Background

Poor fiscal management characterised the military governments of Nigeria. Thus in 1999, the new civilian government inherited large external debt and unpaid arrears to civil servants and pensioners, years of unprepared financial statements, and barely audited government accounts.

Past Reform and Achievements

One of the first steps of the new civilian government was to restore rule-bound financial management. Between 2003 and 2007, significant progress was made in increasing the transparency of the budget process, ensuring efficient cash management, and reforming procurement processes. These efforts were largely pushed through with the enactment of the Fiscal Responsibility Act (2007) and the Public Procurement Act (2007). Nigeria additionally became an active member of the Nigerian Extractive Industries Transparency Initiative (NEITI) that commits member countries to higher standards of transparency in the management of natural resources revenues. Foreign exchange reserves grew as a result; external debts were also reduced.

The efforts were sustained by subsequent civilian governments. In 2010, a corruption-reducing Government Integrated Financial Management Information System (GIFMIS) was implemented to start managing the financial transactions of government in 447 MDAs. Government further implemented a Treasury Single Account (TSA) for the better consolidation of cash balances. The TSA commenced with 92 MDAs. By November 2014 it had been established in 447 MDAs, to be accounting for 70% of the Federal Government Budget. To buffer external shocks from commodity markets on the budget, the government also inaugurated the Nigeria Sovereign Investment Authority (NSIA) to manage a Sovereign Wealth Fund (SWF), which had an initial amount of US$1 billion.

Challenges and Next Steps

Laws should be passed to compel all MDAs to be remitting the revenues they generate into the TSA. The constitution should be amended to make SWF an integral part of public finance, remove the federal versus state tussles over saving into it, and adequately protect the country from economic shocks; and to set the roles and responsibilities of major budget stakeholders at each stage of the budget process towards ensuring complete implementation of the budget every year.