An evaluation of zero-based budgeting in Nigerian public institutions: A study of Lagos State Government
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Background of the Study
Zero-based budgeting (ZBB) is a budgeting approach that requires all expenses to be justified from scratch for each new budget period, as opposed to traditional budgeting, which typically only requires justification for incremental changes (Ogunfowora & Taiwo, 2023). The ZBB approach contrasts with conventional budgeting practices by eliminating the assumption that previous expenditures should automatically carry over to the next budget cycle. This method has been increasingly adopted by both private and public organizations as a tool for ensuring resource allocation is based on current needs rather than historical spending patterns (Alhaji & Oduwole, 2024).
In the Nigerian public sector, the need for more transparent, efficient, and effective financial management has become more pressing due to economic volatility and corruption concerns. The Lagos State Government, as one of Nigeria’s most economically significant regions, presents an ideal case study for the examination of ZBB’s impact on public budgeting and expenditure control. Lagos, with a population exceeding 20 million, faces significant challenges in managing public funds for infrastructural development, healthcare, education, and social services. The adoption of ZBB in such a dynamic environment could offer an opportunity to enhance financial accountability, optimize public spending, and improve service delivery (Ogunnaike, 2023).
Recent discussions on public financial management reform in Nigeria have highlighted ZBB as a promising alternative to traditional budget practices (Okafor, 2023). However, despite its potential advantages, there is limited empirical evidence evaluating the implementation and effectiveness of ZBB in Nigerian public institutions. While ZBB has been successfully used in several international contexts, its applicability to the unique economic and institutional conditions of Nigeria, especially in Lagos State, remains underexplored. The study aims to fill this gap by evaluating the implementation of ZBB in the Lagos State Government.
Statement of the Problem
The Nigerian public sector is grappling with inefficiency in resource allocation, corruption, and a lack of transparency in budgeting processes. Lagos State, despite its economic strength, faces similar challenges, making it imperative to explore alternative budgetary systems such as ZBB to improve financial management and service delivery. Though the Lagos State Government has shown interest in adopting ZBB, its actual effectiveness in transforming budgeting practices, controlling expenditures, and optimizing resource use remains uncertain.
The problem stems from the traditional method of incremental budgeting, which often results in wasteful spending and a lack of alignment between budgetary allocations and actual priorities. In this context, the challenge is to determine whether ZBB can effectively address these issues and enhance financial efficiency in the Lagos State Government. This study will critically evaluate the extent to which ZBB has been implemented, its impact on resource allocation, and the potential obstacles that have hindered its full adoption.
Objectives of the Study
- To assess the extent to which zero-based budgeting has been adopted in the Lagos State Government.
- To evaluate the effectiveness of ZBB in improving budgetary control and expenditure management in Lagos State.
- To identify the challenges associated with the implementation of ZBB in Lagos State.
Research Questions
- To what extent has zero-based budgeting been adopted by the Lagos State Government?
- How effective is zero-based budgeting in enhancing budgetary control and expenditure management in Lagos State?
- What challenges have impeded the full implementation of zero-based budgeting in Lagos State?
Research Hypotheses
- H₀: Zero-based budgeting has not been effectively adopted by the Lagos State Government.
- H₀: Zero-based budgeting does not significantly enhance budgetary control and expenditure management in Lagos State.
- H₀: There are no significant challenges in the implementation of zero-based budgeting in Lagos State.
Scope and Limitations of the Study
This study will focus on the Lagos State Government, specifically analyzing the implementation of zero-based budgeting in its various ministries and agencies. The research will be based on secondary data collected from government reports, budgeting documents, and interviews with key stakeholders. Limitations include the potential unavailability or inconsistency of relevant financial documents, the subjective nature of some interviews, and the challenge of accurately assessing the long-term impacts of ZBB within the short study period.
Definitions of Terms
- Zero-Based Budgeting (ZBB): A budgeting technique in which all expenses must be justified and approved for each new budgeting period, starting from a "zero base."
- Expenditure Management: The process of planning, controlling, and monitoring public spending to ensure that it aligns with budgetary constraints and priorities.
- Public Sector: Governmental organizations responsible for delivering public services and managing public funds.
- Budgeting System: A method by which financial resources are allocated and managed within an organization or government.
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