Every individual or organization have or runs on a budget. Looking at it from the literal point of view, a budget is a defined standard that determines how much a person or organization want to spend of particular projects. In this post we shall be looking at the various types of government budget in Nigeria and the importance of a government budget.

Before you reed further, it is also important for you to note that the types of government budget you will find in this post, are the ones that can be implemented constitutionally in the Federal Republic of Nigeria. In this post, you will get to see the factors that determines a budget as well as the possible benefits of a government budget in Nigeria.

Also read: Constitutional Democracy: Definition, Features and Advantages

Before you move into such details, let me show you what a government budget is all about.

Types of Government Budget in Nigeria and Their Importance

What is a Budget?

A government budget is a document prepared by the government (most times, the office of the President) or other political entities, presenting the expected estimated revenues, and proposed ways or formula for the spending of the money.

In Nigeria, the President (or the Vice President, if he is unavoidable absent) presents the budget to a joint session of the National Assembly.

He is also expected to make a speech to the legislature, where he has to justify the presented budget, point out the key areas of focus, and explain the reasons behind his choice of those areas of focus.  After that ceremony, the National Assembly will need some time to review the budget, and then approve it, or make recommendations for amendments. Often, when the president has made the appropriate changes and sends the document back to the National Assembly, it is then approved and so disbursement of funds to the various parastatals and agencies can commence.

Must read: Complete List of Nigerian Senators of the 9th National Assembly (2019 – 2023)

What are the Factors that Determines a Budget?

The two major factors that determines a budget are; the revenues and the expenses.

In the case of the Nigerian government, revenues are derived primarily from oil, and so the price of oil or the projected price of oil is a key factor that is put into consideration.

Types of Government Budget In Nigeria

The types of Government budget in Nigeria as listed and explained below. Please note that in a single financial year, more than one kind of budget can be implemented.

Union Budget

This should perhaps more aptly be called the National Budget. Anyway, the union budget is the budget prepared by the central government or federal government for the country as a whole. This budget can have a different key focus every year, depending on the particular needs of the country at a given time.

State Budget

The state also has its own needs which may be different from that of the federal government, and so the office of the governor may prepare a budget, outlining the state’s needs, revenue, and expenditure.

Plan Budget

It is a special document showing the budgetary provisions that the government has made for important projects, programs, and schemes which are urgent, and are included in the central plan of the country.

Performance Budget

The individual ministries, agencies and departments dealing with development activities must also prepare performance budgets, which are circulated to members of the National Assembly. These performance budgets present the main projects, programmes and activities of the ministry or parastatal, and are intended to justify the allocation given to them.

Also read: Top 5 Highest Paying Government Agencies in Nigeria (Updated)

Supplementary Budget

This, made by the Federal Government is a budget that intends to make more money available for disbursement to the various ministries and agencies and parastatal, perhaps owing to the government has exceeded its revenue forecast or projection.

Zero-based Budget

This kind of system is defined as the budgetary process which requires each ministry/department to justify its entire budget in greater detail. It is a system of the budget in which all government expenditures for the previous year must be justified so as to allow for a similar amount for the new period.

Need and Importance Of A Government Budget

The need and importance of government budget in Nigeria are highlighted below:

  • A planned approach to government’s activities: Without a budget, it would seem as if the government was just spending blindly without any real plan for the future, or any direction for sustainable development. A budget connotes stability and a deliberate, intentional approach to governance.
  • An integrated approach to fiscal operations: Instead of each ministry spending anonymously, the budget brings them all together like a family, all working for a common interest, the development, and upliftment of the People of Nigeria.
  • Affecting economic activities: When the budget is passed and the money is disbursed, you will find that there is money flowing all over the economy. Parastatals will engage contractors and hire workers to carry out capital projects, and those workers too will contribute to the buying and selling of the country, thus boosting the economy.
  • The instrument of economics policy: The budget, especially the part that researches the expected revenues helps the government to fashion out policies that can help bring development and stability. For example, when the government sees that it is dependent on oil exports, it can make efforts to diversify the economy.
  • Index of government’s functioning: If anybody wanted to research in detail how the Nigerian government or any government for that matter is run, a good place to start would be the Budget.
  • Public accountability: A Budget is a good tool for ensuring accountability in government. This is because the government thus makes a paper trail that can help in investigating any alleged misappropriation of funds. If a president or member of the cabinet stands accused of corruption, he has only to make a reference to the budget in order to clear his name.
  • Allocation of resources: Resources are scares, and so it is certainly stupid to spend unwisely. A budget helps to encourage the government to make the wise and purposeful allocation of available resources.
  • Elimination of poverty: The ultimate goal of the budgetary and planning office should be to eliminate poverty in Nigeria. Money cannot be handed out to citizens, but capital projects and infrastructure can be put in place that can create an enabling environment for the citizens to prosper.
  • Reduce inequality in the distribution of income: The budget and planning office can see early signs that the resources available are inequitably distributed, and can make concerted efforts to correct this anomaly before it produces terrible consequences in the country. Some of the consequences that can be produced by an unequal distribution of resources throughout the country are that such a system can lead to protests and riots, as the youth in the affected areas can quickly become restless, and threaten not just the peace of the country but the national unity as well. Remember that Nigeria is made up of many different tribes, some of whom have a long history of disaffection with one another, and who suspect each other of conspiring to disenfranchise them perpetually. Some sections of the country have also been clamoring for separation or secession for a very long time. So equitable distribution of resources is important.


If you have read to this point, I guess you might have getting yourself acquainted with the types of government budget in Nigeria. Also you might have come across the meaning of a budget, and also the need and importance. If you want to get more facts about Nigeria delivered right into your email address, you can easily subscribe to this site.