For a nation which aims to become one of the world’s most industrialised, Nigeria severely fails at funding the sectors critical for national economic advancement. All over the world, it has been proven that education and infrastructural development are key pillars to the advancement of any nation. Yet on these fronts and in other critical sectors, Nigeria is failing to rise to the challenge.
A cursory examination of the Nigerian government’s budgets and expenditure over the past years reveals the nation’s misplaced priorities: rather than fund the sectors critical for development such as education, healthcare and infrastructure; the biggest chunks of the Nigerian government’s expenditure are instead debt servicing, subsidy of petroleum products and the remuneration of public officials. That this situation is unideal is an understatement.
In 2018, debt servicing accounted for 66 percent of the nation’s revenue. In clearer terms, this implies that for every naira the government generated as income in 2018, more than 60 kobo went to servicing the nation’s debts, leaving little to build badly needed infrastructure and fulfil other developmental obligations. Given that the nation’s debt stock now stands at over ₦24 trillion, this is unsurprising as a corollary to increasing debt stock is an increase in debt servicing.
In absolute terms, Nigeria spent ₦2.2 trillion on servicing outstanding loans in 2018 compared to ₦1.68 trillion expended on infrastructure, according to data released by the Central Bank. While taking up debt is not bad, particularly when such debts remain within acceptable limits and are used to finance economically viable infrastructure, this has not been the case in Nigeria. Therefore, not only have enormous debts and debt servicing obligations been incurred, the nation has little or nothing to show for it.
The subsidy of petroleum products is another substantial component of waste in government expenditure. Although Nigeria is one of Africa’s biggest oil producers, the nation not only imports refined petroleum products but also spends a substantial portion of its revenue on the subsidy of these products.
The cost of fuel subsidy in Nigeria is massive. According to BudgIT, Nigeria has spent nothing less than ₦10 trillion on petrol import subsidy since 2006, depriving the nation of funds needed for critical socio-economic development. For context, BudgIT estimates the ₦10 trillion consumed by the subsidy regime is sufficient to construct 27,000MW of electricity or build about 2,400 units of 1000-bed standard hospitals across 774 local government areas of Nigeria. Given that no nation in history has attained significant economic advancement without sustained investments in infrastructure, education and citizens’ healthcare, that Nigeria continues to spend more on fuel subsidy than on any of these critical sectors is baffling to say the least.
The cost of public governance also leaves much to be desired. Currently, a chunk of government expenditure consists of salaries for civil servants across Nigeria’s bloated federal bureaucracy. Based on available data, the federal government’s recurrent expenditure is estimated at over ₦4.5 trillion. In fact, Nigeria historically spends over most of its annual budgets on recurrent expenditure. This is not a hallmark of a nation with its sights set on achieving swift economic development, and if there were hopes that the 2020 budget would be any different, such hopes have been dashed.
An analysis of the proposed 2020 budget reveals that the component of debt servicing in the 2020 budget proposal is estimated at ₦2.45 trillion. This implies that 25 percentage of the proposed budget is expected to go to debt servicing. Besides, infrastructure related ministries – Works and Housing, Power, and Transportation will receive just over ₦500 billion in total, while a total of ₦160 billion has been proposed for education. A paltry ₦48 billion was allocated to Healthcare. In total, the federal government proposed to spend less than 25 percentage of the entire budget on capital projects in 2020, meaning that the government intends to spend more on servicing its debt obligations in 2020 than on capital projects.
All of these, paint a rather troubling scenario for Nigeria. A nation which spends just 1.5 percentage of its national budget on education is failing to prepare future generations for a fiercely competitive future. Investments in education, particularly STEM education, are critical in order to prepare the young generations for the jobs of the future, while the availability of infrastructure is critical for economic advancement. That Nigeria is currently failing in this regard is an understatement. Thus, there is an urgent need to reassess the nation’s priorities.
In light of the nation’s appalling socio-economic indicators, sustained investments in education, healthcare and infrastructure are necessities. A nation which fails to prioritise investments in these sectors is only setting itself up to fail.
Furthermore, given the perilous state of the nation’s finances, more than ever, the subsidy of petroleum products must be urgently reconsidered. More importantly, there is an urgent need to cut down on the cost of governance. The remuneration of public officials must be urgently reduced while waste in the civil service must also be eliminated.
Overall, there is a pressing need to reassess and reset the nation’s priorities, vis a vis government spending. Massive investments in education, healthcare and infrastructure are necessary if Nigeria is to stand a chance at fulfilling its potential and compete in the upper echelons of nations.
If Nigeria fails to get its act in order and reset its priorities, achieving sustained development will be impossible. That is the sad reality.
OLARENWAJU RUFAI
