Financing Federal Government Expenditure in Nigeria (1980 - 2003)

ABSTRACT

This study seeks to assess the relationship between various sources of finances available to the Federal Government of Nigeria and her expenditure pattern. This study was carried out using secondary data collected from the Central Bank of Nigeria’s Statistical Bulletins and her Annual Reports for the period 1980 to 2003. The contributions of the various sources of finance were compared with the total expenditure. From the findings of this study, strong and significant relationships exist between the various components of federal government financing and her total expenditure profile, except for one variable – external grants received by the federal government. While the capital expenditure of the federal government has been significantly financed through dedicated accounts / special funds, federal government independently generated revenue and external loans; her recurrent expenditure needs were financed by allocation from federation accounts, internal loans and dedicated accounts / special funds. The outcome of this study has shown that the federal government of Nigeria does not generate enough funds to finance her expenditure profile. This deficit, she augments through external and internal loans. Based on the findings, several recommendations were made, the major ones being that there is a need to diversify our economy and change the revenue structure of the federal government. This must become significantly based on domestic production activities in contrast to the ages long dependence on export of primary commodities (be they agricultural commodities or crude oil).

Again, the level and composition of public expenditure should form an integral part of the macro economic framework of reform measures.
Perhaps, this could be the best way forward!