The Role of public sector budgets in growing an economy. Analytical assessment of Delta State budgets from 1996-2001 fiscal years

TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION
1.1 Overview
1.2 Brief History of Delta State – Nigeria
1.3 Statement of the Problem
1.4 Objectives of the Study
1.5 Research Questions
1.6 Statement of Hypotheses
1.7 Significance of the study
1.8 Scope of the study
1.9 Limitations to the study
1.10 Definition of Terms

CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Budget
2.1.1 Procedures for the preparation of Government Budget
2.1.2 Government Budgeting Models
2.2 Economic Growth
2.2.1 Features of Economic Growth
2.3 Economic Development
2.3.1 Objectives of Development
2.4 Theoretical Review

CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design
3.2. Sampling Procedures
3.3 Method of Data Collection
3.4. Method of Data Analysis
3.5 Validity of Research Instrument

CHAPTER FOUR: DATA ANALYSIS AND RESERCH FINDINGS
4.1 Research Questionnaire Distributed
4.2. Analysis of Questionnaire Returned
4.4. Test of Hypotheses
4.5 Discussion of Research Findings

CHAPTER FIVE: SUMMARY, CONCLUSION AN RECOMMENDATIONS

REFERENCES

The Role of Public Sector Budgets in Growing an Economy: Analytical Assessment of Delta State Government Budgets From 1996 – 2001 Fiscal Years.

Abstract

The study examined the role of public sector budgets in growing an economy; analytical assessment of Delta State government budgets from 1996-2001 fiscal years. The main objective of the study is to evaluate the effect of public sector budget on the economy. The study considered three major indices of economic growth- Capital projects, Per capita income and Worker’s productivity. Primary data were collected using questionnaire. Data were analyzed using frequency distribution tables and simple percentage and the three hypotheses were tested with the non parametric statistical tool, the chi-square. Finding showed that, Budgets had a positive and significant effect on capital expenditure as demonstrated by the results from test of hypotheses (c2> CV: 8.08> 3.841). It was also discovered that, budgets had a positive and significant effect on per capita income according to result from test of hypotheses (c2 > CV: 10.54 > 7.88). The study revealed that budgets had a positive relationship with worker’s productivity as shown by the result from test of hypotheses (c2 > CV; 5.66 > 3.841). The study concludes that budget affects the growth of an economy. Based on this, the study recommends that governments at all levels should formulate realistic budgets as economic blue-prints for growth and development of their economies.

Key Words: Public sector budget, Economic growth, Development, Delta State, Nigeria.

CHAPTER ONE: INTRODUCTION

1.1 Overview

The continent of Africa is endowed with abundant human and mineral resources. However, a disproportionate number of the population is impoverished. The notorious fact about Nigeria and particularly, Delta State on the projections of high hopes of developments and recovery from the consequences of colonization after independence are no longer valid. It is evident that’s, the Classical Richardian Model of development based on comparative advantage has not benefited developing countries. The old development of blue print has been replaced by self-reliance as the contemporary continental motif. The elusiveness of economic growth is a dynamic force that necessitates reconsideration of strategic development model for the continent (Aderinto & Ubah, 1998). The unrealizable growth in developing countries due to external dependence, has infused into modern democratic governments the necessity, viability and feasibility of formulating a documented plan which embodies the vision and mission for a stipulated period of time, normally a year. This intended, laudable and people – oriented vision, mission, and programmes are subsumed in a financial plan called Budget for a fiscal year. It is trite that modern governments cannot achieve their objectives without a workable budget which incorporates the variables needed to transform an economy and the sustenance of livelihood. Based on this premise, governments prepare budget which serves as a compass for piloting the affairs of the State in every fiscal year.

Anyanwu and Oaikhenam (1995) define government budget as a financial statement of proposed expenditure and expected income for a particular period of time. Pandey (1999) opines that, budgeting is a device to facilitate a well co-ordinate and decentralized decision – making. Oladeji (1982) defines budget as a financial statement of sources of revenue and uses of the government. He sees budget as an economic document that reveals the state of an economy. Obasanjo stated four broad objectives pillars that hold budget; alleviation of poverty through job creation, countries economic growth through mobilization and prudent use of resources, encouraging private sector participation and ensuring good governance through people oriented system (Vanguard, November 8, 2001).

