OPINION: Why Ministries Of Finance, Budget & Economic Planning Should Be Merged

It goes without saying that the structure of government institutions often determines the quality of economic governance. While sound policies remain essential, the institutional arrangements through which they are formulated and implemented are equally important. As Nigeria continues to pursue economic reforms aimed at achieving fiscal sustainability, inclusive growth and macroeconomic stability, the time has come to review whether the existing architecture for managing the nation’s economy remains fit for purpose.

At present, Nigeria operates two separate but closely related economic ministries. The Federal Ministry of Finance is headed by the Honourable Minister of Finance and Coordinating Minister of the Economy, while the Federal Ministry of Budget and Economic Planning is headed by a substantive Minister, assisted by a Minister of State. On paper, the distinction between the two ministries appears logical: one manages public finances while the other prepares the national budget and coordinates development planning. In practice, however, these responsibilities are deeply intertwined and increasingly inseparable.

It is a no-brainer that economic management is not merely about collecting revenue, controlling expenditure or preparing annual budgets. It requires the continuous alignment of fiscal policy, budgeting, development planning, debt management, public investment, macroeconomic forecasting and performance monitoring. Separating these functions into different ministries inevitably introduces institutional fragmentation at precisely the point where integration is most needed.

One practical drawback of the current arrangement is the physical separation of the two ministries. They are housed in different locations within Abuja, with different administrative structures, reporting lines, support services and bureaucratic processes. While modern communication technologies have improved collaboration, no technology can entirely substitute for the informal, day-to-day interactions that occur when policymakers work within the same institutional environment.

The inevitable consequence is slower consultations, duplicated meetings, overlapping policy reviews and delayed decision-making. Matters requiring urgent coordination often have to move through multiple layers of bureaucracy before consensus can be reached.

Institutional fragmentation also increases the risk of policy inconsistencies. Budget preparation, revenue projections, fiscal strategy, borrowing plans, medium-term expenditure frameworks and national development priorities are all components of a single economic management system. When responsibility for these interconnected functions is divided between separate ministries, disagreements over assumptions, priorities or sequencing can emerge. Such differences may not always be visible to the public, but they can delay implementation, reduce policy coherence and weaken investor confidence.

The existence of parallel administrative structures further increases the cost of governance. Separate ministries require separate permanent secretaries, directorates, procurement units, human resource departments, finance and accounts divisions, planning units, legal services, protocol offices and administrative support systems.

At a time when government is committed to reducing the cost of governance and improving efficiency, rationalizing overlapping institutions deserves serious consideration.
The current arrangement also creates uncertainty over accountability. When economic outcomes fall short of expectations, responsibility is often diffused between multiple institutions. Budget implementation may be attributed to one ministry while fiscal performance falls under another. Development planning may be coordinated separately from budget execution.

Such fragmentation can make it difficult for both the Executive and the National Assembly to assess performance comprehensively or hold any single institution fully accountable for delivering agreed economic objectives.

To be sure, international experience provides compelling support for integrating finance, budgeting and economic planning within a single ministry. A number of countries have deliberately adopted institutional arrangements that not only combine these functions but also reflect the integration in the official nomenclature of the ministry itself. Their experience demonstrates that modern economic governance is increasingly organized around unified institutions responsible for fiscal policy, budgeting, economic planning and macroeconomic management.

Rwanda provides perhaps the closest model for Nigeria’s consideration. Its Ministry of Finance and Economic Planning (MINECOFIN) has for many years brought together public finance management, national budgeting, macroeconomic policy, development planning and resource mobilization under one institutional umbrella. The ministry has been widely credited with improving policy coherence, strengthening fiscal discipline and ensuring that annual budgets are firmly aligned with the country’s long-term development strategies. Rather than treating planning and budgeting as separate exercises, Rwanda integrates them into a single economic management framework.

Mauritius has similarly operated a Ministry of Finance, Economic Planning and Development, recognizing that fiscal policy, national planning and economic development are inseparable components of effective governance. The ministry oversees budget preparation, public financial management, macroeconomic policy and national development planning within one coordinated institution, enabling government priorities to be translated more seamlessly into budgetary allocations and measurable development outcomes.

The trend is by no means confined to Africa. Several countries outside the continent have similarly recognized that effective economic governance is best achieved through integrated institutions that combine responsibility for public finance with broader economic management. Brunei operates a Ministry of Finance and Economy, which brings together fiscal policy, public finance, national budgeting, economic planning and overall economic management under one leadership, thereby promoting policy coherence and efficient decision-making. South Korea likewise consolidated its finance and economic functions into a unified Ministry of Economy and Finance as part of far-reaching public sector reforms designed to strengthen macroeconomic coordination, improve fiscal management and align budgeting more closely with national economic priorities.

