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Understand Govt. Priority from National Budget.

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Presentation on theme: "Understand Govt. Priority from National Budget."— Presentation transcript:

1 Understand Govt. Priority from National Budget

2

3 There is an adage that says that “the Priority of a person can be deduced from what he spends Money on”. This is applicable to Family, Community, Orgainsations and Nations. The Nigerian government has gone through some transition – from Military governance to Democratic Rule – precisely in 1999 a new democratic government came to power, from 1999 to 2013, we have had 3 Elected Presidents, each with their peculiar programme. As a result, Programmes/Projects are sometimes abandoned mid-way because their is no binding goal or vision that an elected President would run with irrespective of his personal agenda.

4 The purpose of this budget analysis is four-fold: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government To understand from National Budgets the priority of government from 1999 till date To determine the budget growth rate and changes in budget priorities To calculate the annual growth rate of Nigeria Budget over a period

5 Agriculture Aviation Communications Technology Defence Education Environment Federal Capital Development Agency Finance & Economic Development Foreign Affairs Health Trade and Investment Culture Tourism & National Orientation Information Interior Justice Labour & Productivity Petroleum Resources Niger Delta Mines & Steel Development Power Science & Technology Special Duties Transport Water Resources Women Affairs & Social Development Works Lands, Housing & Urban Development Sports Youth Development Police Affairs National Planning Commission There are 31 Ministries with several Agencies that helps the Government prosecute programmes as may be considered priority by the government in Power.

6 President & Programme Priority Olusegun Obasanjo (1999 – 2007) Top Agenda a)Foreign Policy b)Finance c)Health d)Information & Communication e)Security

7 President & Programme Priority Top Agenda Umaru Yar'adua (2007 – 2010) a)Critical Infrastructure b)Niger Delta c)Food Security d)Human Capital Development e)Land Tenure and Home Ownership f)National Security and Intelligence g)Wealth Creation

8 Elected President & Programme Priority Top Agenda Dr. Goodluck Jonathan (2010 – till date) a)Job Creation b)Education c)Health d)Power e)Transportation f)Niger Delta g)Labour & Productivity h)Foreign Policy & Economic Diplomacy i)Legislature j)Governance k)Judiciary & Justice Delivery l)Public Expenditure Management m)Information & Communication Technology (ICT) NPC Finance Transportation Agriculture Niger Delta Works Aviation FCT

9 Summary of Agenda/Ministry Priority PresidentMinistry Olusegun Obasanjo Foreign Affairs, Finance, Health, Information & Communication, Defence, Power Umaru Yar’adua Power, Works, Niger Delta, Agriculture, Education, Lands, Housing & Urban Development, Defence, Labour & Productivity Goodluck Jonathan Education, Health, Power, Transportation, Niger Delta, Labour & Productivity, Foreign Affairs, Justice, Finance, Communication Technology

10 OBJYAR GEJ Defence ICT, Health, Finance, Foreign Affairs Labour & Productivity Niger Delta Power Works, Agriculture, Lands, Housing & Urban Development Transportation, Justice Education

11 Normalizing Budgetary Allocation

12 Definition of Terms: In order to understand this section, it is important to define some terms that will be used in normalizing the budgetary allocations. When government budgets, they allocate budget in actual monetary value in terms of its purchasing power at current prices. This is refer to as Nominal value. This value do not take into account the effect of inflation on the real value of money. Nominal terms This is when budgetary values are measured in terms of their purchasing power at a particular time. For instance, GDP may be measured in constant 2006 prices by taking into consideration the effect of inflation. Real terms A statistical tool used to convert current currency into inflation- adjusted currency, in order to compare prices over time after factoring out the overall effects of inflation. Deflator

13 Deflators from Year Deflator Year Deflator Year Deflator The Deflator for the base year is always Year 2000 is going to be the base year

