The Open Budget Survey (OBS), an independent tool that measures budget transparency worldwide, has ranked Nigeria 92nd among 125 nations, indicating significant gaps in the country’s fiscal openness.
Nigeria scored 31 out of 100 in the transparency assessment, which evaluates the online availability, timeliness, and comprehensiveness of eight key budget documents using 109 equally weighted indicators.
A score of 31 is notably below the threshold of 61 points, which OBS identifies as the minimum for a country to be considered as providing adequate information to keep the public informed about its annual budget. This shortfall underscores the need for substantial improvements in Nigeria’s budgetary processes.
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The OBS report highlights that Nigeria is falling short, particularly in the comprehensiveness of the executive budget proposal. This crucial document should outline sources of revenue, allocations to ministries, and other financial data that help citizens understand the nation’s fiscal status. The lack of detailed and timely information restricts public understanding and engagement in the budget process.
Implications of Obscure Budget Practices
Obscure budget practices have far-reaching implications for Nigeria’s economic and social development. When citizens are not adequately informed about budgetary decisions and allocations, it undermines public trust in government institutions and processes. This lack of transparency can lead to inefficiencies and misallocation of resources, as there is limited accountability for how public funds are spent.
Furthermore, the absence of detailed budget information can hinder effective planning and decision-making by businesses and investors. When fiscal policies and allocations are unclear, it creates an unpredictable economic environment, discouraging investment and economic growth.
For small and medium-sized enterprises (SMEs), which are particularly vulnerable to economic instability, the lack of budget transparency can exacerbate challenges related to access to finance and market opportunities.
Additionally, obscure budgeting practices can impact the government’s ability to implement and monitor its policies effectively. Without clear and accessible budget information, it becomes difficult to assess whether funds are being allocated and spent according to policy priorities. This lack of oversight can lead to corruption and wastage of public resources, further exacerbating poverty and inequality.
Recommendations for Improvement
To enhance its ranking and overall budget transparency, OBS provided several critical recommendations for Nigeria. It said the auditor-general should audit the federation’s accounts and report findings to the National Assembly no later than 180 days following the conclusion of the fiscal year.
Notably, Nigeria published its 2020 audit report in January 2024, which indicates significant delays. The Ministry of Finance, Budget, and National Planning should ensure that in-year reports, mid-year reviews, and audit reports are published online promptly. Specifically, mid-year reviews should be published within three months after the end of the fiscal year.
The organization also said the government should publish detailed information on its financial and non-financial assets, including conducting analyses on the impact of macroeconomic assumptions on expenditure, revenue, and debt estimates. The survey emphasized the importance of public engagement in budget decisions, noting that when governments provide information and meaningful channels for public input, it ensures that public money is spent on public interests.
Oversight and Legislative Recommendations
The report also highlighted that while the legislature and supreme audit institution in Nigeria provide adequate oversight during the budget process, with a composite oversight score of 61 out of 100, there is room for improvement, especially during the implementation stage of the budget cycle.
Legislative committees should examine the executive’s budget proposal and publish their analysis reports online. In-year budget implementation should be reviewed, and findings should be published online. The legislature should be consulted before the executive spends any unanticipated revenue or reduces spending due to revenue shortfalls. The audit report should be examined, and a report with findings should be published online.
To improve the effectiveness of the Office of the Auditor-General for the Federation (OAGF), the OBS report stressed the need for adequate funding determined by an independent body such as the legislature or judiciary. Additionally, an independent agency should review audit processes to ensure transparency and accountability.
The International Budget Partnership, which publishes the OBS, emphasizes the significance of transparent budget practices.
“Government budget decisions – what taxes to levy, what services to provide, and how much debt to take on – have important consequences for all people in society,” it stated. The organization further noted, “When governments provide information and meaningful channels for the public to engage in these decisions, we can better ensure public money is spent on public interests.”