A similar philosophy underpins the institutional arrangements in France and Uzbekistan. France’s Ministry of the Economy and Finance reflects the long-standing recognition that managing the nation’s finances cannot be divorced from managing the economy itself, with fiscal policy, economic strategy and budgetary oversight coordinated within a single ministry. Uzbekistan has also established a Ministry of Economy and Finance, bringing together finance and economic management functions as part of broader governance reforms aimed at enhancing policy coordination and improving public sector efficiency.

Taken together, these examples demonstrate an emerging international consensus that the integration of finance, budgeting and economic management within one ministry fosters stronger coordination, clearer accountability and more coherent policymaking. Nigeria would therefore not be charting an unfamiliar course by establishing a Federal Ministry of Finance and Economy; rather, it would be aligning itself with an institutional model that has gained acceptance across both developed and developing economies.

More importantly, it would send a clear signal that the management of the nation’s finances, budget and long-term economic transformation will henceforth be pursued through one coherent institution with a single leadership, unified accountability and an integrated policy vision.
Essentially, creating a unified Ministry of Finance and Economy would produce several important benefits:

First, it would ensure that national planning, budgeting and fiscal policy are developed simultaneously rather than sequentially. Development priorities would directly inform budget allocations, while fiscal realities would shape planning assumptions from the outset. This would improve the realism and implementability of national development plans.

Second, a single ministry would enable faster policy coordination. Revenue forecasts, expenditure ceilings, macroeconomic projections and public investment priorities could all be developed through integrated technical teams working under unified leadership. Decisions that currently require inter-ministerial consultations could instead be resolved internally, reducing delays and improving responsiveness to changing economic conditions.

Third, the merger would strengthen accountability. A unified ministry headed by one Minister, assisted by a Minister of State, would provide a single institutional focal point for economic management. Performance against fiscal targets, budget implementation, economic growth objectives and development priorities could be assessed within one integrated framework.

Fourth, the merger would reduce administrative duplication. Consolidating overlapping directorates and support services would generate efficiency gains, improve coordination among technical departments and contribute to the broader objective of reducing recurrent government expenditure without diminishing service delivery.

Fifth, investors, development partners and international financial institutions generally value institutional clarity. A single ministry responsible for fiscal policy, budgeting, economic planning and macroeconomic coordination would simplify engagement with external stakeholders while presenting a more coherent economic policy framework.

Naturally, institutional reform should be carefully managed. The objective should not be to simply combine two organizations administratively but to redesign economic governance around integrated policymaking and implementation. A phased transition over the next twelve months would therefore be both prudent and achievable.
The first quarter should be devoted to a comprehensive functional review of both ministries. This review should identify overlapping mandates, duplicate structures, staffing implications and legislative amendments required to establish the new Ministry of Finance and Economy.

During the second quarter, the Federal Executive Council could approve the new organizational framework while necessary amendments to enabling regulations and administrative instruments are initiated. Departments with similar responsibilities should begin coordinated planning under joint implementation teams.

The third quarter should focus on institutional integration. Administrative units such as finance, procurement, legal services, human resources, information technology and planning should be merged progressively. Technical departments responsible for macroeconomic analysis, budgeting, fiscal policy, public investment and national development planning should also be reorganized into integrated clusters to facilitate continuous collaboration.

The final quarter should complete the transition with the presentation of the first fully integrated Medium-Term Expenditure Framework, Fiscal Strategy Paper and annual federal budget prepared under the new institutional arrangement. This would provide an opportunity to evaluate the effectiveness of the merger before subsequent refinement based on operational experience.

Throughout the transition, staff welfare, institutional memory and technical expertise should be carefully preserved. The reform should be driven by improved effectiveness rather than workforce reductions. Clear communication with employees, development partners and the National Assembly would be essential to ensure confidence in the process.

All said, institutions exist to serve national objectives. As Nigeria seeks to accelerate economic growth, strengthen fiscal discipline, attract investment and deliver better outcomes for its citizens, its economic governance framework must evolve accordingly. Budgeting, fiscal management and national planning are no longer separate disciplines; they are interconnected elements of one comprehensive economic management system. Organizing them under separate ministries risks perpetuating institutional silos at a time when integrated policymaking has become indispensable.

Indeed, Nigeria already recognizes the need for integrated economic management by designating the Minister of Finance as the Coordinating Minister of the Economy. If the Minister is constitutionally and politically expected to coordinate the economy, then it is institutionally inconsistent for budgeting and economic planning to remain in a separate ministry. Establishing a Federal Ministry of Finance and Economy would not merely change a nameplate on a government building; it would signal a deliberate commitment to integrated economic governance, and better policy coordination. For a country seeking sustainable growth and fiscal resilience, that is a reform whose time has come.

-Prof Uche Uwaleke, a Financial Economist, is the Director of the Institute of Capital Market Studies at the Nasarawa State University Keffi and President of the Capital Market Academics of Nigeria