Budget is seen as a deliberate plan for growth and development. Todaro (1977) canvasses that, growth is the increase in economy’s capacities to produce goods and services that improve the economic and social well-being of the people. Leonard (2000) defines economic growth as the sustained increase in per capita accumulated by increase in population through secreting structural changes.

On the other hand, World Bank defines economic development as that sustainable increase in living standards which encourages materials consumption, education, health and environmental protection. According to Schumpeterian model, development involves a discontinuous and spontaneous change in an economy which results to increase in productive and economic activities.

1.2 Brief History of Delta State – Nigeria.

Delta State is one of the 36 states in Nigeria. The state was created on August 27, 1991 by Ibrahim Babangida administration. It was carved out from the defunct Bendel State. At inception, the State had 12 local government areas that were increased to 25 by the Sani Abacha Military junta. Delta State has a population of 2, 570, 181 according to the 1991 provisional census figures and it comprises five major ethnic groups – Urhobo, Izon, Ibo, Itsekiri and Isoko. The State is rich in human, minerals and forest resources and contributes massive wealth to national unity, growth and development.

The State lies roughly between longitude 5000/ and 6045’ east and latitude 5000; and 6030’ north. It is bounded on the North by Edo State, on the North-West by Ondo, Anambra on the East and Bayelsa on the South-East. The Bight of Benin covers the southern flank (coastline) of the State. The State has plain land-scape. It is low-lying land without remarkable hills and wide coastal belt crisscrossed with rivulets, streams, rivers, seas and ocean. It is one the six States that make up the geo-political zone of the South-South with Asaba, the Capital Territory

1.3 Statement of the Problem

Successive governments in Delta State have prepared budgets, but, the citizens do not feel the impact of these budgets. This raison’ detre is generating agitation for good governance and people-oriented budgets in the State. The research work is focused on addressing the following problems;

How workable are the budgets prepared since 1996 – 2001? What is the impact of these budgets on the people and economy and ascertaining the percentage increase of one budget to the other and the reflection of this increase on the economy? Based on the above problem, the project seeks to examine the role of public sector budgeting in growing an economy: an analytical assessment of Delta State Government budgets from 1996 – 2001 fiscal years.

1.4 Objectives of the Study

The main objective of the study is to examine the role of public sector budgets in growing an economy. The specific purposes are;

i. To examine the effect of budgets on tangible capital projects
ii. To ascertain the effect of budgets on citizen’s productivity.
iii. To evaluate the effect of budgets on per capita income of the citizens.
iv. To proffer recommendations on budgets preparation and implementation.

1.5 Research Questions

The study considered the following questions

i. How has budgets affected tangible capital projects?
ii. What effect does budgets have on citizen’s productivity?
iii. How does budget affect per capita income of citizens?

1.6 Statement of Hypotheses

The study formulated three null hypotheses;

Ho; Budgets do not have positive significant effect on tangible capital projects.

Ho; Budgets do not have positive significant effect on worker’s productivity

Ho; Budgets do not have positive significant on per capita income of citizens

1.7 Significance of the study

The following were identified benefits and beneficiaries of the study.

i. Governments will appreciate the import of preparing and implementing a workable and people –oriented budgets.
ii. The private sector will be positively impacted through the implementation of functional budgets.
iii. Foreign investors will be attracted to Delta State through the execution of tangible capital projects.
iv. It will showcase the performance of Delta State government for the period of assessment.
v. The study will serve as a tool for policy formulation and data bank for future studies.

1.8 Scope of the study

The focus of the study is to examine the role of public sector budgets in growing an economy: an analytical assessment of the Delta State government budgets for 1996-2001 fiscal years. The research work was carried out in Delta State. Towns and citizens were randomly chosen from the three senatorial political districts of the State.

The study focused its assessment on 1996-2001 fiscal years. A period that combines budgets prepared during military and civilian governments. Data were collected from the Ministry of Finance, Planning and Statistics.

