The past few months have been dominated by a single, damning story about the operation of the Nigerian budget with three budgets – 2024, 2025 and 2026 – all running concurrently. That is one of the strangest anomalies in fiscal management I have ever come across. But Nigeria is known for the dysfunction in its governance style. Alongside this has been the revelation that many of the country’s MDAs had very minimal capital releases even as government maintains that it has surpassed all its revenue projections.
Let me look back at the figures from the 2025 budget to illustrate the depth of the collapse we are now managing due to miserable performance of the budget. The Ministry of Livestock Development had a ₦10 billion capital budget of which nothing was released (0%). This was the same with the Ministry of Solid Minerals that had a capital budget of ₦865.06 billion but zero releases. But the Ministry of Health was slightly better and I say that generously; the health capital budget was ₦218 billion and just ₦36 million (0.016%) was released. On the other hand, the ministries of women affairs, transportation, marine and blue economy, and housing and urban development had more funds released to them. While not understating the importance of those ministries, health would actually rank alongside education as of great importance for funding. But ₦394.8 million (0.44%) out of a ₦89.8 billion capital budget was released to Women Affairs; Transportation received ₦2.5 billion (1%) from a capital budget of ₦256.73 billion; Marine & Blue Economy received ₦202 million (1.7%) from a ₦3.53 billion capital budget; and Housing & Urban Development received ₦2 billion (2.0%) from ₦100 billion.
By June 2025 only ₦393.86 billion had been utilized for the entire 2025 capital budget of ₦23.96 trillion across all MDAs. This was 1.644% – or in layman’s terms, for every ₦1 Million budgeted for capital projects, government only released ₦16,440. Yes, just ₦16,440. With releases that thin, it is hard to imagine the budget registering any meaningful socio-economic progress. While the broader economy may show stuttering resilience, it is doing so despite the government’s failure to invest in critical infrastructure, not because of it. The effect of this poor budget performance might hit us when we least expect it—manifesting as shocking declines in health, education, and security outcomes.
Many Nigerians are perplexed about this kind of fiscal management – and so am I. So where are the problems? The problems are not hidden. They are embedded in the structure of how we plan, approve, and release public funds. And until we name them clearly, no reform will stick.
Let me highlight some of the key issues and suggest how we can overcome these.
The first issue revolves around who actually determines the release of funds. That would be the Accountant-General of the Federation. While the Minister of Budget and Planning develops the framework based on government’s priorities, and the Director-General of the Budget Office drafts the proposal, the real gatekeeper remains the Accountant-General of the Federation, whose task is the management of the treasury and who decides which MDAs receive cash. He has stated publicly: “I must have the funds before I can disburse.” But the problem here is that he was part of the budget committee and provided revenue figures. So, you would assume that he expected to receive the funds to service the budget. What makes his comment strange is that, even though the National Assembly deliberated and approved a budget submitted to it by the executive arm and assented to by the President, one unelected official has effectively paralysed implementation through release control simply by releasing only 1.644%. That is not oversight. That is a structural flaw.
The second issue revolves around the legality of the Budget Office. This office is an administrative creation to enable the executive arm to track the budget. The office preparing the country’s annual budget lacks a clear statutory foundation as an autonomous institution. Another aspect of what we see is that the DG of that office ideally should be one that feels a responsibility to the country, not just to the government that appointed him or her. Yet its Director-General appears on television, grants interviews, and testifies before the National Assembly as if he were an elected official accountable to the Nigerian people. He is not. The Minister of Budget and Planning is the President’s appointee, answerable to the National Assembly. All public communication on the budget should come from that Minister – and that Minister alone. One budget, one voice, one accountable official.
The third issue is the envelope system. Over the years, shortfalls in revenues due to unrealistic revenue estimates forced government to adopt what it calls the envelope system. Here, each MDA is given an envelope stating how much is available to it for capital projects. So, MDAs that have made budget estimates of say, ₦50 billion, are provided with an envelope that gives them just ₦200 million to work with. Where do you start from? And even with those small figures, they still find that they may have to lobby to get anything released to them (giving too much power to the releasing agencies), sometimes far less than what they were allocated – as we saw in the 2025 budget.
