Nigeria’s budgeting system, notorious for earmarking huge recurrent expenditure in excess of the capital component, is grossly flawed. This is, however, not the only defect. A couple of new surveys conducted by some non-governmental organisations have decried the deliberate diversion of the capital budget to recurrent items. In 2018, government will devote only 30 per cent of the budget to capital, but dubiously, a chunk of it is really for overheads, couched in flowery jargon. For a country eager for an economic turnaround, this is a vacuous template.
BudgIT, which monitors the value for money in public spending, says N744.48 billion of the N2.65 trillion capital budget in the 2018 outlay of N8.6 trillion will have no direct impact on citizens. In real terms, it means 42.9 per cent of the capital vote is to be spent on “the procurement of cars, retrofitting of government offices, training, consultancies, purchase of computers and furniture.” Ordinarily, these components ought to be in the recurrent vote.
Inserting them in the capital vote defeats the purpose of budgeting, which is to boost the economy by building social infrastructure. Over the years, the practice has fuelled inequality, servicing just a few. The BudgIT research analysis asserts that the 2018 capital expenditure will benefit less than one per cent of the Nigerian populace – political office holders and civil servants.
Instructively, the funds for the so-called capital projects are to be borrowed. This puts the citizens in a debt trap. Apart from the lopsided 70/30 recurrent-to-capital budget ratio, Nigeria also spent 33.94 per cent of its revenue on debt servicing in 2016, and 34.02 per cent for the same purpose as of July 2017, said the Debt Management Office. This is a perilous budgeting system.
On its part, the Centre for Social Justice denounces the proposals as “frivolous, inappropriate, unclear and wasteful expenditure.” It states that frivolities amounted to N470 billion. Among other items, the CSJ says that N907 million was allocated for the replacement of vehicle spare parts and tyres in the State House, and N4.86 billion for the annual routine maintenance of the Presidential Villa. Several other entries belie the rigorous demands of budgeting. The CSJ says this has been the practice in the past 13 budgets.
Unsurprisingly, therefore, Nigeria suffers from chronic infrastructure deficit. Major highways like Lagos-Ibadan, East-West Road, Abuja-Lokoja-Okene and Enugu-Port Harcourt Expressway are in disrepair. The infrastructure supporting the Apapa seaports in Lagos is an eyesore, gaining notoriety for gridlock. There is virtually no electricity for productive activities, with power generation fluctuating between 4,000 and 5,000 megawatts.
There is little hope: the Muhammadu Buhari administration, which won power with a change mantra, copies its predecessors in penning dodgy budgets. This is why Babatunde Fashola, the Minister of Power, Works and Housing, at the 2018 budget defence of the ministry, told lawmakers that the ministry did not execute any capital project in 2017! He blamed this on the lateness in the passage of the budget and the slow procurement procedure.
Therefore, the ministry – like its counterparts in education, health, solid minerals and petroleum resources – is just there to pay salaries or buy vehicles for civil servants. Its core job of constructing roads, mass housing and supplying electricity, suffers neglect. Chibuike Amaechi, the Minister of Transportation, admitted in December that only 16.55 per cent of the ministry’s capital budget (2017) had been implemented. This was because only N31 billion had been released out of the ministry’s capital vote of N192 billion. This makes it impossible for the ministry to deliver the railway projects, the cost of which is put at $36 billion.
A few years ago, a presidential panel headed by a former minister, Ibrahim Bunu, laid the issue bare. It said 11,886 projects requiring N7.78 trillion to be completed were abandoned as of 2011. Predictably, most of them are now white elephants because they were poorly conceptualised, not cash-backed, or the allocated funds were stolen. An ex-Minister of Works, Mike Onolememen, had told the legislators that the ministry’s capital budget for 2015 was slashed to N11 billion. That year, the Federal Road Maintenance Agency and the Office of the Surveyor-General received zero allocation. A year earlier, the government began the reconstruction of the Lagos-Ibadan Expressway that was to cost N167 billion.
Conversely, Germany, the world’s fourth largest economy with a GDP of $3.3 trillion, anchors its economic development on a strong capital budgeting system. “It (capital budgeting) is characterised by a systematic, clear and coherent process that incorporates planning, a traditional cost-benefit assessment framework and a strong link to the budget process in the short and medium term,” an Organisation for Economic Cooperation and Development Journal on Budgeting report states. Singapore’s late Prime Minister, Lee Kuan Yew, laid the foundation for the country’s economic progress by building physical and technological infrastructure.
To advance economically and attract foreign direct investment, it is important that the capital budget funds be released to the ministries as and when due for the provision of infrastructure. The National Assembly is not a rival to the executive. It should end its penchant for making it difficult for the executive to implement the budget by inserting undesirable items into it in the name of constituency projects.
It should work with the executive to reduce the high recurrent ratio in the budget, first, by reducing its own bloated budget. Budget preparation should be transparently done. The practice of repeating items under different sub-heads breeds corruption. With our existential challenges, it is better to put money into capital projects. The executive should get serious by submitting the budget early, while the National Assembly should pass it expeditiously, not five or six months into a new year, as recorded in the past few years.
