Appraising The Impact of Budgeting and Planning On The Performance of Financial Institutions in Nigeria

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ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
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Appraising the Impact of Budgeting and Planning on the
Performance of Financial Institutions in Nigeria

+a,-e Isaac
.ingha, /ni0ersit1) 2aru) Nasarawa State. Nigeria
3-4ail5 tal62ice71ahoo.co,

Abstract
8his stud1 see6s to underta6e a co,"rehensi0e and anal1tical a""raisal into the i,"act of -udgeting and
"lanning on the "erfor,ance of financial institutions in Nigeria. Attention is "ri,aril1 on the "olicies to -e
considered in de0elo"ing .udgeting and !lanning "rogra,,es) to deter,ine the factors res"onsi-le for rigidities
and structural i,-alance in -udgeting and "lanning "rogra,,es of Nigerian .an6s) and to su-se9uentl1
a""raise the i,"act of -udgeting and "lanning on their effecti0e "erfor,ance. 8o achie0e this) the related 0iews
and literatures of nota-le authorities in this area of stud1 were -rought under re0iew. !ri,ar1 source of data
collection was utili:ed through well structured 9uestionnaires raised and ad,inistered to res"ondents ,ade u" of
,anage,ent and non-,anage,ent staff of selected institutions. Inter0iews and "artici"ant o-ser0ation
conducted at the con0enience of the res"ondents were added as su""le,ents. 8he findings re0ealed that
-udgetar1 and "lanning "rogra,,es are restricted to few to" ,anage,ent staff of Nigerian .an6s) -ut indicated
that -udgeting and "lanning can -e utili:ed as a ,a;or "olic1 instru,ent to align co,,ercial -an6ing o"erations
with the "olic1 fra,ewor6 of regulator1 -odies) "articularl1 the <entral .an6 of Nigeria. It was also disco0ered
that o0erti,e -udgeting and "lanning has i,"acted "ositi0el1 on effecti0e "erfor,ance of Nigerian -an6s. It is
reco,,ended that for greater i,"ro0e,ents in o0erall o"erations and for ,a=i,u, i,"act of -udgetar1
"ro0isions) financial institutions as a whole ,ust function as a single s1ste,) in which all its constituent units are
inti,atel1 inter-lin6ed.
Keywords: .an6ing Industr1) .udgeting) <ontrol) Financial Institution) Nigeria) !lanning

1. Introduction
8he success and failure of an1 organi:ational entit1 or -usiness concern de"ends greatl1 on its a-ilit1 to integrate
a0aila-le resources) whether hu,an or ,aterial) and co,-ine the, in the ,ost efficient and "roducti0e ,anner.
.usiness is the e=change of goods) ,one1 or ser0ices for ,utual -enefit. >ence a -usiness entit1 can -e
regarded as the su, total of those acti0ities that ha0e as their ,ain "ur"ose) the creating) ,aintaining) and
e="ansion of a concern which continues to e=ist -ecause it earns "rofit and other -enefits) as a result of the
e=change of goods) ,one1 and ser0ices.
Financial institutions generall1 fall under the do,ains of -usiness entities) -asicall1 -ecause) financial
institutions acts as agents that "ro0ides financial ser0ices for its clients. 8hus financial institutions can -e
descri-ed as those organi:ed entities) who ha0e as their "redo,inant o"erational structure) the "ro0ision of
financial inter,ediar1 ser0ices of ,o-ili:ing and ,o0ing funds fro, in0estors and all sur"lus econo,ic units)
and channeling these funds to deficit econo,ic units for "roducti0e acti0ities. <o,,on t1"es of financial
institutions in the glo-al econo,1 include -uilding societies) credit unions) stoc6 -ro6ers and si,ilar -usinesses.
>owe0er the discerna-le su--sector in the Nigerian financial ser0ices industr1 is -asicall1 .an6ing) Insurance)
<a"ital 4ar6ets) In0est,ent 4anage,ent) Real 3states and Regulator1 Financial Institutions. 8hese financial
ser0ices industries are highl1 regulated in Nigeria -1 -odies such as 8he <entral .an6 of Nigeria) Nigerian
?e"osit Insurance <or"oration) National Insurance <o,,ission) Securities and 3=change <o,,ission)
<or"orate Affairs <o,,ission) and 8he Federal 4inistr1 of Finance.
In the Nigerian econo,1) ,a;orit1 of the o"erators in the financial ser0ices industries are s,all-si:ed)
e=ce"t for the -an6ing industr1. 8his is -ecause there is a dearth of long ter, in0esta-le# funds in the industr1.
As at toda1) the -an6ing industr1) ca"ital ,ar6ets and in0est,ent ,anage,ent co,"anies see,s to -e well
ca"itali:ed) the insurance su--sector is "lagued -1 under ca"itali:ation) while the real estate sector is relati0el1
insignificant. >owe0er) co,"etition is high across all su--sectors) -ut ,ore so o-0ious in the -an6ing industr1.
3ntr1 -arriers are high for the -an6ing industr1) ,oderate for insurance and low for in0est,ent ,anage,ent and
ca"ital ,ar6et acti0ities. 8hus one of the do,inant su--sectors of the Nigerian financial ser0ices industr1 is the
.an6ing sector.
.an6s can si,"l1 -e 0iewed as those financial institutions) who act as agents that acce"t de"osits and
,a6e loans. .an6s create sa0e ha0ens that stores wealth for de"ositors and as "redicta-le sources of loans for
-orrowers. In this wa1) the ,a;or -usiness of -an6s is that of financial inter,ediation -etween sa0ers and
-orrowers. 8he -an6 si,"lifies this "rocess -1 eli,inating the need for sa0ers to find the right -orrowers and the
right ti,e to directl1 source for loan. As financial inter,ediaries) the1 facilitate the creation) sourcing and
,o-ili:ation of funds fro, sur"lus econo,ic units to deficit econo,ic unit) for functional and "roducti0e
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acti0ities. .an6s as co,"etiti0e and "rofit oriented financial institutions are howe0er forced to loo6 ahead) -1
setting targets) antici"ating "ro-le,s and focusing on "ur"ose and direction) since it ai,s at ,a=i,u, and
efficient utili:ation of resources to earn ,a=i,u, return on in0est,ent. &ne of the ,ost effecti0e tools of
achie0ing this ai, is -udgeting and "lanning.
8he funda,ental "rinci"les of "lanning as it relates to financial inter,ediation acti0ities in0ol0es the
selection of desira-le organi:ational o-;ecti0es) ha0ing a chosen course of action) deter,ining the ,eans of
achie0ing the,) as well as a detailed co,"rehension of all the financial i,"lications in0ol0ed. As a -an6
therefore ai,s at achie0ing its institutional o-;ecti0es) it is a""arentl1 i,"ortant for its ,anage,ent to set u"
long-ter, strategies) which are su-se9uentl1 con0erted into short-ter, action "lans) ai,ed at achie0ing long-
range goals and o-;ecti0es. 8he 9uantification of these long range o-;ecti0es into short-ter, action "lans) in
financial ter,s is 6nown as .udgeting. .udgeting therefore) is a co,"rehensi0e and coordinated "lan) e="ressed
in financial ter,s) for the effecti0e integration and o"erations of all organi:ational resources) for so,e s"ecific
"eriod of ti,e. .udgeting in a -usiness sense) howe0er) is the "lanned allocation of a0aila-le funds to each unit
within an organi:ation. .udgeting allows ,anage,ent in an organi:ation to control e=cessi0e s"ending in less
"roducti0e areas) and "ut ,ore organi:ational assets into areas which generates significant returns and inco,e)
as well as good "u-lic relations.
For a long ti,e now) the attention of owners and ,anage,ent of ,an1 financial institutions in Nigeria)
ha0e -een focused al,ost e=clusi0el1 on higher return on in0est,ent) "rofit ,oti0ation and financial assets A
cash) stoc6s) de-tor) ,achines and e9ui",ent) "ro"erties) etc) while the "rocess of effecti0el1 integrating
a0aila-le resources into ,a=i,u, utilit1) within a reasona-le ti,e fra,e) for o0erall success of -usiness and
goal attain,ent is not -eing gi0en ade9uate "riorit1. 8his "unctuates the need to scan through the twin issues of
-udgeting and "lanning and su-se9uentl1 ha0e an a""raisal of their i,"act on the "erfor,ance of financial
institutions) ,ost es"eciall1 -an6s in Nigeria.
.udgeting and "lanning are often at "la1 in all as"ects of the hu,an life) and has o0er ti,e) -eco,e
,ore "ara,ount in organi:ational de0elo",ental discourse) while its i,"act on the "erfor,ance of -an6s is of
great significance and cannot -e o0ere,"hasi:ed. 8he "redo,inant the,e) howe0er) underl1ing -udgeting and
"lanning in financial institutions in general# and the -an6ing su--sector in ,ore s"ecific ter,s) can initiall1 -e
assessed fro, the following funda,ental "ro-le,s.
Firstl1) there is a fa,iliar challenge in the -an6ing industr1) which relates to the su--sector -eing one
of the highl1 and ,ost regulated industr1 in Nigeria. 8he -an6ing industr1 in Nigeria has often -een descri-ed as
fragile) s,all) and unco,"etiti0e and tainted -1 insta-ilit1) which had led to the consolidation e=ercise) in which
-an6s in Nigeria were re9uired to hold a ,ini,u, financial reser0e of N2( .illion as at the end of ?ece,-er
2**(. /nder this scenario of high regulation and refor,s) -udgeting and "lanning in indi0idual -an6s has
-eco,e so,ewhat inconsistent and significantl1 altered) due to constant e,ergence of new "olicies -1 the A"e=
.od1. 8his is ,ade ,ore challenging in a situation where "olic1 re0iews -1 the A"e= .an6 are done at regular
inter0als.
Secondl1) there is also a consistent "ro-le, in -an6s) which relates to the a-sence of coordination
-etween "lanning units which is usuall1 a "redo,inant function of to" ,anage,ent staff# and the -udgeting
units usuall1 0ested in the financial and control officials#. As a result) the strategic "olicies reco,,ended in the
"lan ,a1 not -e ade9uatel1 ca"tured in the -udget) as the thrust of the -udget ,a1 -e at 0ariance with the goals
of the "lan. /nder these circu,stances) the funda,ental "olicies "ro0ided for in the -udget) ,a1 actuall1 0itiate
the goals of the "lan) "articularl1 when the "ersonnel in0ol0ed in the -udget "re"arations are entirel1 different
fro, those reco,,ending the "lan. And as such) unnecessar1 ri0alr1 ,a1 occur -etween the "ersonnel in0ol0ed
in -udgeting and "lanning "olicies) such that the goals of the entit1 ,a1 -e sacrificed at the e="ense of "ersonal
egos. Such ri0alr1) though) ,a1 also ha0e their root in the differentials in the "rofessional -ac6ground of
officials. In such cases irreconcila-le differences will -e co,,on "lace in the organi:ation) with its ad0erse
effects of dishar,on1 in the -udgeting and "lanning s1ste,s.
Additionall1) there is also the "ro-le, of B>alo 3ffectC in the i,"le,entation of "lans. 8his refers to
undue senti,ental attach,ent of -an6s to the esta-lish,ent and acco,"lish,ent of a goal) "roduct or "rogra,)
-ecause the organi:ation is fa0ora-l1 dis"osed to a "ro;ect. 8his ,a1 lead to o0er co,,it,ent of funds and
resources to such a "ro;ect at the e="ense of other e9uall1 i,"ortant goals and "ro;ects. In other words)
unnecessar1 0ire,ents ,a1 occur and the econo,1-wide i,"act antici"ated -1 -an6s will therefore -e lost.
Di0en the differentials in the ti,e fra,e of -udgets and "lans) the 9ualit1 of forecast significantl1
0aries. 8he farther the ti,e fra,e) the ,ore difficult it is to ,a6e accurate "ro;ections for ,ost financial
institutions such as -an6s) ,ost es"eciall1 in the light of econo,ic uncertainties) high regulations) and the
0olatile nature of financial transactions. 8hus while -udgets are often -ased on the ,ore relia-le "ri,ar1 data)
"lans are -ased on sti,ulated scenarios. 8his increases the ris6 in0ol0ed in "ro;ects with long gestation "eriods
underta6en -1 -an6s) in which case the re9uired de"th of data anal1sis differs a,ong 0arious organi:ations.
Related to the a-o0e) is the issue of "olitical insta-ilit1) cou"led with the inconsistencies in
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go0ern,ent "olicies) which is a situation highl1 "re0alent in de0elo"ing econo,ies such as Nigeria. 'arious
ad,inistrations co,e into office with different agendas the1 stri0e to i,"le,ent) which in the long run affects
the "olic1 thrust of -an6s in the countr1. 8he "olitical en0iron,ent often changes) such that "lanning and
-udgeting in -an6s are significantl1 altered) "articularl1 when the new ad,inistration is not fa0ora-l1 dis"osed
to e=isting "olicies.
A general a""raisal of -udgeting and "lanning howe0er) shows that) it is significantl1 tied to the
successful "erfor,ance of -oth indi0iduals and organi:ed entities in se0eral res"ect) while the influence
-udgeting and "lanning e=erts on goal attain,ent is un"recedented. 8hus in "ersonal financing sense) the i,"act
of -udgeting and "lanning can translate to an a-ilit1 to -eco,e sta-le econo,icall1 and otherwise) while its
i,"act fro, a cor"orate "ers"ecti0e can translate into a tool of functionalit1) "roducti0it1 and effecti0e
"erfor,ance. In ,ore concise ter,s) -udgeting and "lanning facilitates the "ri,ar1 function of -an6s) in their
ca"acit1 as agents that facilitates financial inter,ediation and the "erfor,ance of core -an6ing roles such as
lending) treasur1) trade financing) "ri0ate -an6ing) and financial ad0isor1 ser0ices. <onse9uentl1) the successful
"ro0ision of -asic -an6ing "roducts and ser0ices ,ust not -e de0oid of an effecti0e s1ste, of -udgeting and
"lanning) if the organi:ational goals and o-;ecti0es are to -e achie0ed. Such -asic -an6ing "roduct and ser0ices
includes) asset -ased finance) structured trade finance) e9ui",ent leasing) finance leases) loan s1ndication)
ad0ances) -onds) guarantees) cash ,anage,ent) ,utual funds) co,"an1 flotation) ca"ital reconstruction and
restructuring) ,ergers and ac9uisition) "ro;ect finance) custodial ser0ices and trust ser0ices a,ong others.
8hus the end "roduct of the -udgetar1 "rocess is "ro-le, identification) gathering of rele0ant
infor,ation) de0elo",ent of feasi-le solution and setting u" of a sound ad,inistrati0e structure through which
decisions can -e i,"le,ented) ,onitored and e0aluated. 8his collecti0el1 ca"tures the thrust of "lanning "rocess.
It is i,"ortant to state howe0er) that -udgeting without the ele,ent of "lanning would result into a -udget that
lac6s focus) while "lans that do not ha0e a realistic recognition of the -udget constraints would ha0e little 0alue.
8hus organi:ations) such as -an6s) though with a good ca"ital -ase cannot succeed without a co,"rehensi0e
-udgeting and "lanning "rogra,,e) that will ena-le funds to -e "ut into the ,ost efficient and "roducti0e
,anner for the "ur"ose of achie0ing o0erall organi:ational o-;ecti0e.
8hrough "reli,inar1 discussions) held with 6e1 ,anage,ent officials of so,e Nigerian -an6s) it was
disco0ered that) -an6s ha0e certain 6e1 goals which the1 see6 to achie0e. 8hese 6e1 goals are howe0er ,ulti"le
in nature) since there are a nu,-er of the,. <onse9uentl1) all -udgetar1 "rogra,,es of ,ost Nigerian -an6s are
geared towards the attain,ent of these ,ulti"le goals and o-;ecti0es. 8he "redo,inant goal of ,ost -an6s is to
,a=i,i:e "rofit) and at the sa,e ti,e) ,ini,i:e cost) through an efficient co,-ination and utili:ation of li,ited
resources. 8his goal is howe0er attained) through their role as Bgo--etweensE. As financial inter,ediaries) -an6s
earn enough to su""ort their acti0ities) -1 the difference -etween the interest rate "aid to sa0erFde"ositors) and
the interest rate charged on loans. Ghen custo,ers ,a6e de"osits in a sa0ings account) the1 earn interest on the
"rinci"al. Si,ilarl1) when custo,ers o-tain loans fro, the -an6s) the1 "a1 interest on the "rinci"al. .1 charging
the -orrower a slightl1 higher interest rate) than that which is gi0en to the de"ositor) a -an6 is a-le to achie0e its
goal of "rofita-ilit1.
&ther goals of Nigerian -an6s include a sound and effecti0e asset and lia-ilit1 ,i=. For .an6s)
reser0es and loans ser0e as assets) -ecause the1 are ,one1 that the -an6 has. ?e"osits on the other hand) are
lia-ilities) since the1 are ,one1 that the -an6 owes. 8hus -an6s see6 to ,aintain an a""recia-le le0el of li9uidit1
through their assets and lia-ilit1 ,i=.
Additionall1 .an6s also see6 to -eco,e do,inant "la1ers in the industr1) -oth within and outside the
shores of Nigeria) through increased ca"ital -ase. 8his is to ena-le the, ha0e the a-ilit1 to "artici"ate in
,anaging the NationEs e=ternal reser0e. 8his the1 see6 to achie0e) through their "artici"ation in the ca"ital
,ar6et and the co,"etiti0e nature of their "roducts and ser0ices.
8he "rinci"al "ro-le, howe0er is that) the -an6ing industr1 is a highl1 regulated industr1 as
cha,"ioned -1 the central -an6 of Nigeria) which e9uall1 has certain goals it see6s to achie0e) in its function as
the A"e= -od1 in the Nigerian -an6ing su--sector. 8he 9uantification of these goals -1 the A"e= -od1 is
translated into the 0arious restructuring and refor,s in the Nigerian .an6ing sector. 8he first "hase of the
refor,s as witnessed in 2**() was designed to achie0e a highl1 di0ersified) strong and relia-le -an6ing sector)
which will ensure the safet1 of de"ositors ,one1) "la1 acti0e de0elo",ental role in the Nigerian econo,1 and
-eco,e co,"etent and co,"etiti0e "la1ers -oth in the African and glo-al financial s1ste,s. 8he second "hase
ai,ed at the e,ergence of regional and s"eciali:ed -an6s is still ongoing. 8hus necessitating the need to find out
how the -an6ing su--sector s1nchroni:es its -udgetar1 and "lanning "rogra,,es to align with the "olic1 thrust
of the A"e= -od1 and to su-se9uentl1 a""raise the i,"act of this -udgeting and "lanning "rogra,,e on the
"erfor,ance of the -an6s) ,ost es"eciall1 in the light of their set goals.

