Infrastructure projects stall as capital votes put on hold

For three straight quarters the Nigerian economy has run without capital votes to fund critical development projects, eventhough the government has struggled to sustain huge recurrent expenditure, largely on borrowed funds.

The National Assembly appropriated N722.20 billion for 2015 capital expenditure, (inclusive of transfers and SURE-P), someN478 billion lower than last year’s budget.

This comprises an increase of N37.77 billion in MDAs’ capital and N20.80 billion for MDGs under capital supplementation.

Analysts said yesterday, that with a depleted treasury and President Buhari’s drag on the appointment of key economic managers, particularly the finance minister, on whose shoulders lie the responsibilities of capital disbursements, further releases are unlikely, at least in coming months. This situation also puts the developement of  Africa’s largest economy in dire straits.

The last capital release overseen by Ngozi-Okonjo-Iweala, immediate past Co-ordinating minister and minister of finance, was N210 billion for the third quarter of 2014, which brought the entire release for last year to N610 billion, out of the over N1.2 trillion earmarked for capital expenditure in 2014.

There was none for the last quarter of last year, as well as for first and second quarters of 2015.

Last year (2014) was a difficult year for Nigeria’s budget implementation and 2015 appears obviously more challenging, say analysts.

N400 billion was released for the first and second quarter capital expenditure, while about N210 billion was released for the third quarter and no releases for the fourth quarter of 2014, apart from other releases for programmes like the Subsidy Reinvestment Programme (SURE-P).Shrinking oil revenue, occasioned by frequent pipeline vandalisation, soft oil prices and under-remittance by some revenue generating Ministries, Departments and Agencies (MDAs) seriously delayed releases last year, and as such, slowed down budget implementation, authorities claim.

Tunji Awonusi, a financial analyst, said it was quite worrisome, and that the situation would likely become worse, following current trends.

“From what we are seeing, it does not look like anything is going to happen soon. The first half of the year is gone to politics and for a business owner, this means a lot,” Awonusi said, adding, “Election is gone, the government needs to take a quick look at the economy.”

He said the overall feeling is that people are getting very jittery about the government’s policy direction and would want it to move on as fast as possible.

“A lot of financial people are worried because the government seems not to have direction and before you know it, we will be entering the last quartet of the year, which is the quarter of earnings.

“So what may happen, is that people will start moving their money away from the capital market into money instruments.”

Awonusi said a lot of people had approached them in the year past, with interest in coming to the capital market for IPOs, “but this is the second quarter and all of them are saying they will probably do it on 2016.

“It is not going on so well if we continue not to have a minister of finance,” he  observed.

He said for instance, an institution like the African Development Bank (AfDB) deals with the finance minister of any country  and may not deal with Nigeria until that position is filed.

“This means with the delay, we are short changing ourselves in many other organisations that we have invested, like in the AfDB.”

The effect is now seen in the rising cases of abandoned projects , owing to the cash crunch which analysts fear could worsen the infrastructure deficit that has hampered economic growth.

Abandoned projects litter the country’s landscape and Abuja has got a fair share of this, due to non-payment of contractors.

These include the Musa Yar’Adua/Airport expressway, Abuja/Lokoja road, the Centenary building project and the Asokoro/Apo 10-lane road dualisation project.

Expensive electioneering for the March 2015 general elections, amidst falling oil prices and a  dwindling economy, drained the treasuries of the three tiers of government and left them prostrate.

This leaves little money for on-going projects and has forced contractors to stop work and trim their workforce to stay afloat.

Leading construction firms such as Julius Berger have resorted to a lean workforce to keep running. Julius Berger has rationalised its workforce thrice between January and May, while another job cut looms. Other indigenous firms have followed suit.

Nigeria, as at 2011 required N10.63 trillion or $67 billion for road upgrades, bridge repairs, the energy sector, hospitals and schools. The estimates from the 2011 Africa Infrastructure Country Diagnostic (AICD) Report, show that Nigeria requires a sustained spending of $14.2 billion per annum over the next decade, to address the infrastructure challenge.

Emeka Eze, the director-general, Bureau of Public Procurement (BPP) said non-payment of contractors for projects executed has kept many away from site, leaving many projects abandoned.

“There is no more glamour in contracts because the processes are tedious and there is appropriate documentation that leaves no room for scandal. People are even pulling out because even after you do the job, it takes a quite a while to get paid”.

Badejo Ademuyiwa & Onyinye Nwachukwu