,775,596 51.22%79.96

TOTAL - CAPITAL EXPENDITURE 539,233,587,755 28.74%

AGGREGATE EXPENDITURE 1,876,302,363,351

2005200520052005

TOTAL - STATUTORY TRANSFERS 89,600,000,000 4.98%24.74

TOTAL - DEBTS SERVICE 355,723,000,000 19.76%

TOTAL - RECURRENT (NON-DEBT) 737,330,997,094 40.96%75.26

TOTAL - CAPITAL EXPENDITURE 617,284,246,044 34.29%

AGGREGATE EXPENDITURE 1,799,938,243,138

2004200420042004

TOTAL - STATUTORY TRANSFERS 532,324,500,000 29.72%50.35

TOTAL - DEBTS SERVICE 369,369,000,000 20.63%

TOTAL - RECURRENT (NON-DEBT) 539,286,472,751 30.11%49.65

TOTAL - CAPITAL EXPENDITURE 349,868,371,837 19.54%

AGGREGATE EXPENDITURE 1,790,848,344,588

((((2004 2004 2004 2004 –––– 2007200720072007))))

Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components

YEARYEARYEARYEAR BUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTS ALLOCATIONALLOCATIONALLOCATIONALLOCATION %%%% %%%%

2011

TOTAL - STATUTORY TRANSFERS 196,115,163,718 4.64%17.47

TOTAL - DEBTS SERVICE 542,381,827,452 12.83%

TOTAL - RECURRENT (NON-DEBT) 2,481,705,176,915 58.72%82.53

TOTAL - CAPITAL EXPENDITURE 1,005,989,391,174 23.80%

AGGREGATE EXPENDITURE 4,226,191,559,259

2010

TOTAL - STATUTORY TRANSFERS 180,279,158,994 3.91%14.70

TOTAL - DEBTS SERVICE 497,071,797,452 10.79%

TOTAL - RECURRENT (NON-DEBT) 2,077,358,560,347 45.08%85.30

TOTAL - CAPITAL EXPENDITURE 1,853,906,761,420 40.23%

AGGREGATE EXPENDITURE 4,608,616,278,213

2009

TOTAL - STATUTORY TRANSFERS 140,693,160,103 4.90%14.78

TOTAL - DEBTS SERVICE 283,649,892,795 9.88%

TOTAL - RECURRENT (NON-DEBT) 1,649,429,453,681 57.46%85.22

TOTAL - CAPITAL EXPENDITURE 796,737,536,101 27.76%

AGGREGATE EXPENDITURE 2,870,510,042,679

2008

TOTAL - STATUTORY TRANSFERS 187,600,000,000 7.53%22.46

TOTAL - DEBTS SERVICE 372,200,000,000 14.94%

TOTAL - RECURRENT (NON-DEBT) 1,259,121,253,061 50.52%77.54

TOTAL - CAPITAL EXPENDITURE 673,155,465,876 27.01%

AGGREGATE EXPENDITURE 2,492,076,718,937

((((2008 2008 2008 2008 –––– 2011201120112011))))

Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components Empirical Analysis of Budget Components

YEARYEARYEARYEAR BUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTSBUDGET COMPONENTS ALLOCATIONALLOCATIONALLOCATIONALLOCATION %%%% %%%%

2013201320132013

TOTAL - STATUTORY TRANSFERS 387,976,000,000 7.7819.65

TOTAL - DEBTS SERVICE 591,764,000,000 11.87

TOTAL - RECURRENT (NON-DEBT) 2,386,024,770,349 47.8480.35

TOTAL - CAPITAL EXPENDITURE 1,621,455,655,252 32.51

AGGREGATE EXPENDITURE 4,987,220,425,601

2012201220122012

TOTAL - STATUTORY TRANSFERS 397,929,101,917 8.3820.16

TOTAL - DEBTS SERVICE 559,580,000,000 11.78

TOTAL - RECURRENT (NON-DEBT) 2,471,814,067,335 52.0579.84

TOTAL - CAPITAL EXPENDITURE 1,319,777,651,919 27.79

AGGREGATE EXPENDITURE 4,749,100,821,170

((((2012 2012 2012 2012 –––– 2013201320132013))))

Graphical Representation of Statutory TransferGraphical Representation of Statutory TransferGraphical Representation of Statutory TransferGraphical Representation of Statutory Transfer((((2004 2004 2004 2004 –––– 2013201320132013))))

7.78%

8.38%

4.64%3.91%

4.90%

7.53%

4.51% 4.61% 4.98%

29.72%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

TOTAL - STATUTORY TRANSFERS

2013201320132013 2012201220122012 2011201120112011 2010201020102010 2009200920092009 2008200820082008 2007200720072007 2006200620062006 2005200520052005 2004200420042004 AVGAVGAVGAVGNJCNJCNJCNJC 17.27% 21.36% 48.44% 50.48% 55.44% 41.58% 42.03% 40.48% 36.83% 5.64% 35.95%