. !iterature "e#iew
4ost organi:ations engage in -udgeting and "lanning in order to ada"t their -usinesses to reflect their internal
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resource constraints) gain ad0antage in co,"etiti0e ,ar6et realities) satisf1 the e0er changing custo,erFclient
needs) and to ,eet the as"iration of its 6e1 sta6eholders. 8herefore the 6e1 dri0ers of -udgeting and "lanning in
,ost large-scale organi:ations) "articularl1 financial institutions such as -an6s) are the funda,ental ele,ents of
econo,ies of scale) geogra"hical e="ansion) increased ca"ital -ase and "roduct offerings) gaining ,ar6et "ower)
attaining regulator1 co,"liance) as well as "rofit ,a=i,i:ation. 8hus in order to ha0e an o-;ecti0e anal1sis of
the issue in 9uestion) and to gain additional insight into its historical "ers"ecti0e) the funda,ental ele,ent
underlining the conce"tual and theoretical fra,ewor6 of -udgeting and "lanning needs to -e e=a,ined.

2.1 Conceptual Framework
Se0eral schools of thought and authorities ha0e written so ,uch on the twin issues re0ol0ing around -udgeting
and "lanning) within organini:ational entities) -oth in the "ast and "resent. >alford 196$# defines "lanning as
Bthe funda,ental understanding of the right wa1 of loo6ing at things) a certaint1 that such wa1 of loo6ing at
things can -e translated into actions and the actual i,"le,entation of these actionsC. Fro, this definition) "lans
as conce"tuali:ed ,ust -e feasi-le) well concei0ed) faithfull1 i,"le,ented and ti,e -ound) while the right
attitude ,ust e9uall1 -e e=hi-ited -1 those in0ol0ed in the "lan. ?ic6son 1966#) "uts it succinctl1 when he
o"ined that "lanning in0ol0es the decision on what) how) where) when) and for who, to "roduce. 8he /nited
Nations ?e"art,ent of 3cono,ic Affairs 19(1# gi0es it a glo-al "ers"ecti0e) when it defined "lanning as Bthe
setting of "roduction targets within the glo-al econo,1) whether for "ri0ate or "u-lic enter"rises) in ter,s of
in"ut of ,an"ower) of ca"ital or other scarce resources or use in ter,s of out"utC. In essence) "lanning can -e
generall1 seen as the selection of desira-le set goals) ha0ing a chosen course of action and deter,ining s"ecific
,ethods of acco,"lishing these goals. It should -e noted that as an entit1 ai,s at "lanning for the o0erall
success of -usiness) it is i,"ortant to set out long-ter, strategies) which are con0erted into short-ter, action
"lans to achie0e its long range "lans. 8he 9uantification of these short-ter, action "lans in financial ter, is
6nown as .udgeting.
8he Institute of <ost and 4anage,ent Accountants I<4A# defines -udgeting in their ter,inolog1 as
Ba "lan 9uantified in ,onetar1 ter,s) "re"ared and a""ro0ed "rior to a defined "eriod of ti,e usuall1 showing
"lanned inco,e to -e generated andFor e="enditure to -e incurred during that "eriod and the ca"ital to -e
e,"lo1ed to attain a gi0en o-;ecti0eC. !ande1 119(# writing on Financial 4anage,ent and !lanning a"tl1
defines -udgeting as Ba co,"rehensi0e and coordinated "lan which is "ac6aged -1 the ,anage,ent of an
organi:ation) and e="ressed in financial ter,s for the o"erations and resources of an enter"rise for so,e s"ecific
"eriod in the futureC.
Fro, the two definitions of -udgeting gi0en a-o0e) it can -e deduced that the following ter,s are
a""arent. Firstl1) -udgeting is a 9uantitati0e "lan) which are those "lans e="ressed in ,onetar1 or econo,ic
ter,s. Secondl1) it is a co,"rehensi0e and coordinated "lan. 8hirdl1) it deals with so,e s"ecific entit1. 8hat is
to sa1) it is a "lan for an organi:ationEs o"erations and utili:ation of resources. Fourthl1) it is futuristic) ,eaning
it is a future "lan for so,e s"ecific "eriod of ti,e. +astl1) -udgets are to -e sanctioned and a""ro0ed -1
authori:ed ,anage,ent.
&lafusi 199$# su,s u" -udgeting in a write-u" for the BNigerian AccountantC) when he defined
-udgeting as Ban indis"ensa-le tool for effecti0e "erfor,ance) -1 which costs are assigned to s"ecific tas6s that
are "lanned within a definite ti,e "eriodC. 8o !ar6er 1997#) -udgeting is a faith acco,"li in econo,ic
discourse) -ecause resources are scarce relati0e to need for the,. 8hus an o0erall "ers"ecti0e of -udgeting is
such that) it can -e 0iewed as an instru,ent that "ro0ides a -ench,ar6 for the ,easure,ent and control of
"erfor,ance) while it e9uall1 "ro0ides feed-ac6 infor,ation) which facilitates a-ilit1 to ta6e correcti0e ,easures)
-ased on its relati0it1 to the nature and t1"es of "lanning.

2.2 Theoretical Framework
.udgeting and "lanning as a 6e1 organi:ational and institutional 0aria-le is not a ,odern "heno,enon. >owe0er)
-udgeting and "lanning are of wide ranging glo-al orientations) to which se0eral ,odels and theories ha0e -een
associated with o0erti,e) ,ost es"eciall1 as "ro"ounded and o"ined -1 0arious authorities and schools of
thoughts. 8o full1 a""reciate the theoretical fra,ewor6 of -udgeting and "lanning) the following funda,ental
issues) as discussed -elow needs to -e closel1 e=a,ined.

2.2.1 Nature of Planning
!lanning is not a ,odern "heno,enon) as it "redates 4anEs e=istence. Infact) the creation of the world as
contained in the .i-le was "lanned and scru"ulousl1 i,"le,ented -1 the Al,ight1 D&?) such that all li0ing
things were created in "airs to ,eet the set goals of re"lenishing the earth. Fro, the a-o0e analog1) we can
safel1 0iew "lanning as a "redeter,ined course of action ta6en to acco,"lish set goals. I,"licit in this si,"le
definition is the e=istence of alternati0e o"tions for reali:ing the set o-;ecti0es.
Dal-raith 1962# gi0es an insight into the nature of "lanning -1 sighting an e=a,"le of a household
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and a fir,. >e e="lains that within a household) the head of the fa,il1 often identifies and articulates the
as"irations of the ,e,-ers of the fa,il1 and deter,ines goals that can -e reali:ed or the needs that ha0e to -e
satisfied gi0en the resources constraints. At the le0el of the fir,) the .oard of ?irectors sets the -road targets
and "olicies) while the ,anage,ent continuousl1 stri0es to achie0e the set targets) -ased on the Strength)
Gea6nesses) &""ortunities and 8hreats S.G.&.8. Anal1sis#) facing the cor"orate -od1) hence) "lanning can -e
conce"tuali:ed as ,icro and ,acro in nature. >owe0er to 8odaro 19$*#) whene0er targets are set in so,e
organi:ed for,) while resources are co,,itted to their full reali:ation) a "lan is esta-lished. 8he underl1ing fact
therefore) is that in "lanning) targets are set) -ut the nature of "lanning itself is that which ta6es into cogni:ance
alternati0e o"tions for the reali:ation of the identified goals which are criticall1 considered and out of which the
,ost feasi-le and 0ia-le o"tions are selected.
Fro, the "ers"ecti0e of the 3cono,ists) the -est o"tions in "lanning is that which utili:es the ,ost
efficient co,-ination of resources -1 incurring the least cost) -ut 1ields the highest le0el of out"ut and "rofit in a
definite ti,e "eriod. Although there is no unani,it1 of o"inion on the su-;ect) ,ost econo,ists consider
"lanning as in0ol0ing deli-erate action) and setting of direction for a -usiness) -1 its ,anage,ent for a s"ecified
"eriod of ti,e and directed towards acco,"lishing organi:ational o-;ecti0es. 8he co,,it,ent of resources
under this scenario is carefull1 ,onitored) while i,"le,entation is "rogra,,ed. 8hus to facilitate the
achie0e,ent of set goals and to accelerate the "ace of e9uita-le growth and de0elo",ent) the right and
a""ro"riate t1"e of "lan ,ust -e selected and i,"le,ented.
According to 8odaro 19$*#) "lans can -e classified -ased on their sco"e) such as aggregate growth
"lan) single sector "lan and single "ro;ect "lan. >owe0er) the ti,e-fra,e of each "lan usuall1 influences its
descri"tion. 8hus we ha0e short-ter,) ,ediu,-ter, and long-ter, "lans. !lans ,a1 also -e at ,icro and ,acro
le0els) while organi:ations the1 a""l1 to ,ust -e clearl1 identified. &0erall) the choice of the t1"e of "lan to -e
ado"ted and i,"le,ented de"ends significantl1 on the a0aila-ilit1 of resources) co,"le=ities and scale of
o"eration of the organi:ation in 9uestion. In ,ore concise ter,s) those "lans whose duration are usuall1 not
,ore than one 1ear can -e referred to as short-ter, "lans. An e=a,"le of this t1"e of "lan is the Annual -udget
of the Federal Do0ern,ent of Nigeria) which according to &gunshola 1997# Bthe "eriod of short-ter, "lans are
usuall1 too short to achie0e an1 ,eaningful "rogress in a "rofit-oriented organi:ation) hence it is often ,ade "art
of a rolling "lanC. 8hus short-ter, "lans are -etter 0iewed as a 0ehicle for achie0ing ,ediu,-ter, "lans.
8hose "lans that s"an ,ore than one fiscal 1ear and o"erate -etween 2 and ( 1ears can -e regarded as
,ediu,-ter, "lans or rolling "lans. A -asic attraction of this ,ode of "lanning according to +ewis 19(%# is that
Bit gi0es roo, for continuit1) while feed-ac6 "rocess can -e easil1 consu,,atedC. +ong-ter, "ers"ecti0es
refers to long-ter, "lanning in which) long-range targets are set in ad0ance for "eriods of 1*) 1() 2*) or 2( 1ears.
A long-ter, "lan according to the Indian <o,,ission 19$7# Bis a -lue"rint of de0elo",ent to -e underta6en
o0er a long "eriod of ti,eC. In realit1 howe0er) -roader o-;ecti0es and targets are e="ected to -e achie0ed within
the s"ecific "eriod of ti,e -1 di0iding the "ers"ecti0e "lan into se0eral short "eriods as action "lans) of usuall1
"eriods s"anning -etween four) fi0e and si= 1ears. 8hat is wh1 8ho,"son and Stric6land 1992# rightl1 o-ser0ed
that Ba -usiness enter"riseEs ,ission) o-;ecti0e) strateg1 or a""roach to strateg1 i,"le,entation are ne0er final)
-ut in0ol0es e0aluating "erfor,ance) re0iewing changes in the i,,ediate and e=traneous en0iron,ent and
,a6ing it necessar1 "arts of the strategic ,anage,ent "rocess. >owe0er the success of "lanning in an
organi:ational entit1) such as the -an6ing sector) regardless of the t1"e of "lanning ,echanis, ado"ted is ,ade
"ositi0e in the su-se9uent "ro;ections) -ased on a""ro"riate targets of -udgets) -udgetar1 "re"arations) "eriods
and control.

