The Federal Government transmitted the bill of the revised budget to the National Assembly for passage before the weekend.
The revised 2020 budget provided ₦100 billion as COVID-19 crisis intervention fund, incremental capital.
The Federal government has cut the budget of the Ministry of Health and other key ministries such as education, power, and agriculture. This is amidst the ravaging COVID-19 pandemic and inadequate health infrastructure in the country. However, in what seems like the Executive arm patronising the Legislative arm, the Zonal Intervention Project budget and the National Assembly Library budget were untouched.
According to the revised document seen by Dataphyte, the Federal Ministry of Health had a downward cut of ₦15.17 billion. Likewise, the Ministries of Education, Science and Technology, Water Resources, and the Federal Capital Territory are also among the worst hit by capital expenditure reductions.
Since the outbreak of coronavirus, governments around the world are adjusting to current economic realities. The global economic shock arising from the pandemic has resulted in the fall of crude oil prices and production. This development led to various adjustments in the early passed 2020 budget, which is pending a review from the National Assembly. Details from the revision showed that the Federal Government reduced the benchmark for the oil price to $25 per barrel, oil production at 1.90 million barrel per day, exchange rate devalued to ₦360 to a dollar.
No ₦1.5 trillion Cut But Increased Recurrent Expenditure
The Federal Government had announced its decision to downsize the entire 2020 budget by ₦1.5trillion. However, the revised budget proposal is only short by ₦80.35 billion (80,345,966,946). According to the proposed budget document, the 2020 budget as passed by the National Assembly was ₦10.59 trillion (10,594,362,364,830) while the proposed revision is ₦10.51 trillion (10,509,654,033,054).
Further analysis of the budget revision showed that despite reductions in capital expenditure of key MDAs, such as Health, Education, and Agriculture, the federal government increased recurrent expenditure by ₦85.55 billion. This is from ₦4.84 trillion to ₦4.93 trillion.
Capital Expenditure of N100 billion for Zonal Intervention Project, others remain unchanged
Despite cuts in key critical sectors, the Federal Government left N2 billion for the construction of the National Assembly Library (NLIDS). Ordinarily, this should have been among the opportunity costs on the expenditure items as a result of dwindling revenue and projected recession.
Other capital expenses not touched include ₦4 billion expenses for Galaxy Blackbone, ₦5 billion for GIFMIS/IPPIS Capital, ₦6 billion for OSSAP: Special Projets, ₦16 billion for OSSAP: Social Safety Net, N10billion for Office of the Senior Special Adviser to the President (OSSA): Conditional Grants To States, ₦8 billion for OSSAP: Payment of Ongoing Projects, ₦7.97 billion for OSSAP – SDGs: SDG Projects 1. Also, ₦100 billion for Zonal Intervention Projects, ₦2.5 billion for Head of Service (Federal Government Staff Housing Loans Board), ₦1.5 billion for National Development Plans (Federal Ministry of Finance, Budget, and National Planning), and ₦7.2 billion for Capital Existencies/Adjustment to Capital Cost.
It also includes ₦10 billion for Contingency (Capital), ₦500 million for Presidential Enabling Business Environment Council (PEBEC), ₦10 billion for Grants to Bank of Industry (BOI) to support low-interest lending to SMEs, ₦26.9 billion for Refund (Acquisition of Yola DISCO), ₦20 billion for Special Intervention Fund, N1 billion for Constitution review, N500 million for CPA, ₦1.5 billion for FGN Intervention In Zamfara/Katsina/Borno, and another ₦2.5 billion for the Digitalisation of Archival for Supreme Court Proceedings and Judgments.
MDAs with Biggest Cuts in Capital Expenditure
The Ministry of Works and Housing got the highest cut of N58.83 billion. The Ministry’s capital expenditure was dropped from ₦315.57 billion to ₦256.74 billion. The Ministry is followed by the Federal Ministry of Agriculture and Rural Development with a revised capital expenditure from ₦124.4 billion to ₦79 billion.
The Ministry of Transport also suffered a similar fate with ₦14.71 billion cut, while Science and Technology Ministry got ₦20.47 billion cut. Also, capital expenditure for the Ministry of Education was cut by ₦16.86 billion, FCTA and the Presidency removed ₦32. 75 billion and ₦9.1 billion, respectively.
The Federal Government also cut ₦111.92 million from the Office of the Auditor General of the Federation, leaving the important component of government with a meagre ₦41.15 million from the initial ₦153.07 million.
Nigeria’s fiscal policy continues to favour recurrent expenditure
The new budget revision suggests the extent of the Federal Government’s commitment to development aspirations. Capital expenditure includes the acquisition and development of infrastructure facilities, maintenance of fixed assets, and others. Contrarily, recurrent expenditure is spent on wages and daily recurring operations. In actual sense, Nigeria’s fiscal policy continues to give high priorities to recurrent expenditure and provisions for debt servicing in place of capital expenses over the years. Although Mrs. Zainab Ahmed, Nigeria’s Minister of Finance, Budget, and National Planning, had claimed in a memo that the revision eliminated non-critical capital expenditure, classified as Administrative Capital Expenditure.
A recent DATAPHYTE occasional paper confirmed Nigeria’s bloated recurrent expenditure. The paper revealed how five key sectors received less than a fifth of the total budget size, while allocation to debt servicing was over 25 percent. For the period, capital expenditure received a meagre percentage.
In an interview with Ms. Aanu Rotimi, the Program Manager at Health Reform Foundation of Nigeria (HEFRON), she said an in-depth review of the constituency projects has shown huge investment in irrelevant projects. She stressed the same budget allocation should not be left untouched “when we are yet to have at least one functional primary healthcare centre per ward”. She then called on the National Assembly to prioritise budget response to the challenges of inadequate human resource for health, poor health infrastructure, inadequate supply of consumables which are leaving mothers and children to die in thousands annually.
Speaking with Mr. Olanrewaju Suraju, Chairman of HEDA Resource Centre, he decried the attempt to leave the legislature’s budget untouched. He said there is no direct bearing or urgent need for a National Assembly Library. It would be better to redeem the National Library than to construct the National Assembly library at this time. Leaving these items in the legislatures’ budget untouched suggest a motivation to negotiate quick passage of the revised budget” he said. He further called on the Senate President and the Speaker of the House of Representatives to ensure that non-essential components are removed from the budget revision.