Analysis of the effectiveness of capital expenditure budgeting in the local government system of Ondo State, Nigeria

Abstract

Year in year out, Nigerians always hear of billions and trillions of naira budgeted as capital expenditure in our annual budget. This amount undoubtedly continues to increase with each passing year, but the society is always at a loss as to where the money was invested. There seems to be wide disparity between budget proposal and accomplishment. The government at all levels are accused of disregard for budgetary provisions, late passage of budget, involvement in extra-budgetary activities, late release of capital vote and selective implementation of budget. This paper therefore investigates whether or not there is a significant difference between the mean of budgeted capital and expended capital using some infrastructures in some selected local government. The paper adopts a basic research approach where data were obtained from secondary sources, mainly from published materials which include annual financial statements and publication of approved budget estimates covering the period of study. A stratified random sampling was adopted in selecting the sample. A method of descriptive analysis was used in analyzing the data. The method includes measures of central tendencies and test of equality among the means of budgeted capital and expended expenditure on each project per local government. This test uses the student t-test of differences of means. The outcome of the paper shows that there was a positive and significant relationship between budgeted capital and actual expenditure. The implication of this is that an increase in budgeted capital will lead to an increase in capital expenditure on that infrastructure. Key words: Infrastructures, budgeted capital, expended capital, disparity, local government areas.