Empirical analysis of nigeria budget

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Empirical analysis of nigeria budget

  1. 1. Nigeria Budget & Its Components
  2. 2. A budget is an essential aspect of Individual,Organisation and Government financials. It is a planstated in monetary terms. to:The purpose of Budget is to: Provide a forecast of revenues and expenditures Enable the actual financial operation of the business to be measured against the forecast. Establish the cost constraint for a project, program, or operation budgets?Why 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 Source: wikipedia
  3. 3. 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 MDA Expenditure Statutory Recurrent Capital Debt Service Transfer Expenditure Expenditure Consolidated Revenue Fund of the Federation
  4. 4. Statutory Transfer:The Federal Government is required by law to makecertain mandatory expenditures annually in respect of: NJC The National Judicial Council The Niger Delta Development NDDC Commission The Universal Basic EducationStatutory UBEC CommissionTransfer INEC The Independent National Electoral Commission NASS The National Assembly The National Human Rights NHRC Commission
  5. 5. Whenever the Federal GovernmentDebt Service: spends more money than the revenues it earns, it must find the financial resources to pay for this additional spending. Domestic Moneys borrowed within Nigeria Debts Debt Service Foreign moneys borrowed from outside Nigeria Debts When the government pays interest and principal on its debts, this is referred to as Debt Service.
  6. 6. Statutory Transfer & Debt Services Statutory Transfer 18.73% Debts Services Statutory Transfers and Debt Service currently make up on average about 18.73% of Federal spending
  7. 7. Recurrent Expenditure (non-debt): (non-Spending by the Ministries, Departments and Agencies(MDA) of Government on Salaries Pensions & Overheads Salaries, The Federal Government employs people to work in the various MDAs and Salaries pays them salaries in order to maintain the administration of government and continue to provide public goods and services. In addition to the pension contributions paid on behalf of workers under the Recurrent Contributory Pension Scheme, the (non-debt) Pensions Federal Government continues to pay the pensions of existing pensioners under the old Pay-As-You-Go System. Payment for electricity, water, telecommunications, office rent, office Overheads equipment and consumables, staff training, transportation, etc.
  8. 8. Capital Expenditure: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. Infrastructure Capital Educational Expenditure Services Healthcare
  9. 9. Recurrent & Capital Expenditure: RecurrentExpenditure 81.27% CapitalExpenditure The balance of 81.27% is MDA Expenditure, that is, money spent by the MDAs of Government to provide public goods and services
  10. 10. Nigeria Budget in a nutshell:Statutory Debt Recurrent CapitalTransfer Services Expenditure Expenditure MDA Expenditure NJC Domestic Infrastructure Salaries DebtsNDDC Foreign Pensions EducationalUBEC Debts Services OverheadsINEC HealthcareNASSNHRC ≈ 81.27%≈ 18.73%
  11. 11. Empirical Analysis of Budget Components (2004 – 2007)YEAR BUDGET COMPONENTS ALLOCATION % % TOTAL - STATUTORY TRANSFERS 102,300,000,000 4.51% 18.90 TOTAL - DEBTS SERVICE 326,000,000,000 14.38%2007 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 TOTAL - STATUTORY TRANSFERS 86,460,000,000 4.61% 20.04 TOTAL - DEBTS SERVICE 289,500,000,000 15.43%2006 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 TOTAL - STATUTORY TRANSFERS 89,600,000,000 4.98% 24.74 TOTAL - DEBTS SERVICE 355,723,000,000 19.76%2005 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 TOTAL - STATUTORY TRANSFERS 532,324,500,000 29.72% 50.35 TOTAL - DEBTS SERVICE 369,369,000,000 20.63%2004 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
