Normalizing Nigeria’s budget cycle

Nigeria is gearing up to normalize its budget cycle with hopes of passing the budget by the first quarter of the year in order to return to a more predictable schedule. The late passage of the 2017 budget significantly affected its implementation, prompting the government to strive for an earlier approval this time around. To delve deeper into this issue, Kayode Akindele, Partner at TIA Capital, joined CNBC Africa for a discussion. The key theme of the conversation centered around the relationship between the National Assembly and the Presidency, which plays a crucial role in the timely passing of the budget. The strained relations between the two bodies have resulted in delays in budget approvals over the past couple of years, impacting the country's economic stability. Political issues often overshadow the budget itself, leading to prolonged debates and negotiations that hinder the budgeting process. Key Points: 1. The Delay in Budget Approval: In recent years, Nigeria has experienced delays in budget approvals due to friction between the National Assembly and the Presidency. While the budget was passed by the National Assembly in March 2016, it was not signed by the President until May of that year. A similar scenario unfolded in the following years, further complicating the budget cycle and affecting economic planning and execution. 2. Economic Challenges and Debt Servicing: The current budget includes a significant increase in spending, with a focus on addressing economic challenges faced by the country. However, projections for debt servicing alone surpass the entire budget deficit, indicating the pressure posed by interest rates on the government. To mitigate this, the government plans to seek offshore borrowing, but economic conditions may still pose obstacles to budget implementation. 3. Impact on Elections: With the upcoming election cycle, the timely approval and effective implementation of the budget are crucial for both the government and the legislature. Any delays in the budget process could influence the electorate's perception of the ruling party and affect election outcomes. Ensuring a swift budget approval is essential for funding developmental projects and social intervention programs that benefit the public. Akindele emphasized the need for early budget approval to avoid disruptions in government projects and services. He highlighted the significance of adequate revenue generation to support budget execution and prevent the cutting down of essential expenditures. As Nigeria enters a pre-election year, the National Assembly faces the challenge of expediting the budget process to meet the needs of the populace and maintain political credibility. Quote: 'The key issue is no longer revenues... Unless that's addressed, you're not going to have a sustainable budget.' - Kayode Akindele, Partner at TIA Capital In conclusion, the normalization of Nigeria's budget cycle is essential for economic stability and effective governance. By streamlining the budget approval process and addressing underlying political tensions, the country can enhance its financial planning and resource allocation for the benefit of its citizens. As the government strives to pass the budget in the first quarter of the year, the focus remains on fostering collaboration between key stakeholders and prioritizing the nation's economic development.