1 EFFECTSOF DEFENCE FUNDING AND OPERATIONAL READINESS OF THE NIGERIAN ARMY 21. Defence funding is a unique challenge for the Nigerian Army (NA). Identifying a fair and efficient manner for how funds are budgeted and allocated is the main problem. The following paragraphs discuss these issues. NATIONAL DEFENCE POLICY

22. Nations typically allocate funds for defence in an annual budget. Nigeria’s national budgetary framework provides funding according to the needs evinced by the country’s various economic sectors. Defence has only received a bare minimum of funding for this reason. As Annex D indicates, less than 1% of GDP goes to defence, which is well under the NDP’s recommendation of 1.5% to 3%.[endnoteRef:2] As a result, the NA is underfunded. [2: . Federal Republic of Nigeria, National Defence Policy, p.59.]

23. The NDP guides the NA in practical aspects. The problem is that the NDP is so little consulted when the budget for defence is set.[endnoteRef:3] Following the NDP’s guidance would help to ensure that the NA is properly operational.[endnoteRef:4] As the system is currently constructed, defence must fight for funds alongside other sectors of the economy as though all sectors were of equal value or importance. [3: . AO Adetoyo, Former Chief of Accounts and Budget, Army Headquarters,NAFC, Abuja, Interviewed on “Defence Funding and Operational Readiness: An Appraisal of the Nigerian Army”, on 9 Feb 16.] [4: . Ibid.]

24. Adeniran argued that the NDP is not a legal document and therefore carries no weight in terms of how the government should fund defence.[endnoteRef:5] To correct this situation, the NDP should be given legal authority by the NASS. This would aid the proper allocation of funds to the NA. [5: . AI Adeniran, Assistant Director, Budget Office of the Federation, Abuja, Interviewed on “Defence Funding and Operational Readiness: An Appraisal of the Nigerian Army”, on 18 Mar 16.] SECTORAL BUDGETARY ALLOCATION TO DEFENCE

25. GDP sets the stage for sectoral budgetary allocation. In other words, the size of GDP will impact the amount of funding available for each sector. In Nigeria, health and education are viewed as the most important sectors.[endnoteRef:6] Defence is not viewed on the same level and thus does not receive top priority. [6: . AA Onochie, Director Federal Ministry of Finance, Abuja, Interviewed on “Defence Funding and Operational Readiness: An Appraisal of the Nigerian Army”, on 17 Mar 16.]

26. The lack of recognition and appreciation for what the NA does to effect security for the state is troubling. Security threats are rampant and the NA must be able to face them effectively.[endnoteRef:7] Yet, the NA is consistently plagued by problems such as having unserviceable equipment. Without adequate funding, defence equipment is at risk of being non-operational. [7: . Nigerian Defense Spending—How it Undermines Insurgency War, (2/9/2014), , accessed 5 Jan 16.]

27. The funding the NA receives does not in any way reflect its actual worth. From 2009 to 2016, the NA was the least funded of the 3 military branches. For that reason, the NA cannot update or properly service...

FO Alli,Former Chief of Training and Operations, Nigerian Army, Interviewed on “Defence Funding and Operational Readiness: An Appraisal of the Nigerian Army”, on9 Dec 15. ] FUND DISBURSEMENT
28. Fund disbursement to different MDAs is determined by budgetary appropriations. In Nigeria, funding is essentially ruled by the goals of the FGN.[endnoteRef:9] As such, the Federal Ministry of Finance (FMF) plays an overseeing role on a monthly basis. [9: . AA Onochie, Op. Cit.]

29. In 2007, the FGN established the Bureau of Public Procurement (BPP) for the sake of promoting transparency, accountability and efficient use of funds.[endnoteRef:10] The BPP must approve all capital projects before funding can be granted.[endnoteRef:11] Because of delays in the Bureau, not all funds are allocated by the end of the year. Personnel funding is typically approved—but funding for overhead and extra capital is routinely delayed, which especially impacts and the NA, hinders its ability to be fully operational, and adds risk to the state’s security. Annex F and Annex G provide figures on this problem. [10: . BI Hassan, Assistant Director, Budget Office of the Federation, Abuja, Interviewed on “Defence Funding and Operational Readiness: An Appraisal of the Nigerian Army”, on 18 May 16.] [11: . Ibid.]

30. It is also important to note that the MKT states that in an economic downturn, the government should increase funding for defence. The reasoning for this is that a multiplier effect would occur. Aggregate demand would be stimulated and the economy would begin to grow again.

31. Adetayo has pointed out that when capital is not fully released, projects cannot go forward.[endnoteRef:12] Hassan has noted that falling government revenue is the problem for shortcomings in the budget.[endnoteRef:13] Regardless of the source of the problem, fund disbursement in Nigeria is a major issue for defence operations. [12: . AO Adetayo, Op. Cit.] [13: . BI Hassan, Op. Cit.] BUDGETARY SYSTEM

32. Nigeria utilizes an incremental budgetary system (IBS). The problem with this system is that it has no mechanism for considering an alteration in a nation’s circumstances. Another problem is that unspent funds must be returned at the conclusion of each year. The Medium-Term Sector Strategy (MTSS) was introduced in 2005 and obliges MDAs to plan for three years out with clear objectives defined, in accordance with the FGN. As a result, every MDA is capped in terms of funding, which only further handicaps the NA.[endnoteRef:14] [14: . Ibid.]

33. Within the IBS, the NA cannot maximize its potential or achieve its priorities. The budgetary needs of the NA are based on actual programmes, threat assessments and security issues faced by the state. They are not imaginary or superfluous. As a result of the constricting IBS, and as indicated in Annex G, NA capital budget allocation has fallen short of its proposal year over year, causing a gap between the amount of resources at the ready and a ready NA. And while the FGN allows for extra-budgetary allocation to the NA when security issues demand it, the FGN has routinely engaged in…