1.9 Limitations to the study

The study was constrained by the restriction of scope to selected towns and cities to represent the entire local government areas of the State. Assessment of 1996 – 2001 fiscal years budgets was done on tangible capital projects, per capita income and productivity of citizens.

1.10 Definition of Terms

Budget: A financial statement of the sources of income and uses of the government for a fiscal year.

Economic Growth: The increase of an economy’s capacities to produce goods and services that improves the standard of living of the people.

Economic Development: An entire transformation of an economy from a less desirable to a more desirable one.

Underdevelopment: An economic state characterized by incidence of poverty, ignorance or disease, misdistribution of national income, administrative incompetence and social disorganization.

Government: The body or institution which makes and enforces decisions that affect all members of the society or citizens of a State.

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Budget

Government budget is a detailed statement of estimates and sizes of anticipated revenue and proposed expenditure for a period of time, usually a year. Budget may be deficit or surplus. Deficit budget occurs when government plans to spend more than its revenue while surplus budget entails more revenue than expenses. Deficit budget is financed through borrowing (domestic or external). Domestic borrowing is done through sales of treasury bills and development stock by the central Bank of Nigeria (CBN) and debt retirement is done through the purchase of these financial instruments (Aderinto et al, 2000). The expenditure component of budget is divided into – recurrent and capital expenditure. Recurrent expenditure constitutes government spending on wages, salaries of civil and public servants, general maintenance of public services and properties. Capital expenditure entails investments in machinery and equipment, Housing, and other infrastructure (Aderinto et al, 2000).

The Chartered Institute of Management Accounting defines budget as a financial and quantitative statement, prepared and approved for a definite period of time. Anyanwu and Oaikhenam (1995) see government budget as a financial statement of government’s proposed expenditure and expected revenue during a particular period, usually for a fiscal year.

2.1.1 Procedures for the preparation of Government Budget.

The preparation of government budget takes the following procedures at the Federal, State and the Local government levels in Nigeria.

(a) The President in council;

Section 81 (1) of 1999 Constitution of the Federal Republic of Nigeria (FRN) states, that the president shall cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of federation for the next following year’. Section 81(2) states that ... shall be included in a bill to be known as an Appropriation Bill... Based on these sections of the Constitution, the President in council will consider the proposal sent by the Ministry of Budget and Planning with particular attention to

i. The state of the economy
ii. Initiatives of the National Assembly for the budget
iii. Expected revenue for the year
iv. Overall priorities for the country
v. Request and proposal of the ministries, departments and agencies (MDAs) departments and agencies (MDAs)
vi. Budget benchmark and ceilings

(b) The National Assembly

The draft Appropriation Bill will be presented to the Legislature for consideration and approval. Section 59 (2) of the 1999 Constitution of the FRN, states that, where an Appropriation Bill or a supplementary Bill in passed by one of the Houses within a period of two months from the commencement of a financial year, the President of the Senate shall within fourteen days, thereafter arrange for and convene a meeting of the Joint Finance Committee to examine the bill with a view to resolving the differences between the two houses (the Senate and House of Representatives).

(c) Presidential Assent

After the consideration of the bill by the National Assembly, the bill will be passed to the President for his approval and assent.

2.1.2 Government Budgeting Models

The following are tested budgetary techniques used by governments (Jhingan, 1985);

i. Incremental budgeting (Input-Oriented)
ii. Programme budgeting
iii. Performance budgeting
iv. Programme – Performance budgeting
v. Planning – programming budgeting
vi. Zero –Based budgeting.

Incremental Budgeting

It is also known as traditional or conventional budgeting. Incremental budgeting is an input oriented budgetary process where costs are passed on objects of expenditure. The technique is based on the principle of increment which accepts the existing base and examines the marginal increments for the future.

Programme Budgeting

This budgeting technique is based on character and object. It focuses on public services or programmes. Programme budgeting requires the development of appropriate programme structured in hierarchy according to ministries, departments and agencies (MDAs)

Performance Budgeting

In performance budgeting, expenditures are based on measurable performance of activities and work programmes. It involves different basis of expenditure – character, object, however, is subordinate status to activity performance.

