Overview of Financial Laws in Nigeria

Abstract

Financial law is a branch of a national legal system that regulates the financial activities of the state and its financial relationship with the private sector. The state has at its disposal a large share of the national income, more than half of which is handled by the state budget. By means of the budget and other institutions of the financial system, the state ensures the planned accumulation, distribution and use of monetary assets and the systematic supervision of finances.For example, in her overview of the 2013 Budget, the Finance Minister stated the achievements of the 2012 budget that government succeeded in releasing about N1 trillion (N1,017 bn) for the implementation of various capital projects and successfully cash backed N739 bn. By the end of 2012, Ministries, Departments and Agencies (MDAs) had utilized N686 bn or 92.8% of the total amount cash-backed. On the 2013 budget, the gross federally collectible revenue projected was N11.34 trillion, of which the total revenue available for the Federal Government’s Budget was estimated at N4.1 trillion, representing an increase of 15% over the estimate for 2012. On expenditure, the 2013 Budget made provision for an aggregate expenditure of N4.987 trillion, representing a modest increase of 6.2% over the N4.697 trillion appropriated for 2012. This was made up of N387.97 bn for Statutory Transfers; N591.76 bn for Debt Service; N2.38 trillion for Recurrent (Non-Debt) Expenditure, of which N1.717 trillion is the provision for personnel cost while overhead cost projection stood at N208.9 bn; and a total of N1.62 trillion was provisioned for Capital Expenditure. In addition, N273.5 bn was provisioned for the Subsidy Reinvestment Programme (SURE-P).The projected fiscal deficit aimed at improving to about 1.85% of GDP in the 2013 Budget compared to 2.85% in 2012. This is well within the threshold stipulated in the Fiscal Responsibility Act, 2007 and clearly highlights government’s commitment to fiscal prudence. The following are some of the key 2013 Budgetary Allocations: critical infrastructure (including Electric Power, Works, Transport, Aviation, Gas Pipelines and Federal Capital Territory) – N497 bn; Human Capital Development (i.e. Education and Health) – N705 bn; Agriculture/Water Resources – N175 bn; National Security purposes – N950 bn; (Comprised of N320 bn for the Police, N364 bn for the Armed Forces, N115 bn for the Office of the National Security Adviser, and N154 bn for the Ministry of Interior. That the share of recurrent spending in total expenditure has reduced from 74.4% in 2011 to 67.5% in 2013. Similarly, Capital spending as a share of total expenditure has increased from 25.6% in 2011 to 32.5% in 2013. That Government has further reduced annual domestic borrowing to finance the budget deficit from N852 bn in 2011, to N744 in 2012, and to N577 bn in 2013.The principal constituents of financial law are budget law, the legal regulation of state incomes and state expenditures, debt management, foreign-exchange legislation and the legal bases of the organization of credit, financial market, accounting and money circulation.Financial law is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system. It also aims at preventing unwelcome developments that might disrupt the smooth functioning of the banking, insurance, capital, market/securities and pension sectors of the financial economy. Thus, ensuring a strong and efficient financial sector of the economy.It is against this background, that this paper seeks to achieve the following objectives:i) To underscore the importance of /rationale behind financial laws in a national economy;ii) To examine the nature and scope of financial laws in Nigeria;iii) To conclude with some viable options for Nigeria.