Nigeria’s federal government has budgeted 87 trillion naira for improving infrastructure and service delivery for its growing population between 2013 and 2022. Have these budgeted sums translated to commensurate improved food security? Has access to agricultural equipment and farming inputs improved, given their budgeted sums in the past ten years? In the next ten years, we estimate the government would budget at least 150 trillion naira; how can stakeholders ensure that these budgets deliver commensurate value?
Budget credibility (or budget realism, as some policymakers prefer to refer to it) is an important metric in governance worldwide. According to Renzio and Cho, it reflects a government’s ability to accurately and consistently meet its expenditure and revenue targets (Renzio, 2020). In Nigeria, analysis of budget credibility as it affects revenue targets approved in the budget is pretty straightforward — this can readily be calculated as the difference between the final revenue recorded by the government and that budgeted at the start of the fiscal year. However, analyzing budget credibility as it affects expenditure targets approved in the budget is not straightforward.
This study focuses on Oyo and Anambra states, and the federal government. Though the drivers of budget credibility on the revenue end of public finance are well documented, this report will focus on budget credibility as it affects revenue and expenditure. They include unrealistic revenue projections in the budget, weak revenue collection mechanisms, revenue leakages due to corruption, and weak accountability mechanisms.
Summary of key findings:
Tackling budget credibility on the expenditure spectrum for focus sectors like agriculture in Nigeria depends on understanding where the biggest budget deviation is happening for each sector. The set of solutions needed to tackle budget credibility as a result of deviations between the actual cash released for expenditure and the budget for expenditure for that fiscal year is different from the set of solutions needed to address deviations between the actual cash utilised for expenditure and the actual cash released for expenditure.
Nigeria and the two focus states, Anambra and Oyo, failed to meet the 10 percent budgetary provision threshold for agriculture agreed upon in Maputo in 20031. While the federal government and Anambra allocated less than 3 percent of its total budget yearly to agriculture between 2017 and 2021, Oyo’s highest budgetary provision for agriculture within the same time frame was 3.6 percent of its total budget.
Despite the fact that agriculture is the largest sector contributor to the GDP of Nigeria, Anambra, and Oyo State, the allocations and budgetary provisions for the procurement of agricultural inputs by Anambra, Oyo State and the federal government between 2017 and 2021 were negligible.
Concerning expenditures across focus sectors, it is observed that amongst other drivers of weak budget credibility, there exist procedural, regulatory, and contextual political bottlenecks that contribute to weak budget credibility in Oyo and Anambra states and also at the federal level. These bottlenecks contribute to budget deviations observed in the allocations to the agriculture sector. Per this report’s recommendations, they need to be addressed on a case-by-case basis.