Ogun 2025 Appropriation Bill: A bold leap towards economic prosperity

The 2025 Appropriation Bill Ogun State Governor, Prince Dapo Abiodun recently presented to the State House of Assembly represents a new paradigm shift from the traditional disproportionate imbalance between recurrent and capital expenditures. One significant highlight of the analysis of the N1.054 trn budget proposal is the higher percentage voted for capital expenditure vis-a-vis recurrent expenditure. Comparison of the two varieties shows a sharp departure from the past. Appropriating 60 percent to capital expenditure as against 40 percent for recurrent spending is an important milestone in the administration’s effort towards achieving sustainable economic growth.

In economics, capital expenditures are funds used to purchase, upgrade, and maintain physical assets, such as buildings, property, or equipment. Recurrent expenditures, on the other hand, are ongoing operating expenses, or short-term expenses, used for day-to-day running of the administration.

The ratio of recurrent to capital expenditure in economics can vary depending on the time period and the country. For instance, in Nigeria, since the advent of the present democratic dispensation, the percentage of capital to recurrent expenditure has been on a declining trend. Between 2010 and 2019, recurrent expenditure made up 79.32 percent of total expenditure, while capital expenditure made up 20.68 percent. Whereas, in the period 1981 and 1990, recurrent expenditure made up 56.66 percent of total expenditure, while capital expenditure made up 43.34 percent.

No economy can grow by mere conspicuous consumption. Investment in critical sectors like road infrastructures, human capital, healthcare service delivery, among others, is very essential for economic development. These will ultimately result in higher productivity and income level, resulting in mutually reinforcing saving and investment.

Under the present administration of Abiodun, road infrastructure transformation, accessible healthcare service delivery and human capital development have been the major priority of the government. This trajectory is going to continue in the new fiscal year.

As already enunciated in the proposed budget, the key priority areas for capital projects include revitalization of 80 primary healthcare centres, procurement of laboratory and medical equipment across all primary health facilities in the state, construction of fire stations, upgrading of rural roads, extension of the Redline Metro Rail, procurement and energizing of transformers, among others.

The sectoral breakdown of the appropriation bill Governor Abiodun tagged: “Budget of Hope and Prosperity,” shows that N453.56 billion will be recurrent expenditure while N600.98 billion will be for capital expenditures. According to him, N120.1 billion would go for personnel cost, N37.49 billion for consolidated revenue cost, public debt charges would gulp N76.07 billion, while N219.86 billion would be spent on overhead costs.

In specific terms, Abiodun promised that the government would embark on the construction of the Ogun Lodge Government House in Abuja, rehabilitate 150 km of feeder roads across the state, construct the OGIRS Revenue House, and a modern Court of Appeal in the state.

To ensure that financing of the budget align with the strategy to enhance revenue generation capacity, he explained that an estimated N120.97 billion would come from the State Internal Revenue Service, N193.85 billion from Ministries, Departments, and Agencies (MDAs), totaling N314.82 billion. He also projected statutory allocations from the Federal Government, including Value Added Tax, to be N228.06 billion, while capital receipts comprising internal and external loans as well as grants and aids are put at N472.66 billion.