14 Formula for Calculating Real Value from Nominal Value Real Value Nominal Value Deflator Year …2013 Nominal Real Deflator The formula above will be used to calculate and fill up the table

15 Nominal Value: Budget Presentation (1999 – 2013) YearTotal*RecurrentCapital ,549,835, ,009,971,781230,000,000,000170,009,971, ,214,805,186397,856,858,542496,357,946, ,064,801,253,520578,096,146,413486,705,107, ,254,543,375593,903,247,703382,351,295, ,790,848,344,588539,286,472,751349,868,371, ,799,938,243,138737,330,997,094617,284,246, ,876,302,363,351961,108,775,596539,233,587, ,266,394,423,4771,056,563,540,997781,530,882, ,492,076,718,9371,259,121,253,061673,155,465, ,870,510,042,6791,649,429,453,681796,737,536, ,608,616,278,2132,077,358,560,3471,853,906,761, ,226,191,559,2592,481,705,176,9151,005,989,391, ,749,100,821,1702,471,814,067,3351,319,777,651, ,987,220,425,6012,386,024,770,3491,621,455,655,252 Total Budget = Recurrent + Capital + Debt + Statutory

16 Nominal Value: Budget Presentation (1999 – 2013) YearTotalRecurrentCapital OBJ 1999 to ,199,313,784,0635,094,146,039,0963,823,341,409,320 YAR 2008 to ,971,203,039,8294,985,909,267,0893,323,799,763,397 GEJ 2011 to ,962,512,806,0307,339,544,014,5993,947,222,698,345 AVG (OBJ)1,244,368,198,229636,768,254,887477,917,676,165 AVG (YAR)3,323,734,346,6101,661,969,755,6961,107,933,254,466 AVG (GEJ)4,654,170,935,3432,446,514,671,5331,315,740,899,448 TOTAL35,133,029,629,92217,419,599,320,78411,094,363,871,062 In 9 Budget Years (1999 – 2007); Total budget under OBJ was approximately 11.2tr. On the average, 1.2tr was spent per year.

17 Real Value calculation Real Value Nominal Value Deflator Year Deflator TotalRecurrentCapital Nominal1,799,938,243,138737,330,997,094617,284,246,044 Real972,939,590,885398,557,295,726333,667,160, Nominal1,876,302,363,351961,108,775,596539,233,587,755 Real845,181,244,753432,931,880,899242,898,012, : 1,799,938,243, = 972,939,590,885

18 Real Value: Budget Presentation (1999 – 2013) YearDeflatorTotalRecurrentCapital ,824,102, ,009,971,781230,000,000,000170,009,971, ,473,755,402414,434,227,648517,039,527, ,914,133,496502,692,301,229423,221,832, ,698,862,012463,986,912,268298,711,949, ,155,386,028,766347,926,756,614225,721,530, ,939,590,885398,557,295,726333,667,160, ,181,244,753432,931,880,899242,898,012, ,123,127,046457,386,814,284338,325,057, ,467,468,335491,844,239,477262,951,353, ,171,636,752,114673,236,511,707325,198,994, ,719,632,939,632775,133,791,174691,756,254, ,372,140,116,643805,748,434,063326,619,932, ,380,552,564,294718,550,600,969383,656,294, ,381,501,502,937660,948,689,847449,156,691,206

19 Real Value: Budget Presentation (1999 – 2013) YearDeflatorTotalRecurrentCapital OBJ 1999 to ,126,550,816,3673,247,916,188,6682,549,595,041,640 YAR 2008 to ,864,737,160,0801,940,214,542,3581,279,906,602,446 GEJ 2011 to ,134,194,183,8732,185,247,724,8801,159,432,917,567 AVG (OBJ) 1.45 (1.54)* 546,095,847,997263,629,560,769206,947,649,484 AVG (YAR) ,220,984,385252,632,101,869166,654,505,527 AVG (GEJ) ,711,457,976215,507,665,176114,342,496,802 TOTAL15,125,482,160,3207,373,378,455,9064,988,934,561,653 * 1.45 is average of Deflators for 9yrs, while 1.54 is for 8yrs is used for both Recurrent and Capital since no allocation were made in In 9 Budget Years (1999 – 2007); Total Real budget (taking inflation into consideration) under OBJ was approximately 7.13tr. On the average, 546Billion was spent per year.

