BUDGETING AS A PLANNING AND CONTROL TECHNIQUES FOR ECONOMIC DEVELOPMENT IN KOGI STATE

BUDGETING AS A PLANNING AND CONTROL TECHNIQUES FOR ECONOMIC DEVELOPMENT IN KOGI STATE

CHAPTER ONE
INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Budgeting as an instrument of planning and control techniques is very important in the thinking of modern government and also with economist.

Government budgeting means the procedure for the planning, authorization and the control of government expenditure, so as to adjust it to the expected volume of revenue. Budgeting is aimed to achieve greatest efficiency and economy in government operation. The term budget has been defined by various individuals, scholars, authors, and authorities.

T. Lucey (1993), defines budget ‘’as a quantitative expression of a plan of action prepared in advance of the period to which it relates’’. Budget may be prepared for financial resources item such as cash capital expenditure, manpower and purchase. This process of process of preparing budgets is a means of translating the over all objective of the government into detailed feasible plan of action.

According to Kwaghafan (1990) defined budget as ‘’ a plan quantified in monetary terms, prepared and approval prior to a defined period of time, usually showing planned income to be generated or expenditure to be incurred during that period and the capital to be employed to attain a given objective.

Budget is also defined as ‘’a detailed statement of a government expected expenditure and revenue’’. Expenditure and revenue decisions are made on the preparation of the budget. In other words, it is a programme or plan for government activities over a designated fiscal period. It includes the various activities upon which public authorities propose to spend revenue. It can also be defined as a document which provides a period of expenditure actually made and revenue really collected.

Budget therefore, can be defined as a political and administration techniques/instrument by which executive and legislature bodies endeavour to allocate scarce resources between the pubic and private sector of the economy. The budget shows both the sources and the proposed uses of government revenue.

The classical economists are strongly against the coming of the government to regulate the affairs of the state. They contended that this should be left to the free market economy. They contend, that government should only maintain the law and order in the state, but this is not enough because we have seen from the definition of what budget is, therefore, there is need for planning ahead. Budget help government to know the amount to spend and also the amount to be generated. Budget is very necessary in any economy starting right from individual up to the government level. (These is the Ndeckson Ibrahim Ali, June 1989).

Budget also performs the basic concept of being an instrument/techniques of the economic and social policy. It serves as a tool for planning, evaluating and communication. The aim of the government budgeting is to achieve some specific goals. These goals are under here listed as;

i. Raising revenue through taxation from the federation account to financial government expenditure

ii. To reduce unemployment by increasing areas of production

iii. To re-distribute income so as to reduce the wide-gap between the rich and poor

iv. To maintain price stability

v. To show management the action needed to remedy a situation of derivating from the plan.

vi. To supply information on the basis of which the necessary corrective measures may be taken

Having seen what budget is, the need for budget and its function, we can not talk of the types of budget, budget as a planning and control techniques for economic development in Kogi state in the later chapter.
In relation to this topic budget can be defined simply, as ‘’the plan which coordinates the resources available to the government and a tool for management direction and control of the work which an agency plans to do.

1.2 STATEMENT OF PROBLEM

The research statement is to find out budgeting has been used as means of planning and control techniques for economic development in Kogi State.

To find out whether budgeting has really helped in economic development of the state and if it has done so in which ways and which sector of the economy.

The study will also find out whey government fails to achieve her objectives or purposes at the end of each budgeting year. At the end of this research, we shall identify some of this problems and then recommend some useful remedies.

1.3 OBJECTIVES OF THE STUDY

The primary objective of this study is to examine budgeting as a tool for planning and development in Kogi State which are:

i. To examine the budgeting structure of Kogi State as a case study to analyzed the performance of the state budgeting allocations

ii. The study is also aimed at examining the major developments in the state within the period of ten years (2000-2010)

iii. To find out whether government has been able to achieve its purpose of planning and control techniques for economic development

iv. To recommend factors to be considered when formulating budgets.

1.4 SIGNIFICANCE OF THE STUDY

At the end of this study, the researcher is of the opinion that the following contributions will be made:

i. It will show government the importance of budgeting as an economy, both vertically and horizontal method, of communication and co-ordination.

ii. It will provide clear guidelines for government to surprise and measure ways in which her objectives can be translated into specific task and such objectives related to individual citizens.

iii. It will highlight the major importance behind an effective budgetary system

iv. It will also identify the straight and weakness of the government in her budgetary process and how such weakness can be corrected. This will ensure effectiveness and efficiency in the government budget and its implementation.

1.5 RESEARCH QUESTIONS

For the purpose of this study, the following questions have been asked:

i. To what extent has planning and control techniques lead to economic development in the state?

ii. What is the impact of planning and control techniques in Kogi State development?

iii. To what extent does planning and control techniques meet desired purpose?

1.6 STATEMENT OF HYPOTHESIS

The fundamental problems of research work is the test of hypothesis about a population. Hypothesis is says Walpole (1979:91) ‘’assumption of statement which may be true or may not be true concerning one population it is a suggested solution to a problem under investigation. We have two types of hypothesis, these are;

a. Null hypothesis and
b. Alternative hypothesis

Ho: There is no relationship between planning and control

Hi: There is relationship between planning and control

Ho: Budgeting as a planning and control techniques can aid economic development in Kogi State

Hi: Budgeting as a planning and control techniques can not aid economic development in Kogi State

1.7 SCOPE OF THE STUDY

This study is limited to budgeting as a planning and control techniques for economic development in Kogi State.

Some other factors that limit the researcher is made of financial to enable me go extra-notes in the study. And in willingness of respondents to supply you with adequate data.

1.8 LIMITATIONS TO THE STUDY

Hardly can there be a research work, no matter how good it may seem without limitations. And as such, this can not be an exception. In the process of carrying out this research work, some factors limited further work some of these factors area;

a. Some information and documents needed for this work were classified confidential and there were withheld.

b. The requirement of other competing academic workload and a rather tight deadline with which to be undertaken.

c. The reaction of certain respondents who refuses to give coherent answers to one questions were part of the challenges faced.

d. Secrecy: Paramount of all limitations is the inability of the researcher to lay hand on some vital information and the process involved in getting some information at the final stage was tedious.

What was later available during the research work was nothing more than a few documents and records and also verbal explanations through personal interaction with some of the staff.

1.9 DEFINITION OF KEY CONCEPTS OR RELEVANT TERMS

There are many ways in which a particular word can be used. The ambiguity of such words makes the individual reader confused. The realization of this makes the clarification of concept very important.
The following are the list and definitions of likely term that can be found in budgeting system.

CONTROL:

This is the process of comparing actual results and reporting on the variation.

PLANNING:

This is the establishment of objective and formulation, evaluating and selection of policies actions and strategies in which the objectives can be achieved.

BUDGETARY CONTROL:

Is the establishment of budgets relating the responsibilities of executive to the requirements of a policy, and continuous comparison of actual with budget result.

BUDGET:

Is the formulation of plans for a given future period in financial term

PLANNING AND CONTROL:

Is about making plan for the future, implementing and monitoring the activities of the plans to know whether to conform

COMMUNICATION:

This is the process by which the top and middle management communicate, that is transfer ideas, regarding to the firms and transfer the agreed to al staff involved.

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