For the first time in the history of the country, the Federal Government has been able to back its capital expenditure with total cash release of N1trillion.
“So far, N1 trillion has been released on capital and this is the highest so far in the history of this country. With the current stability in oil price and the return of normalcy in Niger Delta, I am sure we will do more this year (2017),” Minister of Finance, Kemi Adeosun said in a statement released by the Ministry of Finance.
The N1 trillion represents total cash released to the Federal Ministries Departments and Agencies (MDAs) for the 2016 budget.
Even though the N1 trillion capital injection is the highest in the country, it represents just 63 percent of the N1.6 trillion provision made in the 2016 budget as capital expenditure. Nigeria has historically struggled to finance capital expenditure in its budgets, despite it making up less than 30 percent of the budget. Previous governments had always managed to meet up recurrent expenditure demands by 100 percent but struggled to back up capital expenditure provisions with cash, resulting in a build up of abandoned projects across the country.
With the Nigerian economy contracting by 1.5 percent in 2016, the Federal Government has announced its commitment to ensure it releases money for infrastructure spending, in a bid to get contractors back to site and stimulate economic growth. The Presidency has reached an agreement with the legislature to continue to make releases in respect of capital expenditure for the 2016 budget until March of 2017.
Kemi Adoesun,minister of Finance, disclosed the N1 trillion released so far for capital expenditure in the 2016 budget in an interactive session with members of the House of Representatives Tactical Committee on Recession, in her office in Abuja.
The amount was released for various projects including the commencement of the construction of a dual standard railway line that would link Lagos and Kano, rehabilitation of roads, expanding irrigation facilities to boost agriculture and upgrading of aviation infrastructure throughout the country.
Adeosun gave a break down of the outflow, to include aggregate releases to the MDAs of N870 billion as at the end of February 2017 and additional releases of N65 billion.
Others were Manual Authority to Incur Expenditure (AIEs) in February 2017 in the sum of N11 billion and an additional Manual AIEs worth N46 billion as at March 13, 2017.
She noted that the overall capital releases totalling N992 billion have made impact on the Nigerian economy, by creating jobs, stimulating economic activity in communities and upgrading infrastructure, thereby improving the wellbeing of Nigerians.
The minister pointed out that contractors returning to project sites around the country have employed workers, contributed to economic growth and improved the wellbeing of Nigerians, in line with the strategic objectives of the administration of President Muhammadu Buhari.
“We are determined to transform the economy and this is why we are focused on capital expenditure. If we have our rail, road and power, then we will be able to generate jobs and prosperity,” Adeosun said.
At the Federal Executive Council meeting on 22 March, the Federal Government approved the reconstruction of 12 more major highways across the country at the contract sum of N80 billion, as part of its continuous bid to stimulate growth through infrastructure spend.
Analysts have commended the Federal Government focus on capital expenditure, noting that it has the capacity to turnaround the economy because of its impact on a larger segment of the Nigerian population, unlike recurrent expenditure which benefits mainly the public sector.
