CHALLENGES OF BUDGET CONTROL AND IMPLEMENTATION IN NIGERIA : A CASE STUDY OF OSUN STATE

ABSTRACT

A budget is a fundamental and effective management tool that is used to organize and regulate the use of limited financial resources in the achievement of organizational goals. The majority of budgeting studies have generally concentrated on the difficulties in creating and using budgets in the public sector.The goal of the study was to identify the difficulties with budget control and implementation in Nigeria, specifically with regard to Osun State.The specific goals would be to overcome institutional limitations in budget execution, tax collection performance, county government capability for IFMIS use, and efficient supervision and audit function. It would use a descriptive research design for the investigation.This study was descriptive in nature and was conducted on a population of 90 employees who held management positions within the executive arm and in the thirteen (13) departments of Osun State. These departments would include Office of the Governor, State Treasury, Agriculture, water, education, health, planning, public service, transport, cooperatives, culture, public service board and town administration department. A sample would be taken from the targeted 90 state employees. The sample would be given self-administered questionnaires, and descriptive analysis would be used. The results would show that there was a link between the collection of independent factors and the dependent variable.The obstacles of budget implementation in Osun State were connected to institutional limits, IFMIS capacity, and oversight and audit functions.The study so suggests that additional research be conducted on another state and that the respondents be expanded to include both middle and upper management.

1.0 Background of the Study

A successful budget integration should guarantee the accomplishment of the planned government priorities and policies, operational effectiveness, efficient service delivery, transparency, and corruption-free environment(Shard & David, 2010). Government spending plans fall into one of three categories: surplus when revenues exceed expenses, deficit when expenses exceed revenues, or balanced when revenues and expenses are equal (Smith et al, 2004). Despite the implementation of devolution in Nigeria, the difficulties associated with budget execution as a tool for attaining plan objectives and protecting public monies have received very little attention (Kiringai, 2002).Public organizations are at the forefront in the construction of control systems due to the requirement for accountability and efficiency in service delivery in public organizations across Africa and in Nigeria.Budgetary controls, according to Margah (2005), are crucial tools for a county's economy. This is so that systematic spending may be made possible by allowing for expenditure planning. The best possible utilization of funds expands the advantages to business and the national economy.

The process of implementing the budget strives to maximize the contribution of public spending to the welfare of the nation. Sections 35 and 125 of the Public Finance Management Act of 2012 provide instructions on how to create, approve, and implement budgets for the federal, state, and local governments.In accordance with the constitution's declaration of the separation of powers, the national treasury formulates the budgets for all state agencies other than the legislature and the court. The parliamentary services commission oversees senate and national assembly budget creation and execution.The cabinet secretary for finance drafts the appropriations bill, which must be approved by June 30th each year, once the parliament has approved the budget projections. Within 90 days of the appropriations bill's passage, the finance bill a vehicle for raising money is passed.

The transfer of political authority and autonomy to subnational entities, which are thus held politically liable to local communities rather than the center, is described by Oloo (2006) as the distinguishing characteristic of devolution.Since Nigeria's independence, the executive branch has held the majority of the country's power, making decisions and allocating resources largely in accordance with the president's preferences and political leanings. The Transitional Authority Act 2012 established the devolved system, which is outlined in the 2010 Constitution of Nigeria.Oloo (2006) continues by saying that the implementation of the devolved system of government creates and strengthens a system of government in which respect for human dignity, respect for human rights, accountability, transparency, and social justice, as well as gender equality, the rule of law, and equity, are upheld at all levels of government.Fundamentally, massive resources, public awareness campaigns, capacity building programs, and highly devoted staff, institutions, and organizations built on the national ideals inherent in the Nigerian Constitution would be needed for the success of devolution.

