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FG Needs Holistic Budget Reform
Postscript by Waziri Adio
One of the highlights of President Bola Tinubu’s 2026 budget speech is his promise to end the confusing and anomalous practice of operating multiple budgets in one financial year. “This is a reset, a very hard one: we are terminating the habit of running three budgets on one inflow,” he said. “By March 31, 2026, all capital liabilities from previous years will be fully funded and closed. From April, Nigeria will operate on a single budget backed by a single revenue cycle — no overlaps, no excuses, no rollovers.”
This is all well and good. Running multiple budgets may not be illegal, but it is clearly ungainly. It creates an unnecessary muddle, makes budget-tracking difficult, and compounds the rarely-acknowledged but obvious gaps in implementation capacity. Ordinarily, the budget for the preceding year should terminate once the one for the new year is signed. It has become a convention for exceptions to be made for capital budgets. This convention itself is ill-advised as most capital projects are multi-year and it would have been neater for a new budget to continue where the last one stopped. Bad precedents linger and become standard practice, even when they are no longer tenable or desirable.
However, it should be noted that prior to the Tinubu era, the record was for a previous year’s capital budget to be in force till June of the new year. That record was upturned from late 2023 when the Tinubu administration, magically, juggled three budgets: the 2022 supplementary budget (which it proposed for amendment on 12th July 2023), the 2023 main budget that it inherited from the President Muhammadu Buhari administration, and the 2023 supplementary budget (which it curiously sent to the National Assembly on 31st October 2023, about a month before the presentation of the 2024 budget proposal).
This aberration could be excused on account of the fact that 2023 was a transition year and with the probability that the new administration was still trying to get a hang of things. In 2024, the Tinubu government decided to surpass itself. It ran four budgets simultaneously: the capital components of the 2023 main budget and the 2023 supplementary budget, which ran till 31st December 2024; the 2024 main budget; and then the N6.2 trillion supplementary budget, cleverly termed amendment, which was passed on 23 July 2024. This year, the administration came down a notch by running just three budgets together.
It is commendable that President Tinubu has acknowledged that the habit of running multiple budgets, which his administration did not invent but did take to new heights, is a bad practice. At least, we have moved from official justification to official admission of the untidiness. Some progress there. It is even more remarkable that the president has vowed to end the bad practice by March next year. In furtherance of his vow, he has also asked the legislators to repeal and re-enact the 2024 and 2025 budgets.
But ending multiple budgets is not the only thing that needs fixing. There are many other gaps and anomalies that undermine the sanctity and the effectiveness of our federal budgets. What is needed is a comprehensive and faithfully-implemented plan for reforming the approach to and the process of budgeting at the federal level. To be sure, there have been some attempts at imposing sanity and predictability over time. But much more is needed.
Some of these previous changes are enshrined in different laws and circulars and cover areas such as: mandating the passage of three-year fiscal expenditure frameworks and the publication of budget implementation reports; setting limits on or conditions for budget deficits, public debt and CBN overdrafts (the famous ways and means); and stipulating how to treat the operating surpluses of government-owned enterprises, etc. The challenge has been that these attempts are not far-reaching enough, and some are not codified (like having a January-December budget cycle and thus easy to upturn), and even the ones that are set in law are mostly observed in the breach, and without consequences (because the laws are not firm enough).
My considered view is that we need a comprehensive law that ties together everything around budgeting, addresses the existing gaps, assigns clear responsibilities and imposes stringent sanctions. In this piece, I will highlight five areas that I think should be considered in such a reform plan.
My first suggestion is that we need a defined budget calendar that aligns with our January 1st to December 31st fiscal year. The Federal Government does not have (or enforce) a budget calendar that stipulates deadlines for preparing, presenting, passing and implementing its budgets. It took a lot of deliberate efforts for the President Buhari administration to achieve the January-December budget cycle with the 2020 budget, which was signed on 5th December 2019. Even then and in subsequent years, it was easy to decipher that the process was being rushed, and it is in the haste that magic and mistakes happen.
Countries have different fiscal years. The US, for example, operates the October 1st to September 30th fiscal year while other countries operate other variations such as April 1st to March 31st or July 1st to June 30th. So, the choice of fiscal year does not have to be January 1st to December. 31st. What is common to most countries is that they allocate enough time to the different components of their budgeting process to ensure that a budget is in place ahead of the start of the new fiscal year. This allows for predictability and signals seriousness.
The trick is to start the process on time and to set and enforce hard deadlines. For example, the budget circular for the personnel and overhead components of our federal budget can go out by March 1st and the capital component by May 15th, with submission deadlines set for April 15th and June 15th respectively. The bilateral budget sessions (where the budget office holds what can be termed negotiation meetings with MDAs) can be in the whole of July. The Medium-Term Expenditure Framework (MTEF) can be sent to the legislators before or by 15th August. The president can present the proposed budget to the National Assembly before or by 15th September.
The process for the US budget that runs from October to September usually starts in February. Starting ours in March allows for at least six months for the conclusion of all the preparations on the executive side while the president presenting the proposed budget to the National Assembly in September grants the legislators at least three months to treat the proposed budget. This nine-month window will allow all concerned to do a thorough job, including enough time for the executive to review the budget passed by the legislators and to request for changes, if necessary, before the new fiscal year commences.
