Artificial Intelligence and Budgeting in Nigeria: Evaluating Fiscal Efficiency, Governance Challenges, and Strategic Development Implications in the Fourth Industrial Revolution

Abstract

This study examines the role of Artificial Intelligence (AI) in enhancing public financial management and budgeting systems, with particular emphasis on its implications for efficiency, transparency, accountability, and fiscal governance. The increasing complexity of government financial operations and the growing demand for evidence-based decision-making have created the need for innovative technological solutions capable of improving budgeting processes and resource allocation. The study adopts a qualitative approach based on an extensive review of scholarly literature, policy documents, institutional reports, and empirical studies relating to AI applications in public finance. The theoretical foundation of the study is anchored on the Technology Acceptance Model (TAM) and Public Choice Theory. TAM explains the factors influencing the adoption of AI technologies by public officials, while Public Choice Theory highlights how AI can reduce inefficiencies, corruption, and waste through automated monitoring and transparent decision-making mechanisms. Findings reveal that AI significantly improves budget forecasting, expenditure monitoring, fraud detection, financial reporting, and policy evaluation through the use of machine learning, predictive analytics, and intelligent automation. The study also identifies challenges such as inadequate digital infrastructure, cybersecurity risks, poor data quality, limited technical expertise, and resistance to organisational change. The study concludes that AI possesses substantial potential to transform public financial management by promoting fiscal discipline, strengthening accountability, and enhancing the effectiveness of budgeting systems. It recommends increased investment in digital infrastructure, human capacity development, data governance frameworks, cybersecurity measures, and ethical AI policies to ensure successful implementation. The study contributes to the growing body of knowledge on digital governance and provides practical insights for policymakers, public administrators, and development practitioners seeking to leverage AI for improved financial management and sustainable public sector performance.