  12. 12. Empirical Analysis of Budget Components (2008 – 2011)YEAR BUDGET COMPONENTS ALLOCATION % % TOTAL - STATUTORY TRANSFERS 196,115,163,718 4.64% 17.47 TOTAL - DEBTS SERVICE 542,381,827,452 12.83%2011 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 TOTAL - STATUTORY TRANSFERS 180,279,158,994 3.91% 14.70 TOTAL - DEBTS SERVICE 497,071,797,452 10.79%2010 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 TOTAL - STATUTORY TRANSFERS 140,693,160,103 4.90% 14.78 TOTAL - DEBTS SERVICE 283,649,892,795 9.88%2009 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 TOTAL - STATUTORY TRANSFERS 187,600,000,000 7.53% 22.46 TOTAL - DEBTS SERVICE 372,200,000,000 14.94%2008 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
  13. 13. Empirical Analysis of Budget Components (2012 – 2013)YEAR BUDGET COMPONENTS ALLOCATION % % TOTAL - STATUTORY TRANSFERS 387,976,000,000 7.78 19.65 TOTAL - DEBTS SERVICE 591,764,000,000 11.872013 TOTAL - RECURRENT (NON-DEBT) 2,386,024,770,349 47.84 80.35 TOTAL - CAPITAL EXPENDITURE 1,621,455,655,252 32.51 AGGREGATE EXPENDITURE 4,987,220,425,601 TOTAL - STATUTORY TRANSFERS 397,929,101,917 8.38 20.16 TOTAL - DEBTS SERVICE 559,580,000,000 11.782012 TOTAL - RECURRENT (NON-DEBT) 2,471,814,067,335 52.05 79.84 TOTAL - CAPITAL EXPENDITURE 1,319,777,651,919 27.79 AGGREGATE EXPENDITURE 4,749,100,821,170
  14. 14. Graphical Representation of Statutory Transfer (2004 – 2013) TOTAL - STATUTORY TRANSFERS 29.72%30.00%25.00%20.00%15.00%10.00% 8.38% 7.78% 7.53% 4.64% 4.90% 4.51% 4.61% 4.98%5.00% 3.91%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 AVG NJC 17.27% 21.36% 48.44% 50.48% 55.44% 41.58% 42.03% 40.48% 36.83% 5.64% 35.95% NDDC 15.81% 13.74% 23.86% 24.93% 19.28% 37.26% 23.46% 24.27% 32.14% 2.63% 21.74% UBEC 19.66% 17.15% 27.70% 24.60% 25.28% 21.16% 34.51% 35.25% 31.03% 23.63% NASS 38.66% 37.70% 56.72% 85.54% 45.86% 39.31% 58.65% 52.05% 61.87% 6.52% 48.29% INEC 8.25% 10.05% 23.15% 27.85% 11.40% 6.77% 63.03% 6.46% 15.70% NHRC 0.35% 0.03% 0.04% Top Spenders: 1st = NASS 2nd =NJC 3rd = UBEC
  15. 15. Graphical Representation of Debt Services (2004 – 2013) TOTAL - DEBTS SERVICE25.00% 20.63% 19.76%20.00% 14.94% 15.43%15.00% 14.38% 11.78% 12.83% 11.87% 10.79% 9.88%10.00%5.00%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 AVGDOMESTIC 91.82% 91.49% 92.82% 93.18% 80.31% 82.27% 81.29% 75.99% 52.22% 50.29% 79.17%DEBTSFOREIGN 8.18% 8.51% 7.18% 6.82% 19.69% 17.73% 18.71% 24.01% 47.78% 49.71% 20.83%DEBTS
  16. 16. Graphical Representation of Recurrent Expenditure (2004 – 2013) TOTAL RECURRENT (NON-DEBT)70.00% 58.72% 57.46%60.00% 52.05% 50.52% 51.22%50.00% 47.84% 46.62% 45.08% 40.96%40.00% 30.11%30.00%20.00%10.00% 0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Top Spenders of Recurrent Expenditure: MDAs Gross % EDUCATION 12.66 POLICE FORMATION AND COMMANDS 11.33 DEFENCE/MOD/ARMY/AIR FORCE/NAVY 11.00 HEALTH 7.38 INTERIOR 6.73
  17. 17. Graphical Representation of Capital Expenditure (2004 – 2013) TOTAL CAPITAL EXPENDITURE45.00% 40.23%40.00% 34.48% 34.29%35.00% 32.51% 27.79% 28.74%30.00% 27.76% 27.01%25.00% 23.80% 19.54%20.00%15.00%10.00%5.00%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Top Spenders of Recurrent Expenditure: MDAs 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
  18. 18. 70.00% Graphical Representation of60.00% All Budget Components 58.72% 57.46% 52.05% 51.22% 50.52%50.00% 47.84% 46.62% 45.08% 40.96%40.00% 30.11%30.00%20.00%10.00%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Statutory Transfer Recurrent Expenditure Debt Services Capital Expenditure Evidently, Recurrent Expenditure (Salaries, Pensions and Overheads) enjoys a huge share of Nigeria’s yearly budget
  19. 19. Summary of the Budget Components (2004 – 2013) Recurrent Expenditure (Salaries, Capital Expenditure Pensions & Overhead costs) (Infrastructure, Debt Services Educational Statutory Services & Transfer (NJC Health) (Domestic NDDC & Foreign UBEC Debts) NASS INEC 48.06% 29.62% 14.23% NHRC) 8.10%
  20. 20. source:Data source:- Budgit (http://www.budgit.com/)- Nigeria Budget office (www.budgetoffice.gov.ng) Analysis by: Wale Micaiah (M.sc., CISM, CCNP-Sec, MCSA) e: walegate@yahoo.com m: 08078001800 b: walemicaiah.blog.com w. www.statisense.comFreely share, freely use and freely acknowledge the source – © Wale Micaiah

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