Programme and Performance Budgeting

It is the combination of performance and programme budgeting techniques. It attempts to take the best of the merits of both budgeting models. Programme and performance budgeting models enhance clear formulation, presentation, control and management of government operations.

Planning – Programming Budgeting.

It seeks the integration of planning, programming, control and accounting mechanisms to achieve goals. Accountability is a deliberate policy of government to hold ministries, departments and agencies responsible for the production, distribution of goods and services , formal-administration and execution of delegated functions.

Zero – Based Budgeting

Zero – based budgeting (ZBB) is a formalized system of budgeting for the activities of enterprises as if each activity is being performed for the first time. The zero-based budgeting technique estimates every function from scratch with no regard for historical levels of expenditure. ZBB was first introduced as Texas instrument in the United States of America by Peter. A. Phyrr in 1969.

2.1.3. Purposes and Uses of Budget in Government.

Purposes

i. An economic document aimed at promoting economic growth, employment and development
ii. For equitable allocation of resources
iii. A request for the collection and disbursement of state fund
iv. A blue –print showing how available funds would be spend on programmes and projects.

Uses

The uses of budget are for planning, communication, motivations, standard of measuring performance, evaluation and economic and social policy.

2.2 Economic Growth

Leonard (2000) and Gerald (1976) considered economic growth under three stands – measurement of growth from the nominal perspective, real magnitude and per capital values.

Nominal Measurement of Growth

It is the crudest measure of the concept because it did not match expenditure with real value output in the referenced period. Economic growth is seen as the increase in current value prices of aggregate product. It is based on evaluation of behavioral trend of aggregate expenditure for period of time.

Real Output Measurement of Economic Growth

An economy is deemed to have grown in real terms when there is an increase in aggregate output at constant price overtime. Aggregate expenditure is matched by aggregate increase in real output by appropriate price index to obtain the corresponding magnitude.

Growth Measured in Per Capita Values

An economy is witnessing economic growth if there is an increase in per capita output at constant prices overtime. Per capita value is achieved by dividing the increase in real output by the number of people among whom it is to be shared. Leonard (2000) affirms that growth per capita product and population have linear relationship. High rate of increase in total factor characterize modern economic growth. Total factor productivity means the sum of output per unit of all resources employed in the production process.

2.2.1 Features of Economic Growth

Kuznet (1971), Dudley (1869) and Hugh (1976) agreed on the following features of economic growth in a developed nation;

i. High rate of growth in per capita output and population
ii. High rate of increase in total factor productivity (labour)
iii. High rate of structural transformation of the economy
iv. High rate of social and ideological transformation
v. Developed nation reaches out to the rest of the world for markets and raw materials

2.3 Economic Development

Economic growth leads to the development of an economy. Leonard (2000) opines that, some persons are confused about the distinguishing line between the phrases economic growth and economic development. The author argued that lack of development is associated with less developed countries while aspiration for sustainable economic growth is for developed countries. Development is structural in orientation it connotes increase in economic, political and civil right of the people in a countries. Schumpeterian model defines development as a discontinuous and spontaneous change in the stationary state which alters the equilibrium existing state. According to Professor Bonne’s postulation, development requires direction, regulation and guidance to generate expansion and sustaining it. Governments in less developed countries (LDC) establish ministries of economic planning to engender the development of their countries.

2.3.1 Objectives of Development

Todaro (1982) and Goulet (1971) identified the following objectives of development;

i. To increase the availability and distribution of basic life sustaining goods – food, shelter, health etc to citizens of a country
ii. To raise levels of living standard through provision of Jobs, education and infrastructures
iii. To expand the range of economic and social choice to the members of the society.

2.4 Theoretical Review

Scholars have propounded several theories on economic growth and development and had advanced or worked against the growth of developing nations in the world. They identified economic growth as one of the macro-economic goals of the society (Leonard, 2000). Interests in the studies on growth was caused by the publication of keynes’ General Theory of Employment, Interest and Money in 1936 and the struggle to overcome the devastating effects of the Second World War (SWW) on war ravaged economies. Keynes argued that economic stagnation and unemployment were the deficiencies of aggregate effective demand. He states that to grow the economy, aggregate demand and government’s expenditure have to be expanded through deliberate policy instrument. The ideas of Keynes were emphasized on by Mahbud (1971) while propounding his theory on Employment and Income.