20 OBJ: Budget Allocations (1999 – 2007) Nominal & Real: NominalTotalRecurrentCapital 1999 to ,199,313,784,0635,094,146,039,0963,823,341,409,320 AVG1,244,368,198,229636,768,254,887477,917,676,165 TOTAL35,133,029,629,92217,419,599,320,78411,094,363,871,062 % Real Def.TotalRecurrentCapital 1999 to (1.54)* 7,126,550,816,3673,247,916,188,6682,549,595,041,640 AVG 546,095,847,997263,629,560,769206,947,649,484 TOTAL15,125,482,160,3207,373,378,455,9064,988,934,561,653 % While Nominal value shows that OBJ spent 31.88% of Total Budget between 1999 – 2013, the Real value shows that it was 47.12%

21 PresidentPriority Ministry Based on Declaration/Focus OBJ Foreign Affairs, Finance, Health, Information & Communication, Defence, Power OBJ: Priority (1999 – 2007) Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government Objective 2: To understand from National Budgets the priority of government from 1999 till date

22 Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government. To Do: Confirm if the budget of the following Ministries ranks higher than other ministries - Foreign Affairs, Finance, Health, Information & Communication, Defence, Power MINISTRY Total Budget 2,266,394,423,4771,876,302,363,3511,799,938,243,1381,790,848,344,588 Defence 117,314,507,40798,359,999,999111,868,968,87676,057,340,928 Power 104,651,569,54075,850,000,00093,294,415,51958,935,614,817 Health 122,399,999,999105,590,000,00071,685,426,09259,787,376,511 Foreign Affairs 41,351,772,92829,500,000,00033,124,758,31617,422,571,561 Information 19,353,762,42814,415,986,56829,430,435,71012,992,626,447 Finance 10,232,352,40212,025,000,00017,235,132,96917,466,407,044 MINISTRY Total Budget976,254,543,3751,064,801,253,520894,214,805,186470,009,971,78160,549,835,647 Defence58,613,225,42464,908,031,03961,565,511,94435,062,097,640 Power36,676,857,55269,960,796,88073,925,163,47316,886,900,4605,500,000,000 Health52,149,106,21344,652,636,04042,629,588,51617,114,684,1552,319,250,000 Foreign Affairs17,028,004,35316,353,262,87915,392,552,46511,729,143,9601,000,000,000 Information7,912,798,35015,529,233,56011,212,554,7652,717,202,268900,000,000 Finance16,883,279,02611,825,221,60010,695,271,8759,740,279,000

23 MINISTRYTotal Allocation% Defence 623,749,683, Power 535,681,318, Health 518,328,067, Foreign Affairs 182,902,066, Information 114,464,600, Finance 106,102,943, Objective 2: To understand from National Budgets the priority of government from 1999 till date MINISTRYAllocation% Education821,356,629, Works649,370,619, Defence623,749,683, Power535,681,318, Health518,328,067, Police Formation and Commands462,410,270, Water Resources434,265,470, FCT325,631,971, Presidency312,143,493, Interior234,392,995,

24 Findings  From the foregoing, it can be inferred that while priorities were set on these Ministries, Defence, Finance, Foreign Affairs, Health, Information & Communication, and Power, budgetary allocation did not entirely reflect that they were priorities.  It is commendable that three (Defence, Power & Health) of these priority Ministries were given higher credence.  From the Budgetary Allocation, Education and Works’ Ministries were given the highest allocation respectively.  The Education ministry was allocated the highest budget in 2000 (8.71%), 2003 (7.75%), 2004 (5.24%), 2005 (6.67%) and 2007 (8.81%).  The Ministry with the highest singular allocation was Ministry of Works, it was allocated 15.83% of total budget.