2.2.2 Components of Budgeting, budget preparations and uses of budgets
In the 0iews of Anthon1 and <hris 2**%#) a -udget if 0iewed as a targeted "lan) will enco,"ass certain
"redo,inant do,ains of financial "lanning. Firstl1) a -udget will -asicall1 -eco,e a "lan of how ,uch a
-usiness will s"end o0er a s"ecified "eriod of ti,e and how ,uch it will earn. Secondl1 -udgets will often
-rea6down the re0enue and e="enditures it intends to incur into ,an1 detailed categories. A -an6 for e=a,"le)
will decide how ,uch it intends to e="end on research and de0elo",ent o0er a nu,-er of 1ears. 8hirdl1 -udgets)
if 0iewed fro, a -roader "ers"ecti0e) are those which create a lin6 -etween "roduction of ser0ices and returns to
-e earned on the "ro0ision of such ser0ices. Fourthl1 .udgets are clearl1 stated targets and forecasts) as the1
atte,"t to consider what the future ,ight -ring. All these four co,"onents of -udgets when integrated together)
-asicall1 ena-les -an6s to ,onitor their o"erations o0er a s"ecified "eriod of ti,e) while it e9uall1 ena-le the,
to ta6e correcti0e ,easures where a""ro"riate in cases of de0iations.
<onse9uentl1) an integral co,"onent of -udgeting in -an6s) according to a "ress release -1 8he <entre
on .udget and !olic1 !riorities 2**6# on their official we-site www.c-"".org) is that a good -udget will detail
e="enditure "lans of an1 -an6) and one of the decisions ,anage,ent ,ust ta6e is what "ortion of total
e="enditure will go to ca"ital e="enditure and how ,uch will go to re0enue e="enditure. Accordingl1) the "ress
release highlighted the co,"onents of ca"ital e="enditure in -an6s to include "urchases of ,achines) e9ui",ents
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and other fi=ed assets that ,a1 add to the efficienc1 and "roducti0it1 of the -an6s) and Re0enue e="enditures to
-e co,"osed of funds s"ent on the da1-to-da1 running of the -an6.
8he "re"aration of -udgets is -asicall1 a ,anage,ent as well as an accounting tas6. Although there
are no laid down rules on how to "re"are a -udget) a -an6 ,ust "re"are its -udgets along the nature of its
"roducts) ser0ices) de"art,ents) and di0ision. Since -an6s are ,ainl1 regulated -1 the <entral .an6 of Nigeria)
their internal -udgeting structure ,ust therefore -e "re"ared to align with the "olic1 fra,ewor6 of the A"e=
-od1. According to Al-Rasheed 2**6#) the for,er 3=ecuti0e ?irector) Su"er0ision ?e"art,ent of the <entral
.an6 of Nigeria) -an6s -udgetar1 structures) strategic "lanning and future -usiness "lans ,ust contain s"ecific
data and infor,ation that relates to the following.
- 8he -usiness strateg1 for the "eriod of ti,e for which financial data is su-,itted.
- 8he general "olic1 which will -e ado"ted -1 -an6s to achie0e the targets of their strategic
"lans.
- .asic assu,"tions on which the "ro;ections of -udgetar1 ite,s are -ased.
- 3="lanation of the reasons as it relates to increase or decrease in the target figures against the
"ro;ected figures of the "re0ious "eriod) ta6ing into account the latest actual figures a0aila-le
with the -an6) while "re"aring the -udget.
- ?etailed schedules of de0elo",ent of the -alance sheet co,"onents) -alances with the -an6)
loans and ad0ances) in0est,ent "ortfolio and -an6Es custo,er de"osits.
- ?e0elo",ent of inco,e and e="enses co,"onents.
- <a"ital ade9uac1 ratios.
- Instructions concerning -an6Es internal -udgeting structure and i,"le,entation strateg1 of
-an6Es officials.
Fa6i1esi 19$$# further o"ined that B-udgetar1 "re"arations ,ust reflect the organi:ational o-;ecti0es
for the -udgeted "eriodC. In the 0iews of Faroti,i 199$# B-udget "re"arations needs to follow a "articular
techni9ue or s1ste,) which should e0ol0e through three "hases of -udget orientation na,el1 <ontrol)
4anage,ent and "lanningC. .udget "eriods are -ased on annual and interi, -asis -ro6en down into control
"eriods. 8he &rgani:ation for 3cono,ic coo"eration and ?e0elo",ent 1992# suggests that the ti,e hori:on of
-udgets could -e short-ter, or long-ter,. 8hose -udgets that relates to current conditions in a fir, de"ending on
the nature of -usiness) are regarded as short-ter,) while those -udgets that are esta-lished as a "lan for
de0elo",ent) with longer gestation "eriods are regarded as long-ter, -udgets.
It is i,"ortant to e,"hasi:e howe0er that efficient -udgeting and "lanning also de"ends largel1 on its
i,"le,entation and control. 30en when a co,"rehensi0e -udget has -een "re"ared and "ac6aged) -udgetar1
control ,easures are needed to direct the actual state of affairs and "ro"er i,"le,entation of "lans. 8hus
Faroti,i 199$# 0iews -udgetar1 control as Ban internal control s1ste, which ,anage,ent uses in achie0ing the
o0erall control of the entire -usiness acti0ities within an enter"riseC.
&rgani:ations ,a6e -udgets for a 0ariet1 of reasons) which are funda,ental to ,eeting "lans and
targets of the enter"rise. In the 0iews of >alford 196$#) -udgets are useful in the a nu,-er of wa1s. Firstl1)
-udgets can -e used as a tool for <ontrolling. Since docu,entation of "lans in the for, of -udgeting) creates a
-lue"rint for the i,"le,entation of those "lans. An1 de0iation can) therefore) -e in0estigated for correcti0e
,easures and actions to -e ta6en. Also -udgets can -e used to coordinate the acti0ities of su--units of an
organi:ation) es"eciall1 if the -udgets are constructed in such a wa1 that ena-les each de"art,ent contri-ute
,ost efficientl1 to the achie0e,ent of o0erall "lan. 39uall1) -udgets "ro0ide for the co,,unication of the "lans
and intended goals of the -udgets) to the indi0iduals and officials who are going to -e res"onsi-le for the
i,"le,entation of the "lan.
8he &rgani:ation for 3cono,ic <oo"eration and ?e0elo",ent 1992# also suggests that -udgets can
-e used to authori:e the e="enditure contained in it. 8he &rgani:ation is of the o"inion that the "lanned acti0ities
and e="enditure contained in the -udget) "ro0ides a 1ardstic6 against which actual "erfor,ance can -e ,easured.
>owe0er) &ni 199%# o"ined that -udgets -asicall1 ser0e as a 9uantification of "ro"osals) in which case) internal
o"erating staff of an organi:ation are ,ade aware of the BcostC of their decisions on the attain,ent of o0erall
o-;ecti0es of the organi:ation) which is su-se9uentl1 used to e0aluate their indi0idual "erfor,ance. In a ,ore
restricted and technical sense) uses of -udgets in -an6s) as ca"tured -1 Soludo 2**%#) is -asicall1 for a nu,-er
of reasons as highlighted -elow.
- 8o ena-le -an6s carr1 out their o"erations within the "olic1 fra,ewor6 of the <entral .an6 of
Nigeria.
- 8o ena-le Nigerian .an6s dis"el with the attri-utes of -eing regarded as fragile) s,all)
unco,"etiti0e) and tainted -1 insta-ilit1) and su-se9uentl1 -eco,e do,inant financial "la1ers
in the Nigerian and glo-al ,ar6ets.
- 8o assist -an6s to focus on their "ri,ar1 functions of -eing financial inter,ediaries) who ha0e
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1$
the res"onsi-ilit1 of ,o-ili:ing funds fro, sur"lus units within the econo,1) and to channel
these funds ,o-ili:ed to deficit econo,ic unit for "roducti0e acti0ities.
- 8o facilitate the "erfor,ance of -an6s in their core acti0ities of lending) treasur1 o"erations)
trade financing) "ri0ate -an6ing) and financial ad0isor1 ser0ices.
- 8o aid the effecti0eness of -an6ing "roducts and ser0ices) which ,ainl1 includes) asset -ased
finance) structured trade finance) e9ui",ent leasing) finance leases) loan s1ndication) ad0ances)
-onds) guarantees) cash ,anage,ent) ,utual funds) co,"an1 floatation) ca"ital reconstruction
and restructuring) ,ergers and ac9uisition) "ro;ect finances) custodial and trust ser0ices.
<onse9uentl1) <ha,-erlain 2**(#) 0iews -udgets as an instru,ent that is ca"a-le of s1nchroni:ing
the internal o"erational structure of -an6s) with the indis"ensa-le e=traneous influences of the <entral .an6 of
Nigeria) as a do,inant regulator1 -od1 for -an6s in Nigeria. 8hus the result of effecti0eness in Nigerian -an6s is
a direct function of effecti0eness and efficienc1 in their -udgeting and "lanning "rogra,,es.
It is howe0er) a well esta-lished fact that the acti0ities of e0er1 -usiness concern are li,ited -1 so,e
factors) which "re0ents infinite e="ansion. 8hese factors are -asicall1 res"onsi-le for the structural rigidities and
o"erational i,-alance recorded in the -udgeting and "lanning "rogra,,es of financial institutions) ,ost
es"eciall1 -an6s. .ell 19$9# o"ined that B"lanning and -udgetar1 "rogra,,es are often co,"licated -1
unforeseen econo,ic factors such as inflation and econo,ic recession) which can render a realistic forecast
unattaina-leC. <rowling 19$$# -elie0es that Bfre9uent changes in go0ern,ent "olicies are the ,a;or i,"edi,ent
to achie0ing the desired o-;ecti0es of -udgeting and "lanningC.
?uring the 199@ International !u-lic Relation Ad0ance <ourse) for to" 4anage,ent at >ol-orn
<ollege in +ondon) the "ertinent issue identified) for lac6 of s1nchroni:ation in -udgeting and "lanning
"rogra,,es of ,ost financial institutions was that) the s1ste, of -udgeting) "lanning and -udgetar1 control are
not well esta-lished and a""reciated -1 those enter"rises with high turn-o0er. 8he1 e,"hasi:ed that "ost-
-udgetar1 control) which is usuall1 a-sent in -udgeting and "lanning "rogra,,es) can render the internal
control s1ste, ineffecti0e and a ,a;or feature that characteri:es ,ost large-scale organi:ations.
?ru6er 1966# identifies the non-in0ol0e,ent of o"erational ,anagers and other heads of functional
units) at the "lanning stages of the -udget) while these sa,e "ersonnel and officials are saddled with the
res"onsi-ilit1 of -udget i,"le,entation) as a ,a;or source of dishar,on1. A-u 19$$# -elie0es that B-udgeting
and "lanning in ,ost organi:ations) are often regarded as annual rituals) which lac6s sincerit1 of "ur"ose and
,ost ti,es are ne0er strictl1 o-ser0ed and ,eticulousl1 i,"le,entedC) hence a ,a;or factor that accounts for
rigidities and i,-alance. In the 0iews of .a16ou 1977# howe0er) Bthe introduction of uncontrolla-le e="enses)
where-1 so,e e="ense ite,s are regarded as uncontrolla-le can hinder the achie0e,ent of the desired o-;ecti0es
of -udgeting and "lanningC. .ased on all the factors highlighted a-o0e) the need to resol0e these conflicting
structural issues and s1nchroni:e the twin issue of -udgeting and "lanning es"eciall1 as it affects the o0erall
"erfor,ance of -an6s cannot -e o0er e,"hasi:ed.