On the other hand, it was observed by Amartya in (Leonard, 2000) that growth was first reviewed slowly and then by leaps and bounds. This was as a result of practical concern for growth after the Second World War (Anyanwu & Oaikhenam, 1995). Leonard (20002) argued that every nation wants development. He also pointed out that economic progress is an inextricable component of development. Aderinto (1998) also canvasses that though development is defined in natural context its wide spread application necessitates fundamental modification of international, economic and social system.

From the foregoing, policy instrument plays key roles in advancing the ideas of economic growth and development of a nation. Budgeting for economic growth is the function of the Central government. It is a deliberate policy of the government to grow the economy. This can be done through an expansionary fiscal policy and deficit budget. With the immense practical intention to develop an economy the onus is on the government especially developing countries to mobilize human and economic resources through a policy instrument. This argument portrays that budget is a major instrument that enhances good governance due the thorough preparation procedures through its passage by the National/State Houses of Assemblies and final approval/assent by the President.

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design

According to Abdullah and Levine (1929) research design is not a specific method of data collection but a fundamental question on how the study will be employed to achieve required data. Nachmias and Nachmias (1976) define research design as a model of proof that allows the researcher to draw inferences concerning causal relations among the variables under investigation

The study employed the cross–sectional survey research design. This is because it involves selecting samples of elements from the population of interest and measures at a single point in time.

3.2. Sampling Procedures

The population of the study is the entire population of Delta State, categorized into Central Senatorial District, Southern Senatorial District and Northern Senatorial District. By applying the principle of simple random technique, one local government each was chosen from the three Senatorial Districts of Delta State. The Ministries of Finance and Economic Planning were also chosen based on their cardinal relationship to the data collection. A sample size of 100 represents was selected through Census Sampling on the basis of convenient.

3.3 Method of Data Collection

The study collected both primary and secondary data. Primary data were gathered through the use of questionnaire. Copies of questionnaires were distributed to the 100 respondents. Secondary data were sourced from the official records of the three selected Local Governments Councils, Ministries of Finance and Economic Planning, books and Newspapers.

3.4. Method of Data Analysis

Data were analyzed using frequency distribution table/percentage and the Chi-square formula was used to test the three hypotheses. Budget extracts from 1996 to 2001 were explained using tables, bar chart and graph.

According to Tull (1926) , the Chi – square formula is as follows

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Decision Rule

The null hypotheses (Ho) will be accepted if the computed value of c2 is less than the critical value, at the given degree of freedom and/or otherwise, it will be rejected and the alternative hypotheses (Hi) will be accepted.

3.5 Validity of Research Instrument

The questionnaire was validated using content validity. Both face and sample validity techniques were employed to ensure the appropriateness of the questionnaire to the study. The questionnaire was also cross examined by the supervisor.

CHAPTER FOUR: DATA ANALYSIS AND RESERCH FINDINGS

4.1 Research Questionnaire Distributed

Copies of questionnaire were distributed to the three local government councils and the Ministries of Finance and Economic Planning of Delta State.

Table 4.1.1 ; Questionnaire Distributed

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Source; Researcher’s compilation, 2001

Tables 4.1.1 indicated the number of questionnaires returned in the proportion of administration.

4.2. Analysis of Questionnaire Returned

Question 1; capital projects embarked on and completed within 1996 – 2001 fiscal year

Table 4.2.1; Capital Projects

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Source Researcher’s compilation, 2001

Table 4.2.1 showed that, pipe Borne water project had total of 30 (35%) , road construction had 20 (33%) while electricity schools and Health centre projects had 10 (12%) each of the numbers of capital projects completed by the Delta state government during the period of assessment. It is an indication of economic growth and prosperity in the State.

Question 2; Uncompleted capital projects during 1996 – 2001 fiscal years

Tables 4.2.2 Uncompleted Projects

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Source; Researcher’s compilation , 2001

Table 4.2.2 showed that several projects were uncompleted during the 1996 -2001 financial years. Road construction has the highest numbers of uncompleted projects, 23%. It was followed by electricity, Health centre and school with 15% of the uncompleted projects. Uncompleted projects may amount to waste of economic and en route to bad governance.

