Nigeria’s Spending Structure Unsustainable, Budget Office, FG May Embark On Cost Cutting Measures

Nigeria’s current trend of spending more money on running the government than on building new infrastructure is unsustainable, Ben Akabueze, director-general of the Budget Office has said

According to Akabueze on Tuesday in a virtual presentation, low revenue collection and high recurrent costs have resulted in actual capital expenditure below two trillion naira ($4.88 billion) a year for a decade, according to Bloomberg.

Metrobusiness reports that the federal government is considering removal of some items from the budget,review of salaries of civil servants as well as merging of some agancies performing related responsibilities as a way of reducing cost of governance.

The government projected a revenue of N7.98trn to fund part of the 2021 budget, but investigations show government expenditure still increasing in most cases twice higher than the revenue.

Besides, budgets which have become yearly rituals have always been filled with mostly projects not necessarily relevant.

But the budget office boss says there is need to bridge the infrastructural gap by making adequate financial allocation.
His words:
“Hence, the investments required to bridge the infrastructure gap are way beyond the means available to the government.”

Recurrent spending, allocated towards salaries and running costs, has accounted for more than 75% of the public budget every year since 2011, he said.

Africa’s largest economy requires at least $3 trillion of spending over the next 30 years to close its infrastructure gap, Moody’s Investors Service said in November. The country’s tax revenue as a proportion of gross domestic product is one of the lowest globally, according to the International Monetary Fund.

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“Huge recurrent expenditure has constrained the provision of good roads, steady power supply, health care services, quality education and quality shelter,” Akabueze said.

Nigeria should amend its constitution to create six regions to replace the existing 36 states, which each have their own governments, Akabueze said. The country also needs to reduce the number of cabinet ministers to a maximum of 24 from more than 40 and cut federal ministries to fewer than 20 from the current 27, he said.

“No country can develop where a large part of its earnings is spent on administrative structures rather than on capital investment,” Akabueze said.