2. !mpherical Framework of Budgeting and Planning
Identif1ing those constraints that create structural rigidities in the -udgetar1 and "lanning "rocesses of Nigerian
-an6s with a 0iew to identif1ing correcti0e ,easures to address those rigidities and i,-alance is a reci"e for
cur-ing organi:ational disorder. In the 0iews of /s,an 2**@#) he "osits that the ,a;or "ro-le, of -udgeting
and "lanning in -an6s can -e addressed fro, the d1sfunctional nature of -an6s "a1,ents) sa0ings and
in0est,ent structures. It is widel1 recogni:ed that one of the li,itations of the -an6ing sector in Nigeria is that
,ost dail1 "a1,ents for co,,ercial acti0ities and other transactions) in0ol0ing the o0erwhel,ing ,a;orit1 of
the "o"ulation) are carried out outside the -an6ing sector. Another ,a;or area of constraints is the li,ited reach
of -an6Es sa0ing ser0ices. <onse9uentl1) in0est,ent can onl1 -e "roducti0e and "rofita-le) if the in0estor and
those financing the in0est,ent ha0e a close gras" of the s"ecificities of the "roducti0e ca"acit1 and ca"ital of the
in0estor. 8hus ,an1 -an6s ris6 chronic ga"s -etween re0enues and necessar1 e="enditure) -ecause of structural
defects and wea6nesses in coordinating their "a1,ent) sa0ings and in0est,ent acti0ities.
!erha"s what ,a1 -e regarded as one of the "redo,inant "ro-le, associated with -udgeting and
"lanning "rogra,,es in Nigerian .an6s is the "ertinent issue of "olitical insta-ilit1) cou"led with the
inconsistencies in Do0ern,ent "olicies. In the "ast) Nigerian -an6s ha0e often -een descri-ed as fragile) s,all)
and unco,"etiti0e and tainted -1 insta-ilit1. >owe0er an assess,ent -1 the <entre on .udget and !olic1
!riorities 2**(# indicates that) the unsta-le nature of the Nigerian !olit1 is largel1 res"onsi-le for the
inconsistencies in the internal -udgetar1 and "lanning structures of Nigerian .an6s.
Further,ore) the fa,iliar challenge in the -an6ing su--sector) which relates to the sector -eing one of
the ,ost regulated industr1 in Nigeria) e9uall1 creates certain distortions in the internal -udgeting and "lanning
structures of -an6s. 8his is -ecause according to Al-Rasheed 2**6#) the for,er 3=ecuti0e ?irector A
Su"er0ision ?e"art,ent of the <entral .an6 of Nigeria) -an6s in Nigeria are re9uired to align their internal
o"erational structures) to s1nchroni:e with the "olic1 fra,ewor6 of the A"e= -od1) as a "rere9uisite for their
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continuous o"erations.
Additionall1) there is also the consistent "ro-le, in -an6s which relates to the a-sence of coordination
-etween "lanning units which usuall1 a "redo,inant function of to" ,anage,ent staff#) and the -udget
i,"le,entation unit a res"onsi-ilit1 usuall1 0ested in the financial and control officials of the -an6#. In the
0iews of the A,erican .an6ers Association 2**%#) lac6 of coordination is ca"a-le of creating "ro-le,s) such
that the strategic "olicies reco,,ended in the "lan) ,a1 not -e ade9uatel1 ca"tured in the -udget) as the thrust
of the -udget ,a1 -e at 0ariance with the goals of the "lan. /nder these circu,stances) the fiscal "olicies
"ro0ided for in the -udget) ,a1 actuall1 0itiate the goals of the "lan) "articularl1 when the "ersonnel in0ol0ed in
the -udget "re"aration are entirel1 different fro, those reco,,ending the "lan.
4arlin 2**@# adds his 0oice to the "ro-le,s of -udgeting and "lanning in -an6s) -1 highlighting the
"ro-le, of B>allo 3ffectC in -udgeting and "lanning "rogra,,es. 8his refers to undue senti,ental attach,ent
of -an6s to the esta-lish,ent of a "ro;ect or acco,"lish,ent of a s"ecific goal) which ,a1 lead to o0er
co,,it,ent of funds to such a goal) at the e="ense of other e9uall1 i,"ortant "ro;ects.
<onse9uentl1) the <hartered Institute of .an6ers of Nigeria further highlights the "ro-le,s associated
with -udgeting and "lanning in Nigeria.
- ?ifferentials in the ti,e fra,e of -udgets) such that -an6s ,a1 -e fa0ora-l1 dis"osed to short-
ter, -udgetar1 "eriods) whereas the ade9uate design that can guarantee effecti0e "erfor,ance
of their duties) ,a1 re9uire long-ter, -udgetar1 and "lanning "eriods.
- <o,"lications in -udgetar1 and "lanning "rogra,,es due to unforeseen econo,ic factors
such as inflation and econo,ic recession) which is ca"a-le of rendering a realistic forecast
unattaina-le.
- Non in0ol0e,ent of rele0ant sta6e holders within and outside the -an6ing s1ste,s) -efore)
during and after the "ac6aging of -udgetar1 and "lanning "rogra,,es of -an6s.
- .an6Es increased ,ar6eting -udgets) in order to re,ain co,"etiti0e) at the e="ense of e9uall1
i,"ortant units within the -an6ing su--sector.
- Ina-ilit1 of -an6s to ,o0e into the area of 4ar6et Seg,entation) which is a -udgetar1 strateg1
for targeting s"ecific custo,er grou"s and to "ro,ote custo,i:ed "roducts and ser0ices.
- Ina-ilit1 of the co,,ercial -an6s through the <.NEs "olic1 fra,ewor6# to successfull1
consu,ate the "ro"osed B<ashless 3cono,1C regi,e.
A detailed identification of the factors res"onsi-le for structural rigidities) as well as the ,a;or
"ro-le,s associated with -udgeting and "lanning in -an6s) creates a -asis for the har,oni:ation of -udgeting
and "lanning "rogra,,es. 8his is of great i,"ortance if the goals of effecti0eness and efficienc1 of -an6s) is to
-e guaranteed. !ar6er 1997# -elie0es that Bthough the s1ste,s of -udgeting and "lanning as well as -udgetar1
control) cannot su-stitute for good ,anage,ent) the1 can assist ,anage,ent in their da1-to-da1 decision
,a6ingC. 8herefore it is a""arent that the "rocess of har,oni:ing -udgeting and "lanning "rogra,,es ,ust -e
,ade a focal "oint in e0er1 -an6) es"eciall1 through the instru,entalit1 of .udgeting <ontrols. !ande1 199(# is
of the 0iew that Bfor .udgeting and "lanning to -e effecti0el1 har,oni:ed) such that it -eco,es ca"a-le of
e=erting a "ositi0e influence on effecti0eness and "erfor,ance) it ,ust -e a realistic forecast of what can -e
achie0ed. If it is not) the "ersonnel saddled with the res"onsi-ilit1 of utili:ing such -udgets as a wor6ing tool
will find it difficult to i,"le,entC.
>owe0er) the successful s1nchroni:ation of -udgeting and "lanning "rogra,,es in the 0iews of
Gillia,s 1972# ,ust rest on a tri"od.
- 4anagers and heads of de"art,ents should -e in0ol0ed in -oth the "lanning and
i,"le,entation stages of a -udget.
- 8he s1ste, of "ost--udgetar1 control should -e u"held and co,"li,ented with cost-control
ad,inistration
- Realistic forecast should -e set for the new e,erging "heno,enon called Buncontrolled
e="ensesC in -an6s) while ade9uate control ,easure should -e introduced) to a0ert wasteful
and unnecessar1 s"ending.
8he Institute of <hartered Accountants of Nigeria I<AN# in its B.udget E9$ Re0iewC o"ined that the
integration of "lanning and -udgetar1 software and "ac6ages with the I8 structure of organi:ational o"erations
will enhance good 9ualit1 infor,ation) ade9uate record at a""ro"riate ti,es and effecti0e s1nchroni:ation) in the
o0erall -udgetar1 and "lanning acti0ities of organi:ations. It is i,"ortant to state howe0er that the attain,ent of
a""recia-le le0el of success in the har,oni:ation of -udgetar1 and "lanning structure is further enhanced
through consistent e0aluation and a""raisal. 8his therefore ,a6es the ,easure,ent) a""raisal and e0aluation of
the "erfor,ance of -an6s 0is-H-0is their -udgeting and "lanning structure) a "ertinent issue for assess,ent.
A necessar1 and sufficient condition for s1nchroni:ing the twin issues of -udgeting and "lanning)
es"eciall1 as it affects the "erfor,ance of Nigerian -an6s is the instru,entalit1 of 30aluation. 8his rests on the
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e=istence of constant ,easure,ent and a""raisal of the successful "erfor,ance of -an6s) which is -orne out of
the need to accelerate the "rocess of de0elo",ent and reali:ation of the o0erall organi:ational o-;ecti0e. 8he
Institute of <ost and 4anage,ent Accountants I<4A# defines e0aluation as a ,eans of control -1 which the
actual state of affairs are co,"ared with the -udget) so that action ,a1 -e ta6en with regards to de0iations. It is
generall1 regarded as an ele,ent of internal control s1ste,) which ,anage,ent uses in achie0ing o0erall control
of the organi:ation. According to Fitch Rating) Augusto I <o. an International consultanc1 agenc1) -udgeting
and "lanning in Nigerian -an6s) has ena-led the -an6s to create a wide ranging "ositi0e i,"acts) within the
Nigerian econo,1. In the 0iews of the Agenc1) a""ro"riate -udgeting and "lanning "rogra,,es has led to a
BS"urtC in -an6ing acti0ities in Nigeria. Gith well "lanned "rogra,,es) ,eticulousl1 articulated and efficientl1
i,"le,ented) Nigerian -an6s are e="eriencing significant ad0ances in co,,unication and Infor,ation
