…Now To Spend N387 billion

Nigeria has slashed the capital expenditure to less than 10 percent of 2015 spending, axing badly needed infrastructure investment due to the collapse in the price of oil, the country’s main source of revenue, according to the full budget submitted to the National Assembly.

Although Nigeria’s capital spending seldom materialises as planned, shelving projects such as port upgrades and roads will only perpetuate the inefficiencies that have plagued Africa’s most populous nation and biggest economy for decades.

The document, seen by Reuters, puts capital expenditure at N387 billion ($2 billion), or 8.9 percent of total spending of N4.357 trillion.

This is a significant drop from the 2014 spending plans in Africa’s biggest oil producer, when capex, or capital expenditure, accounted for 23.7 percent of projected government outlays.

It is also only just over half the N634 billion that Minister of Finance, Dr. Ngozi Okonjo-Iweala, in her December budget presentation, said would go on capital expenditure and related items.

The Director-General, Budget office, Bright Okogu said the reductions were the direct result of the halving in the last six months of the price of crude, which normally accounts for 80 percent of the cash flowing in to state coffers.

“The capex was severely affected by the huge reduction in revenue,” Okogu told Reuters, adding that it was easier to wield the axe on infrastructure projects than Nigeria’s notoriously bloated bureaucracy.

He said wages were difficult to cut and “you cannot reduce staff numbers overnight.”