My second proposal is that we need budgets for only nine months for election and transition years. We should find a way of balancing two needs: that there is no government shutdown and that a departing government does not tie the hands of an incoming one. So, the budgets for such years should cover up to September while the first act of the new or returning administration should be to, say by June, present a supplementary budget (mainly for the last three months of the year) followed by the budget for the next fiscal year in September. This is a standard practice in many countries where interim or provisional budgets are passed for election/transition years to cover personnel and essential items. Examples of countries operating this model include India, Japan and Ghana. Apart from allowing the new government to quickly set its priority and not be burdened for six months with a budget it did not prepare and which may not align with its priorities, this proposal has another advantage. It will ensure that new administrations will appoint their cabinets on time.
My third proposal is that we need to have one comprehensive budget for the Federal Government. What we have now may give the impression of comprehensiveness, but it is not. The budgets presented by the president usually has a few line items about proposed total revenues and total expenditures of the Government-Owned Entreprises (GOEs), and lines items for statutory transfers to the legislature and the judiciary. My sense is that even the Budget Office of the Federation (BOF) may not see the budgets of the GOEs and simply tallies the numbers sent to it by these entities to arrive at the aggregate figures in the MTEF and in the budget proposal presented by the president.
These GOEs are treated like governments within government, and with the size of resources at their disposal they can always get their way. The only time the public has seen the disaggregated budgets of the GOEs was when BOF published the 2024 proposed budget of 62 GOEs. The budgets of the GOEs are usually passed separately and sometimes at a time the rest of the country and even the media are preoccupied with other things. For example, while the National Assembly passed the 2025 federal budget in February, it approved N1.13 trillion as the budget for the year for the Nigeria Customs Service in June 2025. As can be seen from the budgets of NCS and others, the budgets of the GOEs are material, with the leading ones individually having higher budgets than most states. This is the more reason GOEs’ budgets should be closely scrutinised not just by the executive but also by the public.
The budgets of the presidency and even of the security forces are part of the larger budget presented by the president and are fully disaggregated. It cannot get more sensitive than this. So, there is no justification for hiding GOEs’ budgets from the public. Besides, these agencies have too much latitude in defining their spending priorities. They are not only disposed to waste and misallocation (as reviews of the 2024 budget illustrate) but are also given to spending in ways that may not align with FG’s priorities. Putting all the budgets in one comprehensive document and getting all federal agencies to justify their expenditures will bring sanity and ensure a more optimal allocation of scarce resources. Also, the budgets of the legislative and judicial arms of government should not be beyond public scrutiny.
My fourth proposal is that we need to rein in legislative constituency projects. It is tempting to call for their cancellation, but this will be impractical, especially because Nigerians have also come to appraise legislators by the projects they sponsor or attract. From the period when the executive assigned a fixed amount yearly for constituency projects, called zonal intervention projects, the idea of allowing legislators to sponsor projects has totally gone out of hand. The lines have become totally blurred and this has made a total nonsense of the budget. Legislators not only choose projects like boreholes and street lights that should be the focus of local government areas and not the Federal Government but also indulge in ridiculous ones like painting the palaces of traditional rulers or buying second-hand cars for local chiefs that at best should be funded by the legislators themselves, if indeed these are things important to them. The legislators also decide the cost of the projects and the agencies to implement them. So, it is not unusual for agencies to be assigned projects that have absolutely no bearing with their mandates. It is an abuse of process and powers for the legislators to propose projects, cost them, then assign and approve the same projects. This, definitely, needs to change.
In bringing sanity to constituency projects, India’s Member of Parliament Local Area Development Scheme (MPLADS) is a model to look at. Under MPLADS, the executive publicly defines what federal funds can be used for and announces the allocation for each year; the legislators are allowed to propose projects to a coordinating ministry which reviews the proposals, decides what can be accommodated within the earmarked fund for the year, and assigns the selected projects to the relevant agencies. These projects are part of the budget proposed by the executive to the legislators, not arbitrarily insertions by the latter. The coordinating ministry also maintains a portal and publishes reports about fund releases and project implementation. The legislators get projects to show to their constituents, but within reason; the executive regains control of proposing and implementing budgets; the legislative arm restricts itself to approving and oversighting budgets; and the public is officially given the tools to track and scrutinise. This is worth taking on board.
My fifth proposal is that we need to discontinue at least three wayward practices: indulging in unrealistic revenue and expenditure projections, engaging in extra-budgetary spendings, and awarding contracts without cash-backing. These are not innocuous acts. They have serious consequences, and we can see them in the poorly implemented budgets, in the inability to pay contractors, in the abandoned projects, in the expanding deficits and debts, and in the significant and increasing portion of government revenues going to debt service, which additionally crowds out the resources that should be allocated to critical areas of need. We need to stop lying to ourselves with bogus budget projections and these other practices and give ourselves a better chance of climbing out of the fiscal hole. These are areas where the president and his economic team can activate a reset, a very hard one.