25 YAR: Budget Allocations (2008 – 2010) NominalTotalRecurrentCapital 2008 to ,971,203,039,8294,985,909,267,0893,323,799,763,397 AVG3,323,734,346,6101,661,969,755,6961,107,933,254,466 TOTAL35,133,029,629,92217,419,599,320,78411,094,363,871,062 % RealDef.TotalRecurrentCapital 2008 to ,864,737,160,0801,940,214,542,3581,279,906,602,446 AVG ,220,984,385252,632,101,869166,654,505,527 TOTAL15,125,482,160,3207,373,378,455,9064,988,934,561,653 % While Nominal value shows that YAR spent 28.38% of Total Budget between 2008 – 2010, the Real value shows that it was 25.55%

26 PresidentPriority Ministry Based on Declaration/Focus YAR Power, Works, Niger Delta, Agriculture, Education, Lands, Housing & Urban Development, Defence, Labour & Productivity YAR: Priority (2008 – 2010) Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government Objective 2: To understand from National Budgets the priority of government from 1999 till date

27 Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government. To Do: Confirm if the budget of the following Ministries ranks higher than other ministries - Power, Works, Niger Delta, Agriculture, Education, Lands, Housing & Urban Development, Defence, Labour & Productivity. Year Aggregate Total Budget4,608,616,278,2132,870,510,042,6792,492,076,718,9379,971,203,039,829% Education295,293,389,496216,639,437,111210,444,818,579722,377,645, Defence291,719,069,185201,406,861,244151,940,617,034645,066,547, Agriculture & Rural Development 184,396,769,831119,763,275,542152,111,452,763456,271,498, Power194,523,673,10593,437,462,789139,783,534,336427,744,670, Works250,046,528,157173,330,753, ,377,281, Niger Delta93,889,415,40150,000,000, ,889,415, Labour & Productivity 15,033,288,6546,237,011,7186,142,634,38327,412,934,

28 Objective 2: To understand from National Budgets the priority of government from Year Aggregate Total Budget4,608,616,278,2132,870,510,042,6792,492,076,718,9379,971,203,039,829% Education295,293,389,496216,639,437,111210,444,818,579722,377,645, Defence291,719,069,185201,406,861,244151,940,617,034645,066,547, Health179,999,734,315143,107,216,257138,179,657,132461,286,607, Agriculture & Rural Dev. 184,396,769,831119,763,275,542152,111,452,763456,271,498, Interior95,953,764,28582,230,690,736266,371,519,798444,555,974, Police Formation & Commands 245,095,275,181195,358,792, ,454,067, Power194,523,673,10593,437,462,789139,783,534,336427,744,670, Works250,046,528,157173,330,753, ,377,281, Transport134,414,036,17639,392,035,203124,444,316,123298,250,387, FCT138,360,000,00064,450,000,00037,958,110,000240,768,110,

29 Findings  There is high correlation between government programme priority and budgeting.  Ministries of Education, Defence, Agriculture, Power and Works received higher budgetary allocation in line with government programme priority.  The Ministry of Education, Defence and Health were the top three ministries with 7.24%, 6.47% and 4.63% of the Budget. Education Defence Agriculture Power Works Niger Delta Labour & Prod. Programme Priority Budget Priority Health Interior Police Command Transport FCT

30 GEJ: Budget Allocations (2011 – 2013) NominalTotalRecurrentCapital 2011 to ,962,512,806,0307,339,544,014,5993,947,222,698,345 AVG (GEJ)4,654,170,935,3432,446,514,671,5331,315,740,899,448 TOTAL35,133,029,629,92217,419,599,320,78411,094,363,871,062 % RealDef.TotalRecurrentCapital 2011 to ,134,194,183,8732,185,247,724,8801,159,432,917,567 AVG (GEJ) ,711,457,976215,507,665,176114,342,496,802 TOTAL15,125,482,160,3207,373,378,455,9064,988,934,561,653 % While Nominal value shows that GEJ spent 39.74% of Total Budget between 2011 – 2013, the Real value shows that it was 27.33%

