1. Nigeria Budget & Its Components

2. A budget is an essential aspect of Individual, Organisation and Government financials. It is a plan stated in monetary terms. 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 Source: wikipedia 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

3. The Nigeria budget is made up of four components:  Part A – Statutory Transfers  Part B – Debts Service  Part C – Recurrent Expenditure (non-debt)  Part D – Capital Expenditure Statutory Transfer Debt Service Recurrent Expenditure Capital Expenditure Consolidated Revenue Fund of the Federation MDA Expenditure

4. The Federal Government is required by law to make certain mandatory expenditures annually in respect of: Statutory Transfer Statutory Transfer: NJC NDDC UBEC INEC NASS NHRC 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

5. Whenever the Federal Government spends more money than the revenues it earns, it must find the financial resources to pay for this additional spending. Debt Service Debt Service: Domestic Debts Foreign Debts 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 Service.

6. Statutory Transfer & Debt Services Statutory Transfer Debts Services ≈ 18.73% Statutory Transfers and Debt Service currently make up on average about 18.73% of Federal spending

7. Spending by the Ministries, Departments and Agencies (MDA) of Government on Salaries, Pensions & Overheads Recurrent (non-debt) Recurrent Expenditure (non-debt): Salaries Overheads Pensions The Federal Government employs people to work in the various MDAs and 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 Contributory Pension Scheme, the 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 equipment and consumables, staff training, transportation, etc.

8. Capital Expenditure is used to provide infrastructure such as roads, water and power; fund educational services such as schools, colleges and universities; and provide healthcare facilities and services among others. Capital Expenditure: Capital Expenditure Infrastructure Healthcare Educational Services

9. Recurrent & Capital Expenditure: Recurrent Expenditure Capital Expenditure ≈ 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

10. Nigeria Budget in a nutshell: Statutory Transfer Debt Services Recurrent Expenditure Capital Expenditure MDA Expenditure NJC NDDC UBEC INEC NASS NHRC Domestic Debts Foreign Debts Salaries Pensions Overheads Infrastructure Educational Services Healthcare ≈ 81.27% ≈ 18.73%

11. Empirical Analysis of Budget Components YEARBUDGET COMPONENTSALLOCATION % 2007 TOTAL - STATUTORY TRANSFERS102,300,000,000 4.51% 18.90 TOTAL - DEBTS SERVICE326,000,000,000 14.38% TOTAL - RECURRENT (NON-DEBT)1,056,563,540,997 46.62% 81.10 TOTAL - CAPITAL EXPENDITURE781,530,882,480 34.48% AGGREGATE EXPENDITURE2,266,394,423,477 2006 TOTAL - STATUTORY TRANSFERS86,460,000,000 4.61% 20.04 TOTAL - DEBTS SERVICE289,500,000,000 15.43% TOTAL - RECURRENT (NON-DEBT)961,108,775,596 51.22% 79.96 TOTAL - CAPITAL EXPENDITURE539,233,587,755 28.74% AGGREGATE EXPENDITURE1,876,302,363,351 2005 TOTAL - STATUTORY TRANSFERS89,600,000,000 4.98% 24.74 TOTAL - DEBTS SERVICE355,723,000,000 19.76% TOTAL - RECURRENT (NON-DEBT)737,330,997,094 40.96% 75.26 TOTAL - CAPITAL EXPENDITURE617,284,246,044 34.29% AGGREGATE EXPENDITURE1,799,938,243,138 2004 TOTAL - STATUTORY TRANSFERS532,324,500,000 29.72% 50.35 TOTAL - DEBTS SERVICE369,369,000,000 20.63% TOTAL - RECURRENT (NON-DEBT)539,286,472,751 30.11% 49.65 TOTAL - CAPITAL EXPENDITURE349,868,371,837 19.54% AGGREGATE EXPENDITURE1,790,848,344,588 ( 2004 – 2007 )

