The Impact of Zero-Based Budgeting on Public Financial Management in Nigeria: A Study of Ogun State Government
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Background of the Study
Public financial management (PFM) is a cornerstone of governance, ensuring the efficient and effective use of public resources. In recent years, zero-based budgeting (ZBB) has emerged as a transformative approach to address the challenges of traditional budgeting methods. Unlike incremental budgeting, ZBB requires organizations to justify all expenses for each new period, promoting accountability and cost-effectiveness. In Nigeria, the adoption of ZBB has been sporadic, with some state governments attempting to integrate the approach into their financial management systems.
Ogun State represents a critical case for studying the impact of ZBB on PFM. As one of Nigeria’s rapidly industrializing states, Ogun faces significant financial demands to support infrastructure, education, and healthcare development. Despite its economic potential, the state’s budgeting practices have been criticized for inefficiencies and lack of transparency (Ogunlana et al., 2023). The introduction of ZBB in Ogun State aimed to address these issues by ensuring that expenditures are aligned with strategic priorities and that resource wastage is minimized.
Globally, ZBB has been praised for its ability to improve resource allocation, but its implementation requires significant capacity, planning, and stakeholder involvement (Adeoye, 2024). This study seeks to assess the extent to which ZBB has impacted public financial management in Ogun State, examining its benefits, challenges, and overall effectiveness in achieving fiscal responsibility.
Statement of the Problem
Traditional budgeting methods in Ogun State have led to recurring issues of inefficiency, mismanagement, and misallocation of public funds. Incremental budgeting, which has dominated the state's financial management practices, often perpetuates inefficiencies by carrying over unnecessary expenses from previous years (Ademola, 2024). This has resulted in a mismatch between budgetary allocations and the actual developmental needs of the state.
The adoption of ZBB was expected to transform Ogun State’s public financial management by promoting transparency and aligning expenditures with strategic objectives. However, its implementation has faced significant challenges, including limited capacity of government officials, resistance to change, and inadequate stakeholder engagement. Critics argue that while ZBB offers theoretical advantages, its practical application in Ogun State has been hindered by systemic issues such as corruption and lack of political will (Oluwaseun, 2023).
This study aims to address these concerns by evaluating the actual impact of ZBB on public financial management in Ogun State, identifying key challenges, and proposing solutions to enhance its effectiveness.
Objectives of the Study
- To assess the impact of zero-based budgeting on public financial management in Ogun State.
- To identify challenges affecting the implementation of ZBB in Ogun State.
- To recommend strategies for improving the effectiveness of ZBB in public financial management.
Research Questions
- What is the impact of zero-based budgeting on public financial management in Ogun State?
- What are the major challenges affecting the implementation of ZBB in Ogun State?
- What strategies can be adopted to improve the effectiveness of ZBB in Ogun State?
Research Hypotheses
- Zero-based budgeting has significantly improved public financial management in Ogun State.
- The implementation of ZBB in Ogun State is hindered by challenges such as capacity limitations and resistance to change.
- Enhancing stakeholder engagement can improve the effectiveness of ZBB in Ogun State.
Scope and Limitations of the Study
This study focuses on evaluating the impact of zero-based budgeting on public financial management in Ogun State, Nigeria. It will analyze the implementation process, benefits, and challenges associated with ZBB. However, the study is limited by its reliance on secondary data and potential resistance from public officials to provide accurate information.
Definitions of Terms
- Zero-Based Budgeting (ZBB): A budgeting approach that requires organizations to justify all expenses for each budget period, starting from a “zero base.”
- Public Financial Management (PFM): Processes and systems used to plan, allocate, and control public financial resources.
- Incremental Budgeting: A traditional budgeting method that adjusts the previous year’s budget without extensive re-evaluation.
- Stakeholder Engagement: Involvement of all relevant parties, including citizens and organizations, in the decision-making process.
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