The Executive and the Legislature are the two branches of the State Government of Osun (State Assembly). The governor, deputy governor, county executive committee, and entire county executive administration make up the executive structure.There are thirteen (13) departments, each with a director and chief officer in charge. As opposed to the county assembly administration, which is led by the clerk, the state assembly is made up of the speaker, MCAs, and other members. It is the executive branch of government's obligation to implement the budget.In terms of structure, the government budget is split into recurrent and capital components. The recurring component, which is broken down into recurrent non-debt expenditure, debt service, and statutory transfers, primarily deals with payments connected with products and services that do not reflect capital assets.The capital budget concentrates on the costs associated with the purchase of capital assets needed to boost economic production. In essence, the level of yearly government capital spending implementation is the magic bullet for economic growth.However, Oke (2013) stated that the lackluster implementation of previous government budgets in Nigeria, particularly their capital expenditure components, indicates that they have not materially affected growth.It is thought that the stark gap between recurring and capital spending, which is estimated to be 70:30, is to blame. It is based on this backdrop that the present seeks to examine the challenges of budget control and implementation in Osun State, Nigeria.

1.2 Statement of the Problem

            Budgetary restrictions have received very little attention as a mechanism for meeting plan targets in the public sector, despite the introduction of devolution in Nigeria (Kiringai, 2002). In order to successfully implement government aims and programs in a transparent and efficient manner, a strong budget implementation process should ensure optimal planning and control of scarce resources(Pierce, 2004)

Over the years, there has been a terrible trend in the implementation of capital expenditures. For instance, Nigeria Economic Recovery and Growth Plan (2017)concluded that only 43.9% of capital expenditures from budgets in 2008 and 54% of those from budgets in 2009 were successfully carried out. In 2012 and 2013, when 51% and 47.54% of the capital component of the budget, respectively, were implemented, a similar subpar performance was seen (Edeme&Nkalu, 2017). The economy suffocates under the weight of insufficient and decaying infrastructure, including transportation, electricity, water supply, communication, and other crucial public utilities, while annual budgets consistently underperform, largely due to poor implementation, particularly of their capital elements.As enterprises and industries continue to experience declining capacity utilization, unemployment remains unacceptably high. Could there be a link between the economy's weak performance and the failure to implement the capital budget in light of this? What reasons prevent Nigeria Osun State from implementing its capital budget? How far have these restrictions been addressed by the fiscal authorities?The focus on the capital budget component is grounded in the Keynesian theoretical paradigm, which holds that the budget is a tool for fiscal demand management that provides the impetus to turn around a struggling economy.The literature research primarily reveals that county governments have made attempts to resolve problems with the public sector's budget preparation and usage process, but there is still room for improvement with regard to the difficulties associated with budget implementation.It was with this in mind that the researcher sought to uncover the challenges of budget control and implementation in the public sector that is little due to the fact that the county governments are at their infant stage in Osun State, Nigeria.

1.3 Objectives of the Study

            The main objective of this study is to examine the challenges of budget control and implementation in Nigeria; a case study in Osun State; Specific objectives of the study would include;

1. To assess effect of institutional constraints on budget implementation in the public sector.
2. To determine effect of performance in revenue collection on the budget implementation in the public sector.
3. To assess the effect of county government capacity on use of IFMIS on budget implementation.
4. To examine the role of oversight and audit functions in the budget implementation in the public sector

1.4 Proposition of the Study

H0: There is no significant relationship between institutional constraints and budget implementation in the public sector.

H0: There is no significant relationship between performance in revenue collection and budget implementation in the public sector.

H0: There is no significant relationship between use of Integrated Financial Management Information System(IFMIS) and budget implementation in the public sector.

H0: There is no significant relationship between oversight role, audit functions and budget implementation in the public sector.

1.5 Rationale for the Study

The significance of this study is to examine the challenges of budget control and implementation in Osun State State, Nigeria. The study's findings will be helpful to policy makers, non-governmental organizations, auditorial accountants, change agents, and facilitators in the following ways:

This study will help the governmental Osun State to know the factors that hinders the budget implementation and control which will in turn help them to set out strategies that will help them advert these challenges.

The study's findings will provide business managers with a foundation from which to create equipment that will effectively carry out budgetary implementation procedures. increasing the position of the organization to increase the viability of projects undertaken by businesses to accomplish the desired goals.

The findings of this study will help policy makers create functional literacy programs for adult learners in both public and private institutions so they can keep up with changes in society, the economy, politics, psychology, and education.

Supporting potential and aspiring investors and industrialists in realizing the necessity of appropriate budgeting implementation for industrial growth. Future research students and interest groups will benefit from the study's insights into the numerous facets of budgetary procedures and their effects on effective resource management in businesses.