The fourth issue is one that continues to amaze me. The fragmentation of budget defence. You find agencies supervised by ministries creating their own budgets and defending them before the National Assembly. Why can’t we have a situation where all these agencies have their budgets subsumed as part of their ministry’s budget, with the minister having the sole responsibility of defending the budget? Unless that agency is under the presidency or SGF. This will allow for clarity in budget development between ministries and their agencies. We will no longer have a situation where agencies lobby lawmakers separately, often at cross-purposes with their ministries. This will reduce occurrences of inflated budgets, competing priorities, and accountability confusion. In the current situation, when projects fail, the ministry blames the agencies, and the agencies blame the ministry. The fix is simple: all agencies must align their budget requests with their supervising ministry. Only the Minister defends the consolidated budget before the National Assembly. No more agency heads running to lawmakers to restore cuts. One minister, one vision, one budget.
The fifth issue, if addressed, could drive a marked improvement in how budgets are managed. If we scour the past six budgets we will likely identify projects that have remained largely unfunded during that period, maybe receiving nothing after the initial release. BudgIT, a fiscal transparency organisation, noted that, “inefficient and unfunded budget items have been allowed to persist.” This cannot continue because these projects only inflate budgets, creating false expectations for many communities where they are located until they become eyesores. This also allows officials – elected and unelected – to claim credit for projects they know are bound to fail due to non-release of funding. Here is a simple rule: if a project cannot be funded in half a decade, it does not belong in the budget. Delete it. Permanently.
The sixth issue is one I have grappled with because it sits at the intersection of democratic transition and fiscal responsibility. When new governments are elected into office, we see a sharp increase in the number of abandoned projects due to changing priorities. But consider a situation where the last government started a project worth ₦15 billion and released 20% – roughly ₦3 billion – to kickstart it. If the new government does not consider it a priority and abandons it, how do we account for the public funds already expended on the project? It can be argued that abandoning it is not a policy change; it is a fiscal disaster. Percentage completion alone is misleading. A small project of ₦200 million at 20% might be manageable, but a massive project of say ₦20 billion at 20% is a catastrophe. My proposal: any large project that has received any expenditure cannot be cancelled without a formal National Assembly vote and full disclosure of sunk costs. And 30% of the capital budget should be reserved for ongoing projects from the previous administration. Democratic change needs to be balanced with fiscal responsibility.
A Fiscal Reform Agenda
So where do we go from here? Here are a few policy solutions on how to address the issues highlighted.
First, we must address the Accountant-General’s unchecked power. This can be done through the creation of an Independent Budget and Disbursement Office – established by law, not by administrative fiat. The current Budget Office would then be absorbed into the new Independent Office. This office would track real-time revenue, handle disbursements based on approved budgets, and hold a contingency reserve of 10-25% of the capital budget, deployable only in the last quarter and only if revenue targets are met. I know that independent agencies in Nigeria are rarely that, but the process must be put in motion nonetheless.
Second, we can all agree that the current envelope system has failed. What we need to do is create a transparent ranking process. The Ministry of Budget should sit with each MDA and rank every capital project by importance – socio-economic returns, alignment with national priorities, readiness for implementation. Fund only the top tier. As per freedom of information and for transparency and accountability, the rankings should be published with their justifications.
Third, subsume all agency budgets under their supervising ministries. Only the Minister defends the consolidated budget.
Fourth, adopt the five-year rule. Any project that has remained largely unfunded for five consecutive years is automatically deleted. No more zombie projects cluttering the budget and creating false hope.
Fifth, protect large ongoing projects from political turnover. Require a formal National Assembly vote and full cost disclosure before any major project can be cancelled. And reserve 30% of the capital budget as a continuity pool for projects inherited from previous administrations.
If these are implemented, we will have a cleaner, leaner and more realistic budget process that will yield positive socio-economic outcomes. The current situation where trillions are approved when we know there will be no cash backing is not sustainable. We also cannot allow one unelected official to determine fund releases. We cannot let agencies run circles around their supervising ministries. We cannot keep rolling over unfunded projects year after year. And we cannot abandon partially built billion-naira projects every time a new government takes office.
The National Assembly must go beyond strictly the current oversight functions. It must pass the reforms. Create the Independent Budget Office. Enforce the five-year rule. Protect ongoing projects. And let the Minister of Budget and Planning be the single, accountable voice speaking to Nigerians about their money.
While this analysis has focused on the national government, the same dysfunction is mirrored at the sub-national level, often with even more devastating effects. Reform is not optional; it is overdue.
balamliman@gmail.com
