It is widely acknowledged that the country is suffering from an acute shortage of infrastructure. Nigeria’s Integrated Infrastructure Master Plan (NIIM) put together by the previous government estimated that the country needs a cumulative US$2 trillion over the next 30 years to bridge the infrastructural gap. This comes to an average annual expenditure of US$66 billion, which is actually more than twice Nigeria’s annual expenditure.
But the Lagos Chamber of Commerce and Industry (LCCI) at the Nigeria-Japan Public private Infrastructure conference on May 5, 2016 estimated that Nigeria’s infrastructure deficit is US$300 billion. The Nigerian Infrastructure Regulatory Commission has also estimated that about N3.1 trillion will be needed to bridge the infrastructure gap in the transportation sector alone. At current average exchange rate of N305 to the US$, this amount comes to about US$10 billion, almost 50 percent of Nigeria’s 2017 proposed budget.
What comes through in all the figures is the fact that country’s infrastructure deficit is steep and would require a lot of money to get it fixed. In fact, the Minister of Power, Works and Housing recently said that the federal government requires N2.1 trillion to complete abandoned road projects across the country.
Nigeria’s huge infrastructure deficit has been largely been put at the doorsteps of the previous administrations refusal to spend big to develop the nation’s infrastructure. Fashola claims that unlike in the past, when the immediate past government spent just about 15 percent of its budget on infrastructure, this administration will be spending an average of 30 percent on infrastructure.
But a look into past budgets show that it is not accurate to claim that past governments spent only 15 percent of their budget on infrastructure.
In 2010, Nigeria’s total budget stood at N3.93 trillion with the country budgeting N1.85 trillion or 47 percent for capital expenditure. In 2011, the federal government had a total budget of N3.57 trillion and the country’s capital expenditure stood at N1.15 trillion, which represented 32 percent of total expenditure.
Also in 2012, the federal government’s total expenditure stood at N3.95 trillion and capital expenditure was N1.52 trillion or 38 percent of total budget. In 2013, the federal government budgeted N4.99 trillion but had a capital expenditure of just N1.62 trillion, which is 32 percent of the budget. In 2014, the federal government budget stood at N4.64 trillion but capital expenditure provisions actually dropped to N1.10 trillion or approximately 24 percent of the total budget. But in 2015, capital expenditure provisions dropped to a five year low of
N701 billion, which represented just 15.6% of the total budget N4.49 trillion that year. In 2016, which is the first full year budget of the President Buhari administration, capital expenditure stood at N1.85 trillion, which is 30 percent of the total budget of N6.08 trillion for the period.
In 2017, the capital expenditure has been raised further to N2.24 trillion but it still represents 32 percent of the total budget of N7.3 trillion.
The trends shows that on the average the federal government has been consistent in dedicating an average of 30 percent of the country’s budget as capital expenditure. The exception was in 2015, when it dropped to 15 percent. That was also an election year and also the year crude oil prices starting falling from previous year’s highs.
However, what is not captured in the above data is the fact that not all budgeted amounts are eventually released for expenditure. The trend has been that the capital expenditure is never cash backed unlike the recurrent part of the budget that is always fully exhausted. In the 2016 while the N1.8 trillion capital expenditure had only been cash backed to the tune of about 50% as at the end of the year, the recurrent portion was already exhausted.
This inability of the federal government to fully cash back capital budgets is what is mainly responsible for the high numbers of abandoned projects across the country.