8echnolog1) which has su-se9uentl1 ena-led the -an6s to e="and their reach -oth in ter,s of geogra"hical co0er
and new "roducts and ser0ices introduced into the ,ar6et.
In the 0iews of &du1e,i 2**(#) the for,er ?e"ut1 Do0ernor A Deneral Ad,inistration of the <entral
.an6 of Nigeria) an effecti0e "ractice of "lanning and utili:ation of sound -udgetar1 structure) sanctioned -1 the
A"e= regulator1 -od1) has led Nigerian -an6s to identif1 with increased co,"etition) with its attendant effect of
"ro0ision of satisfactor1 -an6ing "roducts and ser0ices to the -an6ing "u-lic. >e further o"ined that due to the
entr1 of foreign "artnershi" into the Nigerian -an6ing sector) the su--sector is witnessing Ba s9uee:e in ,arginC
and as a direct conse9uence of this) Nigerian -an6s ha0e increased their focus on Retail .an6ing) in other to gain
access to low-cost funds and to further e="and to relati0el1 unta""ed) "otential growth areas. And as such)
Nigerian -an6s are now e="loring new legal a0enues for increasing their foot "rint and safeguarding their
,argins) thus ,ar6ing a "ositi0e and un"recedented influence that ,eticulous -udgeting and "lanning
"rogra,,es ha0e e=erted on Nigerian .an6s.
!erha"s of great significance is the 0iews e="ressed -1 3do:ie 2**(#) where he stated that -udgeting
and strategic "lanning in Nigerian .an6s has -een an effecti0e sur0i0al tool in the face of a highl1 co,"etiti0e
su--sector. <o,"etition in the Nigerian -an6ing su--sector) cou"led with increased regulations fro, the <entral
.an6 of Nigeria) he o"ined) has re-written the rules of retail lending -usiness in Nigeria. !re0iousl1) slow growth
in cor"orate lending) "ressures on cor"orate s"reads due to increased co,"etition) and concerns o0er asset
9ualit1 and ca"ital -ase) was the "re0ailing condition of the Nigerian -an6ing industr1. >owe0er with ,ore
effecti0e "lanning) -udgeting and restructuring) Nigerian -an6s are now "oised to la1 ,ore e,"hasis on growth)
through e="ansion of retail "ortfolio. 8his is indeed a "ositi0e de0elo",ent) since the Nigerian retail lending
,ar6et is still relati0el1 une="lored) with the "er-ca"ital usage of retail "roduct offerings such as housing finance)
credit cards) consu,er finance) real estate etc) lower as co,"ared to the glo-al finance ,ar6et. 8hus the relati0e
si:e of the Nigerian ,ar6et) -ac6ed -1 factors such as growing "o"ulation of -an6a-le households) and "ositi0e
econo,ic refor,s) which can ulti,atel1 ena-le Nigerian -an6s ca"ture a large "ortion of the huge funds)
circulating outside the -an6ing industr1) can -e ca"itali:ed u"on -1 -an6s) through further align,ents) re-design)
har,oni:ation and consistent e0aluation of -udgeting and "lanning on the "erfor,ance of -an6s.
Further e0aluation of the Nigerian .an6ing industr1 in recent ti,es shows that) through -udgeting and
"lanning) an a""recia-le and sustaina-le le0el of growth has -een witnessed in the industr1) which is
un"recedented in the histor1 of Nigeria. According to for,er !resident &lusegun &-asan;o Bthe growth in the
-an6ing industr1 and the efficient "erfor,ance of -an6s in recent ti,es) is closel1 lin6ed with the refor,
"rogra,,es of the Federal Do0ern,entC. It is i,"ortant to state therefore) that this is ,ade "ossi-le -ased on
the a-ilit1 of Nigerian .an6s to su-scri-e to these refor, "rogra,,es) through their internal -udgetar1 and
strategic "lanning structures. Ghat ,a1 -e considered a do,inant influence of "lanning and -udgeting has
e=erted on Nigerian .an6s) is the o""ortunit1 it has created for ad0ance,ent of technolog1 in -an6s. 8he
Infor,ation 8echnolog1 re0olution in -an6s) as ena-led -1 strategic "lanning) has hel"ed in the aggregation of
infor,ation as well as effecti0e disse,ination of financial acti0ities. .an6s are increasingl1 ado"ting technolog1
as a "latfor, for o0erall success. 8hus technolog1 has re0olutionalised the deli0er1 chains of financial "roducts
and o"ened u" door of wide range o""ortunities in -an6s.
In his own su-,ission Sha,suddeen 2**6# -elie0es that Nigerian -an6s ha0e significantl1 i,"ro0ed
in their "roducti0it1 and "rofita-ilit1) ,ost es"eciall1) as their -udgetar1 and "lanning initiati0es) has resulted in
the land,ar6 achie0e,ent -1 which -an6s ha0e for,ed consortiu,s and created uni9ue designs of sharing
Auto,ated 8eller 4achines A84#. Sharing of A84s he o"ined has ,ini,i:ed geogra"hical o0erla"s and
"ro0ided for -etter co0erage to de0elo" econo,ies of scale and ,ini,i:e the cost of ser0icing custo,ers.
8he "erfor,ance of Nigerian -an6s in recent ti,es has -een a ,a;or su-;ect of -oth National and
International discourse. According to the Financial 8i,es of +ondon 2**(#) while a""raising the i,"act of
-udgeting on "lanning on the "erfor,ance of Nigerian -an6s stated that) for the first ti,e all -an6s o"erating in
Nigeria are now "u-licl1 traded) which has translated into higher efficienc1 in -an6ing o"erations. As a fall out
of -udgetar1 and "lanning i,"act) ena-led through the recentl1 concluded consolidation e=ercise in Nigeria)
o0er J@ .illion was sourced -1 the -an6s fro, the ca"ital ,ar6et and "ri0ate "lace,ent) there-1 -oosting the
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21
weighting of -an6 stoc6s in the total ,ar6et ca"itali:ation of the Nigerian Stoc6 3=change NS3# fro, a-out
2%K to (*K. &f this a,ount J(** 4illion was foreign direct in0est,ent into the -an6ing industr1) hence e="erts
around the world are 9uic6 to agree that no refor, ,easure has 1ielded such "al"a-le flow of in0est,ent ca"ital
within a short ti,e-s"an in the annals of Nigeria. 8his lauda-le effort earned the for,er <.N go0ernor) !rof
<harles Soludo the co0eted honor of the <entral .an6er of the Lear Award fro, the .an6ers 4aga:ine and has
conse9uentl1 shown the i,"act of good -udgeting and strategic "lanning in the Nigerian -an6ing industr1.
>owe0er in ,ore concise ter,s) the i,"act of -udgeting and "lanning on the o0erall "erfor,ance of
Nigerian -an6s as o-tained on the financial we-site www.cen-an6.org in 2**6) are highlighted -elow.
- Nigerian -an6s are no longer regarded as technicall1 insol0ent and inca"a-le of ,a6ing
tangi-le i,"act on national de0elo",ent) and the era of "oor "erfor,ing loan "ortfolios ha0e
-eco,e histor1) due to ,ore effecti0e "lanning and -udgeting in Nigerian -an6s.
- 3ffecti0e "lanning is largel1 res"onsi-le for the strong ca"ital -ase Nigerian -an6s now ha0e)
such that the lowest ca"itali:ed -an6 in Nigeria in a "rincel1 N@( .illion a-out J26* 4illion#)
and as such the <.N has further announced its desire to consider indigenous -an6s in the
,anage,ent of the National 3=ternal Reser0e.
- I,"ro0e,ent in the industrial a0erage of loan dis-urse,ent to ,anufacturing) agricultural and
other realF"roducti0e sectors of the Nigerian econo,1.
- Dreater a-ilit1 of Nigerian -an6s to sufficientl1 ,o-ili:e do,estic sa0ings and ,eet the
funding needs of a -udding "roducti0e sector in Nigeria.
- .udgeting and !lanning has ena-led Nigerian -an6s to sti,ulate "roducti0it1) encourage ;o-
creation and hel" alle0iate "o0ert1 in Nigeria) through a""ro"riate "lanning and -udgetar1
"ro0isions for loan s1ndication.
In his own 0iew !eterside 2**(# stated that effecti0e -udgeting and "lanning) has ena-led Nigerian
-an6s to -uild credi-le re"utation) an efficient wor6-force) strea,lining o"erational focus and entrenching
trans"arenc1. <ole,an 2**%# su,s u" the i,"act of -udgeting and "lanning on the "erfor,ance of Nigerian
-an6s) when he o"ined that there is no gainsa1ing that the Nigerian econo,1 is a ,ono "roduct one) still una-le
to ,a=i,i:e its full "otentials) -asicall1 -ecause the oil industr1 re,ains the "re-do,inant sector accounting for
o0er $(K of Do0ern,ent Re0enue. /nder this scenario and gi0en the huge do,estic ,ar6et and growing
"urchasing "ower) the Nigerian econo,1 could for, the -edroc6 for a 0ia-le -alance sheet for the -an6s
o"erating within the econo,1. 8herefore it -ehoo0es on Nigerian -an6s to utili:e the instru,entalit1 of strategic
"lanning and effectual -udgetar1 "rocesses to see6 and gain new o""ortunities in sectors li6e infrastructure)
consu,er lending) housing-financeF,ortgage) 0alue-added e="ort) food "rocessingF"ac6aging) consu,er "roduct
,anufacturing and ser0ice sector.
A-o0e all) it has -eco,e increasingl1 clear that -udgeting and "lanning) is an effecti0e internal
o"erating tool for Nigerian -an6s to achie0e o0erall success in their -an6ing acti0ities) and can su-se9uentl1
re,ain a "ositi0e instru,ent for effecti0e "erfor,ance in the long-run. >ence the "ositi0e and -eneficial
influence that .udgeting and !lanning e=ert on the o0erall "erfor,ance of Nigerian .an6s cannot -e
o0ere,"hasi:ed.