31 PresidentPriority Ministry Based on Declaration/Focus GEJ Education, Health, Power, Transportation, Niger Delta, Labour & Productivity, Foreign Affairs, Justice, Finance, Communication Technology GEJ: Priority (2011 – 2013) Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government Objective 2: To understand from National Budgets the priority of government from 1999 till date

32 Objective 1: To ascertain whether budgets are allocated in line with policy priorities, as determined by the government. To Do: Confirm if the budget of the following Ministries ranks higher than other ministries - Education, Health, Power, Transportation, Niger Delta, Labour & Productivity, Foreign Affairs, Justice, Finance, Communication Technology. Year Aggregate Total Budget4,987,220,425,6014,749,100,821,1704,226,191,559,25913,962,512,806,030% Education432,760,713,761400,148,037,983339,481,528,6851,172,390,280, Health279,819,553,930282,771,771,425235,866,483,244798,457,808, Power77,363,387,56473,416,536,31790,026,917,709240,806,841, Niger Delta64,706,473,31859,723,482,82156,629,811,018181,059,767, Foreign Affairs71,602,678,07050,186,470,95945,239,702,831167,028,851, Transport52,738,692,33654,825,494,23355,954,636,803163,518,823, Justice22,164,762,08122,330,185,04819,822,776,91364,317,724, Finance14,896,868,38213,397,725,75615,150,616,14443,445,210, Communications Tech.15,742,880,07918,305,107,489034,047,987, Labour & Productivity12,718,574,85710,851,966,8868,616,487,01332,187,028,

33 Objective 2: To understand from National Budgets the priority of government from 2011 – Year Aggregate Total Budget4,987,220,425,6014,749,100,821,1704,226,191,559,25913,962,512,806,030% Education432,760,713,761400,148,037,983339,481,528,6851,172,390,280, % Defence364,415,146,886326,354,184,382313,869,733,2521,004,639,064, % Police Formation & Commands 311,151,366,222307,857,718,425304,737,303,692923,746,388, % Health279,819,553,930282,771,771,425235,866,483,244798,457,808, % Works194,781,682,742180,799,815,246163,564,863,303539,146,361, % Interior154,731,693,977157,332,986,945158,157,297,012470,221,977, % National Security Adviser 115,512,690,505124,263,761,913105,240,648,267345,017,100, % Power77,363,387,56473,416,536,31790,026,917,709240,806,841, % Agriculture & Rural Dev. 83,204,844,63978,984,828,94963,526,625,985225,716,299, % SGF79,579,478,86770,591,647,01963,563,978,749213,735,104, % Youth Dev.86,944,795,95176,075,840,14247,272,599,579210,293,235, %

34 Findings  There is low correlation between government programme priority and budgeting.  We found this correlation in three ministries; Education, Health and Power  Ministries of Education, Defence, Police Formation and Commands, Health and Works have budget allocation priority Education Health Power Niger Delta Labour & Prod. Programme Priority Budget Priority Defence Police Command Works Interior NSA Agriculture SGF Youth Dev.

35 To determine the budget growth rate and changes in budget priorities

36 While budget growth rate can be inferred from Nominal value, however the Real value gives one the exact growth rate in a normalized system where inflation is taken into consideration. YearTotal Budget (Nominal)DeflatorTotal Budget (Real) ,549,835, ,824,102, ,009,971, ,009,971, ,214,805, ,473,755, ,064,801,253, ,914,133, ,254,543, ,698,862, ,790,848,344, ,155,386,028, ,799,938,243, ,939,590, ,876,302,363, ,181,244, ,266,394,423, ,123,127, ,492,076,718, ,467,468, ,870,510,042, ,171,636,752, ,608,616,278, ,719,632,939, ,226,191,559, ,372,140,116, ,749,100,821, ,380,552,564, ,987,220,425, ,381,501,502,937 With the assumption that Year 2000 is our base year, therefore the deflator is assumed to be at 1.00.