12. Empirical Analysis of Budget Components YEARBUDGET COMPONENTSALLOCATION % 2011 TOTAL - STATUTORY TRANSFERS196,115,163,718 4.64% 17.47 TOTAL - DEBTS SERVICE542,381,827,452 12.83% TOTAL - RECURRENT (NON-DEBT)2,481,705,176,915 58.72% 82.53 TOTAL - CAPITAL EXPENDITURE1,005,989,391,174 23.80% AGGREGATE EXPENDITURE4,226,191,559,259 2010 TOTAL - STATUTORY TRANSFERS180,279,158,994 3.91% 14.70 TOTAL - DEBTS SERVICE497,071,797,452 10.79% TOTAL - RECURRENT (NON-DEBT)2,077,358,560,347 45.08% 85.30 TOTAL - CAPITAL EXPENDITURE1,853,906,761,420 40.23% AGGREGATE EXPENDITURE4,608,616,278,213 2009 TOTAL - STATUTORY TRANSFERS140,693,160,103 4.90% 14.78 TOTAL - DEBTS SERVICE283,649,892,795 9.88% TOTAL - RECURRENT (NON-DEBT)1,649,429,453,681 57.46% 85.22 TOTAL - CAPITAL EXPENDITURE796,737,536,101 27.76% AGGREGATE EXPENDITURE2,870,510,042,679 2008 TOTAL - STATUTORY TRANSFERS187,600,000,000 7.53% 22.46 TOTAL - DEBTS SERVICE372,200,000,000 14.94% TOTAL - RECURRENT (NON-DEBT)1,259,121,253,061 50.52% 77.54 TOTAL - CAPITAL EXPENDITURE673,155,465,876 27.01% AGGREGATE EXPENDITURE2,492,076,718,937 ( 2008 – 2011 )

13. Empirical Analysis of Budget Components YEARBUDGET COMPONENTSALLOCATION % 2013 TOTAL - STATUTORY TRANSFERS387,976,000,000 7.78 19.65 TOTAL - DEBTS SERVICE591,764,000,000 11.87 TOTAL - RECURRENT (NON-DEBT)2,386,024,770,349 47.84 80.35 TOTAL - CAPITAL EXPENDITURE1,621,455,655,252 32.51 AGGREGATE EXPENDITURE4,987,220,425,601 2012 TOTAL - STATUTORY TRANSFERS397,929,101,917 8.38 20.16 TOTAL - DEBTS SERVICE559,580,000,000 11.78 TOTAL - RECURRENT (NON-DEBT)2,471,814,067,335 52.05 79.84 TOTAL - CAPITAL EXPENDITURE1,319,777,651,919 27.79 AGGREGATE EXPENDITURE4,749,100,821,170 ( 2012 – 2013 )

14. Graphical Representation of Statutory Transfer ( 2004 – 2013 ) 2013201220112010200920082007200620052004AVG 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: 1 st = NASS2 nd =NJC3 rd = UBEC

15. Graphical Representation of Debt Services ( 2004 – 2013 ) 2013201220112010200920082007200620052004AVG DOMESTIC DEBTS 91.82%91.49%92.82%93.18%80.31%82.27%81.29%75.99%52.22%50.29%79.17% FOREIGN DEBTS 8.18%8.51%7.18%6.82%19.69%17.73%18.71%24.01%47.78%49.71%20.83%

16. Graphical Representation of Recurrent Expenditure ( 2004 – 2013 )MDAs Gross % EDUCATION12.66 POLICE FORMATION AND COMMANDS11.33 DEFENCE/MOD/ARMY/AIR FORCE/NAVY11.00 HEALTH7.38 INTERIOR6.73 Top Spenders of Recurrent Expenditure:

17. Graphical Representation of Capital Expenditure ( 2004 – 2013 ) Top Spenders of Recurrent Expenditure: MDAsGross % WORKS13.58 POWER10.64 FEDERAL CAPITAL TERRITORY ADMINISTRATION10.18 AGRICULTURE & RURAL DEVELOPMENT6.57 WATER RESOURCES5.40 EDUCATION5.21 TRANSPORT4.81 HEALTH4.73 DEFENCE/MOD/ARMY/AIR FORCE/NAVY3.34

18. Statutory Transfer Debt Services Recurrent Expenditure Capital Expenditure Graphical Representation of All Budget Components Evidently, Recurrent Expenditure (Salaries, Pensions and Overheads) enjoys a huge share of Nigeria’s yearly budget

19. Summary of the Budget Components Recurrent Expenditure 48.06% (Salaries, Pensions & Overhead costs) Capital Expenditure (Infrastructure, Educational Services & Health) Debt Services (Domestic & Foreign Debts) Statutory Transfer (NJC NDDC UBEC NASS INEC NHRC) 29.62% 14.23% 8.10% (2004 – 2013)

20. Freely share, freely use and freely acknowledge the source – © Wale Micaiah 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.comwalegate@yahoo.com m: 08078001800 b: walemicaiah.blog.com w. www.statisense.com