Senate asks FG to revert to priority budget method, says envelope system has failed

Calls for sack of CAC Reg. Gen.

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From Adesuwa Tsan, Abuja

The Senate has asked the economic team of President Bola Tinubu to begin the process of reverting to the former system of priority-based budgeting, warning that the current envelope system has outlived its usefulness and continues to undermine effective service delivery.

This position was disclosed by the Chairman of the Senate Committee on Finance, Sani Musa, during an interactive hearing and budget defence session with the federal government’s economic management team at the National Assembly on Thursday.

In attendance were the Minister of Finance and Coordinating Minister of the Economy, Wale Edun; the Minister of Budget and Economic Planning, Senator Atiku Bagudu; the Chairman of the Nigeria Revenue Service, Zach Adedeji; representatives of the Group Managing Director of the Nigerian National Petroleum Company Limited (NNPCL); the Governor of the Central Bank of Nigeria; the Comptroller-General of Customs, among others.

The lawmakers also urged President Tinubu to immediately remove the Registrar General of the Corporate Affairs Commission (CAC), Hussein Magaji, for repeatedly failing to honour the invitations of the Senate Committee on Finance.

Speaking at the meeting, Musa said the engagement was convened at a critical moment in Nigeria’s fiscal cycle, stressing that urgent reforms were required to reposition the economy.

“This meeting is not routine. The 2026 fiscal cycle must reflect not only macroeconomic adjustments, but structural reforms capable of repositioning our economy for sustainable growth, fiscal resilience and development,” he said.

Musa explained that several budget performance engagements with heads of Ministries, Departments and Agencies (MDAs) had exposed deep flaws in the current envelope system, noting that it prioritises inputs rather than performance outcomes.

“The incremental allocation model has outlived its usefulness. It promotes routine expenditure expansion rather than strategic prioritisation,” he stated.

He added, “You can see on paper that there is money, but where is the money? If, by December, we cannot assess ourselves realistically, then the system is failing. We must return to a disciplined budget cycle where one fiscal year ends before another begins.”

According to him, Nigeria must urgently transition to a performance- and priority-based budgeting framework in line with global best practices.

“Nigeria cannot aspire to global competitiveness while operating a budgeting framework anchored in outdated assumptions. We need to do a new economic outlook. We need to go back like the advanced countries,” he said.

In his remarks, Jimoh Ibrahim also called for reforms in revenue management and data infrastructure, lamenting the absence of an integrated national revenue tracking platform.

“How do we monitor revenue when we do not even have a national server?” he queried.

“It is not good that we do not have a public service email system, not Gmail, not Yahoo, but official .gov addresses. Every public servant should have an official email, and we must build a central server and data bank. Any economy without data is too weak,” he added.

The lawmakers further queried the utilisation of the budget support approved by the National Assembly for the implementation of the 2024 and 2025 budgets, amid concerns over poor releases for capital projects.

Musa warned that delayed fund releases, weak revenue remittances and under-execution of capital projects were eroding public confidence in the budgeting process.

“These patterns widen fiscal deficits, weaken service delivery and erode the credibility of the budgeting process,” he said, stressing that borrowing must translate into productivity, infrastructure development and long-term growth.

Contributing to the proceedings, Orji Uzor Kalu urged the economic team to focus more on improving the microeconomic sector to ensure that Nigerians at the grassroots feel tangible economic relief.

Similarly, Victor Umeh of Anambra State questioned claims of economic improvement based on the strengthening of the naira, saying it merely reflected weak liquidity in the economy.

“If the naira is strong against the dollar, it shows that we don’t have money to buy the dollar. People don’t have money to buy the dollar, therefore, the monetary value of the dollar will be going down. If you pay contractors now, the demand for dollar will go up,” he said.

Umeh also queried the delayed implementation of the 2025 budget, noting that February was almost over without significant capital releases, leaving only a few months for the budget lifespan.

Responding, the Minister of Finance, Wale Edun, acknowledged that although government revenue had improved, high debt servicing costs were draining available resources.

“Though revenue has increased, the high interest on debt servicing is draining it. We are servicing debt running up to ₦152 trillion,” he said, adding that about ₦30 trillion was inherited from the previous administration, while the current government’s contribution was “in the 20s.”

On the proposed priority budgeting framework, Edun said, “The prioritisation will be from MDAs first, then the finance team, and then Mr President will have the final say.”

He added, “The payment method will be improved. We should not throw the baby away with the bath water but seek to improve it.”

He further assured lawmakers that the government was intensifying efforts to boost revenue to the Federation Account, citing President Tinubu’s directive on NNPCL remittances as part of ongoing revenue optimisation reforms.

On the CAC controversy, Senator Kalu raised a motion calling for the immediate removal of the Registrar General, describing his repeated failure to honour Senate invitations as disrespectful.

“This man has been insulting the Senate and we cannot take it anymore,” Kalu declared. The motion was seconded by Senator Adams Oshiomhole.

Ruling on the motion, Musa said, “Any MDA that we invite almost every time will tell us that he is on the villa.”

He added, “The Registrar General has refused on so many occasions to honour the invitation and the calls of this committee. Section 89 has given us this power.”

The committee also warned MDAs against ignoring legislative oversight, stressing that such actions would no longer be tolerated.

“Oversight is not an optional courtesy. It is a constitutional requirement,” Musa said.

Meanwhile, as the Senate awaits the executive bill for the amendment of the Petroleum Industry Act, the Finance Committee chairman directed the NNPCL to submit detailed documentation on its remittance obligations to the Federal Government, including compliance levels and timelines.