Impact of Medium-Term Expenditure Framework on Budget Implementation in Nigeria

Abstract

This paper examines the impact of Medium-Term Expenditure Framework (MTEF) on Budget Implementation in Nigeria. The research work studied the implementation of annual budget prior to (1994-2004) and after (2006-2016) the adoption of MTEF in 2005. Secondary data gathered from numerous sources including the Central Bank of Nigeria, Budget Office of the Federation, Federal Ministry of Finance, Office of the Accountant-General of the Federation, National Bureau of Statistics, Fiscal Responsibility Commission, were utilized. MTEF was utilized as the independent variable which was proxied by Federal capital budgets while budget implementation was utilized as the dependent variable which was proxied by actual capital expenditure. Correlation analysis was employed in analyzing the data collected, through the instrumentality of PSPP statistical software. Based on the outcome of pre-MTEF and post-MTEF statistical analysis, the research concludes that the adoption of MTEF has not significantly impacted budget implementation in Nigeria. For the correlation coefficient, in as much as the two periods revealed a positive relationship between actual expenditure and budgeted expenditure, post-MTEF relationship (r = 0.3452) indicated a weak position compared to pre-MTEF relationship (r = 0.5922) which is relatively strong. To further validate this position, the average percentage of actual capital expenditure to budgeted capital expenditure for post-MTEF is 77.20% as against pre-MTEF which has 197.5%. The study therefore recommended that the procurement cycle for public procurement as enshrined in the Public Procurement Act (PPA) should be reviewed and amended to a maximum of four weeks. This is possible if technology is incorporated into the procurement processes; the meager percentage of mobilization fees advanced to contractors for government awarded contracts should be reviewed and increase to at least fifty percent (50%) of the contract sum; and the appropriation act should be accompanied with key performance indicators (KPIs) that members of the public and other stakeholders can hold the government accountable to.