The percentage share of capital expenditure to Nigeria’s total budget has been increasing at a faster pace than recurrent expenditure since the inception of the present administration, but in the proposed 2019 budget, the trend was reversed.
President Muhammadu Buhari presented a N8.83 trillion budget estimates for the 2019 fiscal year before a joint session of the National Assembly on December 19, with N4.04 trillion proposed for recurrent expenditure and N2.03 trillion earmarked for capital projects.
Capital expenditure (CAPEX) as a percentage of total budgets increased to 26.29 percent in 2016 from 15.61 percent in 2015; It moved to 29.17 percent in 2017 and 31.47 percent in 2018, but fell to 23 percent in 2019.
Recurrent expenditure as a percent to total budget fell to 43.73 percent in 2016 from 57.46 percent in 2015 while dipped to 40.19 and and 38.49 percent in 2018, but increased to 45.70 percent in 2019.
Should federal government capitulate to Labour demand kick in soon, personnel cost will be spike, further raising concerns whether policy holders can sustain the new wage bill amid falling oil prices.
The planned spending for the 2019 budget is N294 billion lower than N9.12 trillion approved by the lawmakers in the 2018 budget. This may not be unconnected to falling government revenue largely driven by low production and prices of crude oil which accounts for more than 90 percent of Nigerian government earnings.
BusinessDay analysis reveals that despite a 3.18 percent reduction in the total expenditure for the next fiscal year, recurrent expenditure was raised by 15 percent from N3.51 trillion in 2018 even as capital expenditure was cut down by 29.27 percent from N2.87 trillion.
Prior to this present dispensation of government, the administration of former President
Goodluck Jonathan budgeted a paltry sum of N701 billion for capital expenditure in the 2015 budget, this accounted for 15.61 percent of the entire N4.49 trillion budget estimates for the year, according to data from the Budget Office of the Federation.
Recurrent expenditure however got N2.58 trillion, this represented 57.46 percent of the total budget.
This development was reversed in 2016 upon the emergence of President Buhari-led government that pledged to focus on security, while it would implement policies to attract investment and spur competition in critical sectors of the economy for growth and job creation.
In achieving this, the 2016 Budget tagged “Budget of Change” allocated N1.59 trillion for capital expenditure, about 126.82 percent increase when compared with the previous year, while recurrent expenditure was elevated slightly by 2.71 percent to N2.65 trillion.
This brings the percentage share of capital expenditure and recurrent expenditure to the aggregate budget in 2016 to 26.24 percent and 43.73 percent respectively.
OLUWASEGUN OLAKOYENIKAN