Question 3; Impact of budgets on workers per capitals income

Tables 4.2.3; Workers per capital income

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Source; Researcher’s compilation, 2001

Table 4.2.3 indicated that 1996 – 2001 budgets had positive and significant impact on workers per capital income. This was done through increase in minimum wages and projects construction.

Question 4; Effect of budgets on the general standard of living of the people

Table 4.2.4 Standard of living

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Source; Researcher’s compilation, 2001

Table 4.2.4 evidenced that 82% of the population in Delta State was positively affected by the 1996 -2001 budgets. Functional budgets are therefore propellers of the living standard of the people.

Question 5; Tracing the trajectory of economic growth from 1996 – 2001 fiscal years

Tables 4. 2. 5 Budgets and economic Growth

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Source; Researcher’s compilation,2001

Table 4 .2.5 explained that 60% of the respondents agreed that there was reasonable growth in Delta State for the period of assessment while 18% of the respondents opined that the State witnessed a moderate economic growth.

Question 6 ; Impact of budgets on worker’s productivity

Table 4 .2.6 Budgets and worker’s productivity

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Source; Researcher’s compilation, 2001

Table 4 .2.6 showed that workers productivity largely depends on budget implementation. It further means that worker’s welfare should be planned in the budget. This was explained by the 80% of the respondents who agreed that budget implemented by the Delta State government for 1996 – 2001 fiscal years affected workers productivity.

Question 7. Extent of development in Delta State from 1996 – 2001 fiscal years

Table 4.2.7 Budgets and development.

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Source Researcher’s compilation, 2001.

Tables 4.2.7 showed that there was moderate improvement in Delta State supported by 59% of the total respondents while 10% of the respondents achieves that the rate of development was way high.

Question 8; Extent of transformation in social lives and consumption patterns of the citizens

Table 4.2.8 Budgets and social life

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Source; Researcher’s compilation ,2001

Table 4.2.8 showed that social life and pattern of consumption in Delta State had been transformed as depicted by 88% of respondents.

Question 9; Effect of State government budget on local government administration

Table 4.2.9 Budgets and Local government administration

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Source; Researcher’s compilation, 2001

Table 4.2.9 explained that local governments rely on State budgets. Local governments receive statutory monthly allocation from the State government.

Question10; Comparing budgets implementation in military regimes and civilian

Governments

Table 4.2.10: Military regimes and civilian Governments

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Source; Researcher’s compilation, 2001

Table 4.2.10 showed that, in military regime, about 20-40% of the budget was implemented as agreed by 65% of the respondents.

Budgeted Expenditures for 1996 – 2001 fiscal years

Tables 4.2.11 Budgeted Expenditure, 1996-2001

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Source ; Approved Delta State Budget 2001 Capital Expenditure and The Pointer, Sunday,1995, Thursday, 1998, February, 1999

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Source: Configured by Researcher, 2001

Fig. 2 Bar chart and graph showing the values and trends of Budgets for 1996 – 2001 fiscal years

The above table, bar chart and graph showed the budgetary trajectory from 1996-2001fiscal years. The 1996 budget had 70.15% increased over the previous year and there was a slight increase of 4.65% in 1997. In 1998, the budget figures rose by 20.19% while the 1999 budget had18.09% increased over the previous year. The trend showed that in the year 2000, budgeted figures skyrocketed by 58.38% and the 2001 budget also increased by 32.50%.

4.4. Test of Hypotheses

The Chi-square statistical tool was used to test the three hypotheses.

Hypothesis One:

Ho; Budget does not have positive significant effect on capital projects.

Hi; Budgets have positive and significant effect on capital projects.

Table 4.4.1 Combined Responses

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Source: Researcher’s compilation, 2001

Computation of Expected frequency (EF)

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Table 4.4.2 Expected frequency

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Source: researcher’s computation, 2001

Computation for chi-square

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Degree of freedom

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Degree of freedom of 1 at 95% in the table of distribution (Critical value) is 3.481

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Decision: since the calculated value is higher than the critical value in the distribution table, the null Hypotheses (Ho) was rejected and the implication is that, budgets had a positive and significant impact on capital projects.