NDDCNDDCNDDCNDDC 15.81% 13.74% 23.86% 24.93% 19.28% 37.26% 23.46% 24.27% 32.14% 2.63% 21.74%

UBECUBECUBECUBEC 19.66% 17.15% 27.70% 24.60% 25.28% 21.16% 34.51% 35.25% 31.03% 23.63%

NASSNASSNASSNASS 38.66% 37.70% 56.72% 85.54% 45.86% 39.31% 58.65% 52.05% 61.87% 6.52% 48.29%

INECINECINECINEC 8.25% 10.05% 23.15% 27.85% 11.40% 6.77% 63.03% 6.46% 15.70%

NHRCNHRCNHRCNHRC 0.35% 0.03% 0.04%

Top Spenders: 1Top Spenders: 1Top Spenders: 1Top Spenders: 1stststst = NASS= NASS= NASS= NASS 2222ndndndnd =NJC=NJC=NJC=NJC 3333rdrdrdrd = UBEC= UBEC= UBEC= UBEC

Graphical Representation of Debt ServicesGraphical Representation of Debt ServicesGraphical Representation of Debt ServicesGraphical Representation of Debt Services((((2004 2004 2004 2004 –––– 2013201320132013))))

11.87%11.78% 12.83%

10.79%9.88%

14.94%14.38%

15.43%

19.76%20.63%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

TOTAL - DEBTS SERVICE

2013201320132013 2012201220122012 2011201120112011 2010201020102010 2009200920092009 2008200820082008 2007200720072007 2006200620062006 2005200520052005 2004200420042004 AVGAVGAVGAVGDOMESTIC DOMESTIC DOMESTIC DOMESTIC DEBTSDEBTSDEBTSDEBTS

91.82% 91.49% 92.82% 93.18% 80.31% 82.27% 81.29% 75.99% 52.22% 50.29% 79.17%

FOREIGN FOREIGN FOREIGN FOREIGN DEBTSDEBTSDEBTSDEBTS

8.18% 8.51% 7.18% 6.82% 19.69% 17.73% 18.71% 24.01% 47.78% 49.71% 20.83%

Graphical Representation of Recurrent ExpenditureGraphical Representation of Recurrent ExpenditureGraphical Representation of Recurrent ExpenditureGraphical Representation of Recurrent Expenditure((((2004 2004 2004 2004 –––– 2013201320132013))))

47.84%

52.05%

58.72%

45.08%

57.46%

50.52%

46.62%

51.22%

40.96%

30.11%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

TOTAL RECURRENT (NON-DEBT)

MDAsMDAsMDAsMDAs GrossGrossGrossGross %%%%EDUCATION 12.66

POLICE FORMATION AND COMMANDS 11.33

DEFENCE/MOD/ARMY/AIR FORCE/NAVY 11.00

HEALTH 7.38

INTERIOR 6.73

Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:

Graphical Representation of Capital ExpenditureGraphical Representation of Capital ExpenditureGraphical Representation of Capital ExpenditureGraphical Representation of Capital Expenditure((((2004 2004 2004 2004 –––– 2013201320132013))))

Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:Top Spenders of Recurrent Expenditure:

32.51%

27.79%

23.80%

40.23%

27.76% 27.01%

34.48%

28.74%

34.29%

19.54%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

TOTAL CAPITAL EXPENDITURE

MDAs Gross %Gross %Gross %Gross %WORKS 13.58

POWER 10.64

FEDERAL CAPITAL TERRITORY ADMINISTRATION 10.18

AGRICULTURE & RURAL DEVELOPMENT 6.57

WATER RESOURCES 5.40

EDUCATION 5.21

TRANSPORT 4.81

HEALTH 4.73

DEFENCE/MOD/ARMY/AIR FORCE/NAVY 3.34

47.84%

52.05%

58.72%

45.08%

57.46%

50.52%

46.62%

51.22%

40.96%

30.11%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

Statutory Transfer

Debt Services

Recurrent Expenditure

Capital Expenditure

Graphical Representation of Graphical Representation of Graphical Representation of Graphical Representation of All Budget ComponentsAll Budget ComponentsAll Budget ComponentsAll Budget Components

Evidently, Recurrent Expenditure (Salaries, Recurrent Expenditure (Salaries, Recurrent Expenditure (Salaries, Recurrent Expenditure (Salaries, Pensions and Overheads) Pensions and Overheads) Pensions and Overheads) Pensions and Overheads) enjoys a huge share of

Nigeria’s yearly budget

Summary of the Budget ComponentsSummary of the Budget ComponentsSummary of the Budget ComponentsSummary of the Budget Components

Recurrent ExpenditureRecurrent ExpenditureRecurrent ExpenditureRecurrent Expenditure

48.06%48.06%48.06%48.06%

(Salaries, Pensions & Overhead costs)

Capital ExpenditureCapital ExpenditureCapital ExpenditureCapital Expenditure

(Infrastructure, Educational Services & Health)

Debt ServicesDebt ServicesDebt ServicesDebt Services

(Domestic & Foreign Debts)

Statutory Statutory Statutory Statutory TransferTransferTransferTransfer(NJCNDDCUBECNASSINECNHRC)29.62%29.62%29.62%29.62% 14.23%14.23%14.23%14.23%

8.10%8.10%8.10%8.10%

(2004 (2004 (2004 (2004 –––– 2013)2013)2013)2013)

Freely share, freely use and freely acknowledge the source – © Wale Micaiah

DataDataDataData sourcesourcesourcesource::::- Budgit (http://www.budgit.com/)- Nigeria Budget office (www.budgetoffice.gov.ng)

Analysis by: Wale Micaiah Wale Micaiah Wale Micaiah Wale Micaiah (M.sc., CISM, CCNP-Sec, MCSA)

e: e: e: e: walegate@yahoo.com

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