Nigeria’s Capital Spending Decreases by 25.3% – CBN
Nigeria’s capital expenditure for the first half of 2024 has declined by 25.3 per cent to N1.99tn, down from N2.68tn in the corresponding period last year.
It was observed that this decline occurred despite the government operating four budgets concurrently.
An analysis of data from the Central Bank of Nigeria’s statistical bulletin shows a shift in spending priorities towards recurrent costs and debt servicing, raising concerns over the long-term impact on economic development.
A month-by-month comparison reveals inconsistent spending patterns in 2024. CAPEX began with zero allocation in January 2024, compared to N379.1bn in January 2023, suggesting a sluggish start to the fiscal year.
Spending peaked in February 2024 with N893.9bn, representing a significant increase from the previous month but still only 36.3 per cent higher than February 2023’s N656.3bn.
However, CAPEX dropped sharply in March 2024 to N258.6bn, reflecting a 65 per cent decline from February 2024 and a 66.1 per cent decrease compared to March 2023’s N763.6bn.
In April 2024, capital spending amounted to just N42.1bn, marking a 36 per cent drop from the N64.5bn spent in April 2023.
The months of May and June 2024 showed some recovery, with CAPEX rising to N478.9bn and N325.4bn, respectively.
However, these figures remained below the corresponding months of 2023, when N300bn and N513.3bn were allocated, highlighting a consistent downward trend.
The uneven monthly spending reflects growing fiscal constraints as the government grapples with rising debt obligations and recurrent expenditures.
Capital expenditure represented about 53.35 per cent of the N3.73tn retained revenue in H1 2024, a drop from the 96.06 per cent share in H1 2023.
This decline points to a reduced focus on infrastructure investment, which may constrain economic growth and job creation.
Meanwhile, total government expenditure rose by 29.5 per cent from N9.39tn in H1 2023 to N12.17tn in H1 2024, driven largely by recurrent spending.
Recurrent expenditure surged by 51.4 per cent, climbing to N10.17tn in H1 2024 from N6.72tn in H1 2023.
Of this, 68.2 per cent was allocated to debt servicing, which soared by 68.8 per cent, reaching N6.04tn compared to N3.58tn a year earlier.
Personnel costs also increased by 17.6 per cent to N2.32tn, further squeezing funds available for capital projects.
The widening gap between revenue and expenditure resulted in a 28 per cent rise in the fiscal deficit, which expanded from N6.59tn in H1 2023 to N8.44tn in H1 2024.
This growing deficit raises concerns over fiscal sustainability as more resources are diverted towards debt repayment and administrative costs, leaving less for growth-oriented investments.
The 25.3 per cent decline in capital expenditure, despite higher overall spending, signals a diminishing capacity to finance essential infrastructure projects, which could stifle economic recovery.
At the 30th Nigerian Economic Summit on Monday, Abubakar Bagudu, the Minister of Budget and Economic Planning, emphasised the government’s commitment to restoring economic stability through the introduction of three distinct budgets.
The minister highlighted the importance of a N2.17tn supplementary budget, the 2024 annual budget, and an amendment to the 2024 budget, which incorporated the Renewed Hope Infrastructure Fund.
The minister explained that these budgets demonstrate the government’s focus on addressing key national priorities, including agriculture and food security, infrastructure, human capital development, security, social investment, and the creative economy.
He outlined innovative measures such as expanding consumer credit to support manufacturing, reforming mortgages to broaden access to housing, launching a student loan scheme, and promoting the CNG energy transition programme.
Bagudu further noted that adopting these multiple budgets is part of a broader effort to reduce the fiscal deficit and enhance capital expenditure, ensuring that the government can fund critical projects while maintaining fiscal discipline.
He said, “Between last year’s summit and today, we have had a N2.17tn Supplementary Budget, a 2024 annual budget, and an amendment to the 2024 budget, which incorporated the Renewed Hope Infrastructure Fund into the budget.
“The three budgets demonstrate our commitment to restoring economic stability and funding our priorities: agriculture and food security, infrastructure, human capital development, security and social investment, and innovation and creative economy. Innovative measures include expansion.”
However, existing data showed that the government’s spending on capital projects has declined this year.
The minister also touched on the government’s commitment to expanding access to affordable credit, encouraging private-sector collaboration, and driving investment across infrastructure, agriculture, and digital sectors.
He called for continued collaboration between the public and private sectors to achieve sustainable economic development and competitiveness on the global stage.
Africa’s leading civic-tech organisation, BudgIT earlier condemned plans by the Federal Government to implement four national budgets concurrently.
With the 2024 budget currently running, the Senate and House of Representatives extended the lifespan of the capital component of the 2023 Appreciation Act and the 2023 supplementary budget.
Also, President Bola Tinubu submitted the 2024 supplementary budget to the National Assembly, making it a total of four national budgets in the 2024 fiscal year.
With the passing of the expansion of the 2024 budget to N35.06tn, a breakdown showed that N1.74tn is earmarked for statutory transfers; N8.27tn for debt service; N11.2tn for recurrent expenditure while N13.77tn is slated as a contribution to the Development Fund for capital expenditure for the year ending December 31, 2024.
This means that the government spent only about 19.46 per cent of its capital expenditure budget in the first six months of this year.
In a statement issued by BudgIT country’s director, Gabriel Okeowo, the organisation described the situation as worrisome.
SOURCE: The PUNCH