$. %ethodology
.1 ,eans of sur0e1 research design and "ercentage statistics ,ethod) this stud1 e=a,ined the i,"act of
-udgeting and "lanning on the "erfor,ance of financial institutions) with s"ecific focus on Nigerian .an6s. 8he
choice of this design was due to the fact that the researcher "ercei0ed it a""ro"riate -ecause of the need to ha0e
co,"arati0e and in-de"th assess,ent of the issue in 9uestion.
8he "o"ulation of the stud1 consisted of to" ,anage,ent and ,iddle le0el ,anage,ent staff of selected
financial institutions in Nigeria. 8he "ri,ar1 data were o-tained through the use of a well structured
9uestionnaire ad,inistered to the res"ondents) while the secondar1 data were o-tained fro, the annual financial
state,ents of the -an6s) as well as fro, files) rele0ant docu,ent) ,e,os) ta= laws) -an6 "a,"hlet re"orting
standards) ;ournals) ga:ette) and financial colu,ns of National dailies. 8he sa,"ling techni9ue ado"ted for the
"o"ulation of the stud1 is the non-"ro-a-ilit1 t1"e. 8hat is the non-,athe,atical -ased st1le of 9uota sa,"ling.
Rather the ,a=i,u, of $*K of su-;ects was used for the sa,"le si:e of ,anage,ent and non-,anage,ent staff
-ased on the reco,,endation -1 .org and Dall 197%#. ?ata was anal1:ed using the "ercentage statistics
,ethod. 8he raw scores and their e9ui0alent "ercentages were used in answering research 9uestions earlier
de0elo"ed for the stud1.