Hypothesis Two :

Ho; Budgets do no have positive significant effect on per capita income

Hi; Budgets have positive and significant effect on per capita

Table 4.4.3; Combined Responses

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Source; researcher compilation, 2001

Compilation for Expected frequency (EF)

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Table 4.4.4: Expected frequency

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Source: Researcher’s Computation, 2001

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Degree of freedom is 1 at 99% in the table of distribution (critical valve) in 7.88

Therefore;

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Decision since the calculated value is higher than the critical value in the distribution table, the null hypothesis (Ho) was rejected and the alternative hypotheses (Hi) was accepted. The implication is that, budgets had a positive and significant effect on per capita income.

Hypothesis three:

Ho; Budgets do not have positive and significant effect on worker’s productivity

Ho; Budgets have positive and significant effect on workers, productivity.

Table 4.4.5: Combined Responses

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Source: Researcher’s compilation, 2001

Expected frequency for ‘Yes’ option

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Table 4.4.6; Expected Frequency

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Source: researcher’s computation, 2001

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Degree of function is 1 at 95% in the table of distribution (critical value) is 3.841 therefore,

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Decision; since the calculated value (X2) is higher that the critical value in the distribution table, the null hypothesis (Ho) was rejected and the alternative hypotheses (Hi) was accepted. The implication is that, budgets had a positive and significant effect on worker’s productivity.

4.5 Discussion of Research Findings

Budget and capital projects:

The study showed that the 1996 – 2001 fiscal years budgets of the Delta State government had a positive and significant impact on the execution of capital projects. Results from the test of hypothesis proved that budgets significantly affects capital expenditures (c2 > CV; 8.08 > 3.841). This finding is supported by Anyanwu and Oaikhenam (1995) and Leonard (2000) studies which opined that economic growth is affected by increase in capital expenditures and labour.

Budgets and per capita income:

The study revealed that the 1996 – 2001 fiscal years budgets of the Delta State government had a positive and significant effect on worker’s per capita income. Results from test of hypotheses signified that budgets significantly affect citizen’s per capita income

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This finding is corroborated by the studies carried out by Leonard (2000) which affirms that economic growth is depicted by increase in per capita income, per capita output at constant price overtime.

Budget and worker’s productivity:

Research findings indicated that 1996-2001 fiscal years budgets had a positive and significant effect on worker’s productivity. Results from the test of hypothesis showed that budget had significant positive effect on worker’s output (c2 >CV; 5.66 > 3.841). The studies of Leonard (2000), Anyanwu and Oaikhenam (1995) and Kuznet (1971) proved that increase in aggregate output connote economic growth and development. The study discovered that budgets expenditures in 1996 – 1999 had a slight and positive increment while there was a sharp percentage increase in budget expenditures in 2000 and 2001 fiscal years. The implication was that growth and development were more pronounced in 2000 and 2001 fiscal years.

CHAPTER FIVE: SUMMARY, CONCLUSION AN RECOMMENDATIONS

5.1 Summary

The study examined the effect of public sector Budget on an economy; analytical assessment of Delta State Budgets for 1996 – 2001 fiscal years. The study reviewed related literature, collated primary data using questionnaire and analysed them by frequency distribution table. The three hypotheses were tested using Chi-square statistical tool.

5.2 Conclusion

The study found that budgets had positive effect on capital expenditures, per capita income and productivity. The study therefore concludes that budget affects the economies of countries.

5.3 Recommendations

Based on these findings, the study recommends as follows;

1. Governments should formulate a realistic budget that will serve as economic blue – print for growth and development of their economies.
2. Governments should focus their budget on alleviating poverty, increase per capita income, enhance productivity and execute capital projects especially in developing economies.
3. Government should establish project monitoring unit to facilitate the implementation of the budget and execution of projects/programmes.

5.4 Suggestion for further studies

The scope of this study should be widened to accommodate more local government areas or States in Nigeria. Further study should be carried out on the subject matter by extending the years of assessment.

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