37 The Real value for 2001 budget is N931 billion, compared to N894 billion prior to the consideration of inflation. Even though there was an increase of N424 billion in nominal terms, the actual increase for the 2001 financial year is N461 billion. YearTotal Budget (Nominal)Change (Nominal)Total Budget (Real)Change (Real) ,549,835,647-81,824,102, ,009,971,781409,460,136,134470,009,971,781388,185,869, ,214,805,186424,204,833,405931,473,755,402461,463,783, ,064,801,253,520170,586,448,334925,914,133,496-5,559,621, ,254,543,375-88,546,710,145762,698,862, ,215,271, ,790,848,344,588814,593,801,2131,155,386,028,767392,687,166, ,799,938,243,1389,089,898,550972,939,590, ,446,437, ,876,302,363,35176,364,120,213845,181,244, ,758,346, ,266,394,423,477390,092,060,126981,123,127,046135,941,882, ,492,076,718,937225,682,295,460973,467,468,335-7,655,658, ,870,510,042,679378,433,323,7421,171,636,752,114198,169,283, ,608,616,278,2131,738,106,235,5341,719,632,939,632547,996,187, ,226,191,559, ,424,718,9541,372,140,116, ,492,822, ,749,100,821,170522,909,261,9111,380,552,564,2948,412,447, ,987,220,425,601238,119,604,4311,381,501,502,937948,938,643

38 Calculating change in budget priority It is important to determine the budget growth and changes in budget priorities as compared to the previous years. This is to understand whether the allocated budget is increasing or decreasing in line with policy priorities. The growth rate describes how much the size of an allocation changes from one year to the next. It is expressed as a percentage of the original allocation and is called the annual growth rate or year to year change. The following formula is used to calculate Growth Rate: Real Growth rate % = (Year 2 – Year 1) Year 1 x 100

39 Year Nominal%Real% ,549,835,647 81,824,102, ,009,971, ,009,971, ,214,805, ,473,755, ,064,801,253, ,914,133, ,254,543, ,698,862, ,790,848,344, ,155,386,028, ,799,938,243, ,939,590, ,876,302,363, ,181,244, ,266,394,423, ,123,127, ,492,076,718, ,467,468, ,870,510,042, ,171,636,752, ,608,616,278, ,719,632,939, ,226,191,559, ,372,140,116, ,749,100,821, ,380,552,564, ,987,220,425, ,381,501,502, The figure above indicates that, although the budget seems to have increased in nominal terms, when considered in real terms, it transpires that the budget has actually increased by lesser percentages. For instance, in 2010, an increase of 60.55% in Nominal term shows a 46.77% in Real term.

40 To calculate the Annual Growth Rate of Nigeria Budget over a period

41 Year Real% ,824,102, ,009,971, ,473,755, ,914,133, ,698,862, ,155,386,028, ,939,590, ,181,244, ,123,127, ,467,468, ,171,636,752, ,719,632,939, ,372,140,116, ,380,552,564, ,381,501,502, Annual average real growth rate over the medium term: 1999 to 2013 = 14years The average medium term growth rate from 1999 to 2013 has been approximately 46% = 45.70

42 Freely share, freely use and freely acknowledge the source – © Wale Micaiah Data source: -A Budget Guide for Civil Society Organisations Working in Education -Budget analysis manual ( -Nigeria Budget office (www.budgetoffice.gov.ng) Analysis by: Wale Micaiah (M.Sc., CISM, CCNP-Sec, MCSA) e: m: b: walemicaiah.blog.com w.


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