&. "esult and 'iscussions
8he anal1ses and inter"retation of data o-tained fro, -oth "ri,ar1 and secondar1 sources are -rought under
re0iew so as to answer the "ertinent 9uestions raised in this stud1. Fro, all the issues raised and -rought under
re0iew in this stud1) it can -e inferred that the su-;ect of -udgeting and "lanning is a tas6ing issue) while itEs
'ol.() No.16) 2*1%

22
i,"ortance in e=erting a "ositi0e or negati0e influence on the "erfor,ance of -an6s) and cannot -e
o0ere,"hasi:ed.
>ence twent1-se0en different ta-les of data were anal1:ed this stud1. 8he first ta-le relates to the
"resentation of data anal1sis) while twent1-si= ta-les) each anal1sed) and relates to answering all ,a;or research
9uestions -rought into focus.
Fi0e ta-les each anal1sed that is 8a-le %.2 to 8a-le %.6# were structured to answer research 9uestion
one) while four ta-les) each anal1sed that is 8a-le %.7 to 8a-le %.1*# were constructed to answer research
9uestion two. Also four ta-les) each anal1sed that is 8a-le %.12 to 8a-le %.1%# relates to addressing the issues
raised in research 9uestion three. Further,ore three ta-les) each anal1sed that is 8a-le %.1( to 8a-le %.17# were
e9uall1 constructed in an atte,"t to answer research 9uestion four. Additionall1 research 9uestion fi0e was
answered using four ta-les) each anal1sed that is 8a-le %.1$ to 8a-le %.21#. Also three ta-les) each anal1sed
that is 8a-le %.22 to 8a-le %.2%# were directed at addressing research 9uestion si=. <onse9uentl1) the
funda,ental issues raised in research 9uestion se0en were gi0en answers through the construction of three ta-les)
each anal1sed that is 8a-le %.2( to 8a-le %.27#. 8hus the ,a;or findings -rought into focus are further discussed.
It was disco0ered that ,ost Nigerian -an6s do e,-ar6 on -udgetar1 and "lanning "rogra,,es.
>owe0er these -udgetar1 and "lanning "rogra,,es are highl1 restricti0e in nature such that) it is e=clusi0el1
drawn out -1 to" le0el ,anage,ent staff) who are constituted into a -udget co,,ittee) while the -ul6 of non-
,anage,ent staff) who will e0entuall1 -e saddled with the res"onsi-ilit1 of e=ecuting the -udgetar1
"rogra,,es are not in0ol0ed at the "lanning stages.
In another finding) it was o-ser0ed that ,ost -an6s for,ulate their -udgetar1 "lan of actions -ased on
three do,inant issues. 8hese "latfor,s "ro0ide the fra,ewor6 within which the -udgetar1 "rogra,,es are
structured. 8hese do,inant the,es include) reali:ation of the goals and o-;ecti0es of the -an6) "olicies that
addresses issues of inflation) current econo,ic conditions and unforeseen circu,stances) as well as "roducts and
ser0ices rendered -1 indi0idual -an6s.
<losel1 related to the a-o0e is the fact that) financial institution are of a strong o"inion that a strong
relationshi" does e=ist -etween -udgeting and "lanning as a "heno,enon and the effecti0e "erfor,ance of -an6s)
which ,a6es the su-;ect of a""raising and s1nchroni:ing the twin issues of -udgeting and "lanning) "articularl1
as it relates to effecti0e "erfor,ance of -an6s) a "ara,ount issue.
Additionall1) there is an indication that if the internal construction of -udgetar1 and "lanning
"rogra,,es within -an6s) are ,ade to reflect the "olic1 thrust of regulator1 -odies) and if these "rogra,,es are
allowed to sur0i0e through a cordial relationshi" a,ong res"onsi-le officers at the i,"le,entation stages and
e9uall1 rested u"on the fra,ewor6 of wides"read consultations which ,a1 -e internal as it affects -ranch
,anagers) o"eration ,anagers and others#) as well as e=ternal consultations "articularl1 with <.N officials and
other rele0ant sta6eholders#) such a "osition is ca"a-le of integrating and s1nchroni:ing -udgetar1 and "lanning
"rogra,,es for effecti0e "erfor,ance and "ositi0e influence) while eli,inating all i,"edi,ents that constitutes
structural rigidities in -udgetar1 and "lanning circles.
Also a close e=a,ination of internal intricacies indicates that ,ost -an6ers are of the o"inion that the
"erfor,ance of Nigerian -an6s o0erti,e) is well a-o0e a0erage and has -een at an a""recia-le le0el of increase
in recent ti,es) while leadershi" co,,it,ents -eing accorded to effecti0e "lanning and successful
i,"le,entation of -udgetar1 "rogra,,es can also -e descri-ed as fairl1 a""recia-le.
<onse9uentl1) an assess,ent of the i,"act of -udgeting and "lanning on the "erfor,ance of Nigerian
-an6s) indicates that a larger "ercentage of ,a;or "la1ers in the financial s1ste, do agree that -udgeting and
"lanning "rogra,,es has -een 0er1 effecti0e in Nigerian -an6s and this "osition has su-se9uentl1 i,"acted
"ositi0el1 on the "erfor,ance of Nigerian -an6s) although there is a general consensus that there is roo, for
greater i,"ro0e,ent.

(. )onclusion and "ecommendation
In 0iew of the a""raisal of the i,"act of -udgeting and "lanning on the "erfor,ance of financial institutions with
s"ecific reference to Nigerian -an6s) the following conclusions can therefore -e drawn fro, the findings
re0ealed in this stud1.
In one of the findings it was disco0ered that ,e,-ershi" of the -udget co,,ittee of -an6s is highl1
restricti0e) since it co,"rises ,ainl1 of a few selected e=ecuti0e officers and high ran6ing ,anage,ent staff. It
can therefore -e concluded that the ,anage,ent of ,ost Nigerian -an6s are 1et to full1 co,"rehend and
a""reciate the i,"ortance and ad0antages of in0ol0ing e0er1 rele0ant sta6eholder within the internal structure of
the -an6) "articularl1 the -ranch and o"eration ,anagers) and in so,e e=ce"tional cases custo,ers and clients of
the -an6) at the "lanning stages of their -udgetar1 "rogra,,es) so as to o-tain 0ital in"uts. 8his is -ecause fro,
anal1sis carried out) des"ite the fact that onl1 a few selected "ersonnel "ac6age the -udgetar1 "rogra,,es)
e=cluding rele0ant officials such as the -ranch and o"eration ,anagers) these sa,e e=cluded officers are
e0entuall1 saddled with the res"onsi-ilit1 of i,"le,enting the "rogra,,es of the -udget. 8his condition) it was
'ol.() No.16) 2*1%

2@
deduced "roduces unintended conse9uences and creates a d1sfunctional situation) which financial can ill-afford.
It is therefore necessar1 that wide s"read consultations) within and outside the -an6 -e ,ade -efore ,a;or "olic1
decisions are ta6en es"eciall1 as it relates to -udgeting and "lanning. 8his is of great i,"ortance -ecause e0er1
-an6 ,ust function as a single s1ste,) in which all its constituent units are inti,atel1 interlin6ed.
In a si,ilar finding) it was re0ealed that -udgetar1 "rogra,,es of Nigerian -an6s are for,ulated
"ri,aril1 on three do,ains that include goals and o-;ecti0es) "roducts and ser0ices rendered) and unforeseen
econo,ic circu,stances. It can -e concluded therefore) that the "olicies contained in the -udgetar1 "rogra,,es
of Nigerian -an6s are not ade9uate enough. 8his is -ecause -e1ond issues that relates to "roducts and ser0ices)
and goal reali:ation) other 0ital issues such as hu,an ca"ital and hu,an resource "olicies) social res"onsi-ilities
within the societ1) 0alue of indigenous currenc1) considerations for low interest rates) ,onetar1 sta-ilit1 and
health1 financial s1ste,) "olicies that relates to the "ro,otion of s,all and ,ediu, scale enter"rises) a,ong
other rele0ant and 0ital issues) ought to for, the -edroc6 of "lanning acti0ities and should nor,all1 constitute
issues of concerns and e="ected to -e reflected in -udgetar1 "rogra,,es. <onse9uentl1) as -an6s "ac6age their
-udgets) ade9uate "ro0ision should e9uall1 -e ,ade to acco,,odate the i,"ortant issues highlighted a-o0e) as
well as the need to o"erate within the regulator1 fra,ewor6 of 8he <entral .an6 of Nigeria) the a-sence of
which can render a realistic forecast unattaina-le.
8hus as Nigerian -an6s consider the ,a;or "olicies to -e ca"ture in their strategic "lanning and
-udgetar1 s1ste,s) current internal and e=ternal econo,ic factors as well as glo-al issues) should -e
,eticulousl1 identified) co,"rehensi0el1 anal1:ed and strategicall1 directed towards an effecti0e) efficient and
ra"id i,"ro0e,ent of the organi:ational s1ste, as a whole) which will in the long run ena-le -an6s to re,ain
rele0ant in the conte,"orar1 Nigerian societ1. Additionall1) -an6s needs to "re"are "rogra,,es that will not
onl1 reflect its stated o-;ecti0es and "roducts) -ut ,ost i,"ortantl1 "ac6age "rogra,,es that will reflect the fact
that needs within the societ1 ha0e -een identified) and that su-se9uentl1) conscious efforts at ,eeting these
identified needs are -een ta6en.
Further,ore) this stud1 shows that har,oni:ation of -udgets is a ,a;or reci"e for o"erational success
in -an6s. It can -e concluded therefore that e=ce"t the "olic1 "rocedures of -udgeting and "lanning in -an6s) is
effecti0el1 integrated and s1nchroni:ed with the "olic1 thrust of regulator1 -odies) "articularl1 the <.N)
-udgetar1 "rogra,,es ,a1 not e=ert the necessar1 i,"act re9uired on -an6ing o"erations and the econo,1 at
large. 8his is -ecause under the scenario of high regulation of -an6s -1 rele0ant regulator1 -odies such as 8he
Federal 4inistr1 of Finance) 8he Nigerian ?e"osit Insurance <or"oration) Securities and 3=change <o,,ission
and 8he <entral .an6 of Nigeria a,ong other regulator1 -odies) the internal -udgetar1 and "lanning "olicies of
Nigerian .an6s ,ust -e structured to align with the re9uire,ents of these regulator1 -odies. 8he <entral .an6
of Nigeria <.N# is the a"e= -od1 in the financial regulator1 s1ste, in Nigeria) and it has the res"onsi-ilit1 of
licensing Nigerian -an6s and "ro0iding the "olic1 fra,ewor6 within which -an6s can o"erate within the
Nigerian econo,1. It follows therefore that Nigerian -an6s can utili:e their internal -udgetar1 and "lanning
s1ste,s not onl1 as an instru,ent of goal attain,ent) -ut also as a 0erita-le tool that can -e e,"lo1ed to ensure
strict co,"liance and confor,it1 to the re9uire,ents of the a"e= -od1. Ghen this is done the ,ulti"le goals of
"rofit ,a=i,i:ation and "olic1 co,"liance of -an6s can -e achie0ed at the sa,e ti,e.
Additionall1) an anal1sis of the issues in 9uestion re0ealed that financial institutions) "articularl1 -an6s
ha0e recorded a""recia-le le0els of i,"ro0e,ent in the "erfor,ance of their core -an6ing ser0ices which
includes lending) treasur1) trade financing) "ri0ate -an6ing) and financial ad0isor1 ser0ices. 8he1 ha0e e9uall1
-een i,"ro0ed efficienc1 in the "roducts and ser0ices rendered -1 -an6s. 8hese "roducts and ser0ices usuall1
re0ol0ing around asset -ased finance) structured trade finance) e9ui",ent leasing) finance leases) loan
s1ndication) ad0ances) -onds) guarantees) cash ,anage,ent) ,utual funds) co,"an1 flotation) ca"ital
reconstruction and restructuring) ,ergers and ac9uisition) "ro;ect finance) custodial ser0ices and trust ser0ices. It
can therefore -e concluded that the recent refor,s in the Nigerian -an6ing su--sector) as cha,"ioned -1 the
<entral .an6 of Nigeria) has indeed -rought a-out desired "ositi0e changes within the su--sector. /nder this
scenario) the attendant effect of econo,ic growth can therefore -e guaranteed. <onse9uentl1 the recent
de0elo",ents within the su--sector e9uall1 attest to the fact that) the internal o"erational -ase of -an6s will
alwa1s re,ain solid) if the instru,entalit1 of strategic "lanning and sound -udgetar1 s1ste,s is constantl1
e,"lo1ed -1 Nigerian -an6s.
Further,ore) the o0erall finding ascertained fro, all the anal1sis and assess,ent underta6en in this
stud1) if 0iewed fro, a ,ore restricted and technical sense shows that -udgeting and "lanning has "ositi0el1
i,"acted on the "erfor,ance on Nigerian -an6s o0erti,e. 8hus) it can -e concluded that one of the ,ost
indis"ensa-le and 0erita-le tool at the dis"osal of Nigerian -an6s) which is ca"a-le of ensuring constant
efficienc1 in o0erall "erfor,ance of -an6ing o"erations) as well as transfor,ing Nigerian -an6s into an effecti0e)
functional and "roducti0e su--sector) is sound strategic "lanning "rogra,,es and effecti0e -udgetar1 s1ste,.
Fro, all the issues that ha0e -een -rought under re0iew in this stud1 and -ased on the findings
"resented fro, the anal1:ed data) it is i,"ortant to reaffir, that -udgeting and "lanning re,ains a 0erita-le tool)
'ol.() No.16) 2*1%

