Nigeria’s bloated recurrent expenditure  

Against legislative hooliganism
Buhari – PHOTO CREDIT: Channels

 

There is a proven correlation between declining economic growth and sluggish investment in Africa, research from the World Bank has shown. In an Africa Pulse report released in 2017, the World Bank said Sub-Saharan Africa including Nigeria had failed to make sufficient public capital investments and as such were unable to address infrastructural needs. Yet, closing the infrastructural gap for the affected countries could increase their Gross Domestic Product (GDP) per capita by 2.6% per year. Despite the report, Nigeria in 2018 apportioned N6.25 trillion out of its N9.12 trillion budget to recurrent expenditure. This left less than a quarter of the total budget – N2.87 trillion – to capital expenditure. For 2019, Nigeria is once again trotting down this well-travelled route with its proposed N8.83 trillion budget. As usual, recurrent expenditure received a prominent percentage with N4.04 trillion, leaving capital expenditure with N2.031 trillion.

Since the 70s, total government expenditure in Nigeria has been on a continuous rise with capital expenditure taking the lead at the time. While recurrent expenditure was put at N3.81 billion in 1977, capital expenditure was N5 billion. In 1980, recurrent expenditure rose to N4.8 billion while capital expenditure was more than double at N10.1 billion.

Perhaps the interest in development policies aimed at rapid industrialization was due to the recently bequeathed legacy of planned development from the British colonialists. Government at this time was involved in the speedy growth of infrastructural amenities, social services and even the production of goods, which could not be manufactured by the private sector because of the huge capital costs. After 1980, capital expenditure lost its significance in Nigeria’s national development while recurrent expenditure assumed a more prominent role. From N36.2 billion in 1990, recurrent expenditure rose to N461.6 billion in 2000, N1.5 trillion in 2007 and N2.63 trillion in 2011. On the other hand, capital expenditure received N24.04 billion in 1990, N239.45 billion in 2000, N759.3 billion in 2007 and N1.9 trillion in 2011.

READ ALSO  Malabu Oil: London court approves Nigeria’s suit against JPMorgan Chase

It is a known fact that most of the recurrent expenses in Nigeria’s budget are used to fund the most mundane of activities. Purchase of new cars, furniture and office equipment for legislators, refurbishing of the Aso Rock clinic, new sets of cutlery for the Villa’s kitchen or at worst, a series of special haircuts for the President. Nigeria’s inability to prioritize its needs and allocate resources accordingly through the years, has finally accorded us the unenviable rank of the world’s poverty capital. Our dilapidated key infrastructure such as road and rail networks, an almost non-existent water transportation, and most importantly, epileptic power supply, which has led to the collapse and eventual exit of many industries such as Michelin and Dunlop, has further exacerbated the high level of unemployment in the country. Hefty capital investments in massive projects such as the Benin- Okene- Lokoja dualisation, the Enugu-Port Harcourt expressway, the 2nd Niger Bridge, the Kano-Maiduguri dualisation, the Bodo-Bonny highway, the Mambilla Hydro Power, the East–West road, and the Lagos- Ibadan expressway, will not only make for efficient transportation of goods and people, but also in turn, create jobs for the unemployed in the country.

Instead of fixing key infrastructure and making sure public systems work, and by so doing, attract foreign investments, it is worrisome that the government is more concerned with bloated recurrent expenses for running ministries, departments and agencies of government, most of whom don’t expend the budget on the activities they are meant for.

READ ALSO  Nigeria shuts borders again for rescheduled polls

According to the Africa Pulse 2017 report, research data collected for 24 countries in Sub-Saharan Africa revealed that a measly two percent of the GDP accounted for yearly spending on infrastructure between 2009-2015. Of the overall investments on infrastructure, two-thirds was allocated to road construction. It is no wonder then that despite the much touted giant of Africa slogan, Nigeria ranks last in the 10 most developed economies in Africa due to the its poor investment in infrastructure. Thankfully, the National Bureau of Statistics has declared Nigeria out of recession but that is no indication that we are in the clear yet. The 2019 budget, like all others before it, is predicated on the price of crude oil, which can drop at a moment’s notice. Should that occur, Nigeria will be faced with another financial crisis. Instead of waiting for that to happen, the Federal Government should begin to look inwards, eliminating any area of wastage in its civil service. This is not the time for the purchase of another set of office furniture, equipment or cars. Nigeria cannot afford another jamboree of wasteful spending. It is time for the government to truly trim the fat on its recurrent expenses.