2%
which should not -e dis"ensed with -1 the 4anage,ent of -an6s) -ut rather utili:ed as a tool of constant
a""raisal and i,"ro0e,ent of o0erall "erfor,ance and "roducti0it1 within the -an6s. 8hus the need to
constantl1 resol0e the contending issues associated with -udgeting and "lanning in Nigerian -an6s) and
su-se9uentl1 har,oni:e and s1nchroni:e it as a result oriented instru,ent for increasing the "erfor,ance of
-an6s is of "ara,ount i,"ortance. In the light of this) the following reco,,endations are suggested.
- It is necessar1 that wides"read consultations within and outside the -an6s -e held) -efore ,a;or
"olic1 decisions are underta6en.
- It is a""arentl1 i,"ortant for all Nigerian -an6s to carr1 on their internal o"erations in such a
,anner that the1 function as a single s1ste,) in which all its constituent units are inti,atel1
interlin6ed.
- All .ranch 4anagers) &"erations 4angers) as well as heads of functional de"art,entsFunits within
the -an6) should -e in0ol0ed) -oth at the "lanning and i,"le,entation stages of -udgets.
- It is also reco,,ended that the final "ac6aging of the -udgets should -e the res"onsi-ilit1 of an
enlarged -udget co,,ittee) whose co,"osition should -e reflecti0e of the si:e of the -an6. 8his
co,,ittee will e9uall1 -e res"onsi-le for "ro0iding technical assistance for the successful
i,"le,entation of all "lans and "rogra,,es contained in the -udget.
- .udgetar1 "rogra,,es of Nigerian -an6s ,ust clearl1 identif1 and reflect the stated goals and
o-;ecti0es of the organi:ation) which in ,ost cases is to ,a=i,i:e "rofit at the lowest cost) through
custo,ersE satisfaction and clients delight.
- .an6s -udgets should "ro"erl1 articulate the "references and choice of custo,ers) in ter,s of
-an6ing acti0ities and o"erations) as well as "roduct and ser0ices rendered to ensure that custo,ers
satisfaction is guaranteed at all ti,es.
- Realistic forecasts should -e set for the so-called uncontrolla-le e="enses in -an6s) while ade9uate
cost control ,easures should -e ad,inistered to a0ert wasteful and unnecessar1 s"ending.
- 8he conce"t of social res"onsi-ilit1) in which an i,"ortant sector of the national econo,1) such as
the -an6ing su--sector) is ,ade to "artici"ate in not onl1 econo,ic de0elo",ent) -ut also social
de0elo",ent) should -e ,ade a "riorit1 and do,inant focal "oint -1 -an6s. 8hese should
su-se9uentl1 -e ca"ture in the thrust of their -udgetar1 and "lanning "rogra,,es.
- Also -an6s should constantl1 identif1 uni9ue needs within the Nigerian econo,1) and design its
"rogra,,es to effecti0el1 ,eet these needs as a wa1 of gaining ad0antages o0er co,"etitors)
rather than engaging in unwholeso,e acti0ities and unethical "ractices.
- In other for -udgeting and "lanning to ha0e a "ositi0e and desired i,"act on the "erfor,ance of
Nigerian -an6s) the "rogra,,e of acti0ities e,-ar6ed u"on ,ust -e realistic forecasts of what can
-e achie0ed) within the -udgeted "eriods. If this is not the case) those saddled with the
res"onsi-ilit1 of i,"le,entation) would find it difficult to utili:e the -udget as a wor6ing tool.
- .udgetar1 "eriods that are ,ost con0enient for the -an6s should -e ad,inistered) -ecause
-udgetar1 "lans are ,eaningless) if the1 do not ha0e concrete ti,e-fra,e within which set targets
are to -e achie0ed.
- .oth the short-ter, -udgetar1 "eriods and the rolling "lan s1ste, of action should -e ad,inistered
-1 -an6s de"ending on the 9ualit1 of forecast. 8his will allow for a stead1 flow of de0elo",ent.
>owe0er the long-ter, -udgetar1 "eriods ,a1 e9uall1 -e ado"ted as at when due.
- .udgetar1 "lans should -e -ac6ed u" -1 ade9uate resources) if legiti,ate and "roducti0e results
are to -e e="ected) within the -udgeted "eriods.
- .udgeting and "lanning in -an6s should ne0er -e 0iewed as an annual ritual which lac6s sincerit1
of "ur"ose and lac6 of co,,it,ent on the "art of e0er1one functioning within the -an6ing s1ste,.
Rather it should -e regarded as an effecti0e wor6ing tool) which is ca"a-le of enhancing the o0erall
"erfor,ance of -an6ing o"erations
- .udgeting and "lanning should -e constructed and structured) with the "re,onition that the success
and failure of the whole organi:ation de"ends largel1 on it.
- Also e="erts in strategic ,anage,ent and -udgetar1 s1ste,s should -e engaged and su-se9uentl1
trained) -oth within and outside the -an6ing su--sector in other to guarantee effecti0e "erfor,ance)
and to ulti,atel1 ensure that -udgeting and "lanning "rogra,,es re,ain result oriented.
- It is strongl1 reco,,ended that all ,e,-ers of staff within an1 gi0en -an6 ,ust wor6 together as
a tea, for the o0erall success of all "rogra,,es of acti0ities within the -an6. 8his will hel" to
,o0e the organi:ation forward and also ensure that the o0erall result of -udget i,"le,entation
en;o1s general contri-ution fro, all rele0ant 9uarters and that the -enefits of -udgetar1 success is
achie0ed.
- .an6s should e,-ar6 on wides"read consultations and a cordial relationshi" ,ust -e esta-lished
'ol.() No.16) 2*1%

2(
with all rele0ant regulator1 -odies) "articularl1 the <.N) in other to ,eet the as"irations of these
agencies and to ensure "olic1 co,"liance at all ti,es.
- .an6s should e="lore the "ossi-ilities of designing their internal -udgetar1 and "lanning
"rogra,,es to align with the "olic1 fra,ewor6 of the regulator1 -odies.
- 8he e="ress guidelines and instructions issued -1 these regulator1 -odies should -e strictl1 adhered
to. Ghere discre"ancies occur -etween regulations and internal "olicies of the -an6) this should -e
resol0ed in the ,ost effecti0e ,anner.
- Nigerian -an6s should guide against unethical actions in their o0erall -an6ing o"erations.
- Also -an6s should e="lore "ositi0e wa1s of addressing the "ersistent increase in the inflationar1
rate in the Nigerian econo,1) through a conscious effort to reduce their interest and lending rates.
- Nigerian -an6s should "ut in "lace ,echanis,s that will ensure that their ca"acit1 to e=ecute
go0ern,ent econo,ic "olicies is guaranteed.
- .an6s should engage in an effecti0e "ro,otion and acti0e "artici"ation in s,all and ,ediu, scale
enter"rises) which in the long-run can create an un"recedented custo,er -ase for the -an6s.
- 4ore inno0ations should still -e de0elo"ed and ad,inistered -1 -an6s in the areas of Infor,ation
8echnolog1) 3lectronic .an6ing and 3-co,,erce.
- 8he e=tent of success recorded in the "erfor,ance of Nigerian -an6s de"ends on how well)
e,"lo1ees of the -an6 are con0inced of the "ro"riet1 of set goals.
- 8he directions for the i,"le,entation of -an6s -udgets and o0erall "lanning acti0ities for effecti0e
"erfor,ance need to -e "ro0ided -1 the ,anage,ent of the -an6) while the 0iews of rele0ant
sta6eholders should e9uall1 "ro0ide "ersuasi0e ;ustification for decisions ta6en.
- A necessar1 and sufficient condition for the effecti0e "erfor,ance of -an6s and s1nchroni:ation of
-udgeting and "lanning acti0ities is deli-erate and faithful i,"le,entation) -1 all res"onsi-le
officers. 8his rests on the e=istence of a ,ental "icture of the "resent state of affairs) 0is-H-0is the
future e="ected state of affairs) within the organi:ation.
- 8he introduction of co,"uter software and "ac6ages which are -udget inclined and custo,i:ed)
will enhance good 9ualit1 infor,ation and ade9uate records at a""ro"riate ti,es) fro, which
i,"ro0e,ents in -an6ing o"erations can -e drawn and successful "erfor,ance can -e consolidated.
- Also wides"read consultations are 0er1 essential and the whole structure of the -an6s needs to
function as a single s1ste, in which all its constituent unit is inti,atel1 interlin6ed.

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