Counting pennies
Nigeria’s capital expenditure (CapEx) for the first half of 2024 dropped by 25.3% to ₦1.99 trillion ($115.4 million), down from ₦2.68…
Nigeria’s capital expenditure (CapEx) for the first half of 2024 dropped by 25.3% to ₦1.99 trillion ($115.4 million), down from ₦2.68 trillion in the same period in 2023. Despite operating four budgets, January had zero CapEx allocation, compared to ₦379.1 billion in January 2023. Spending peaked at ₦893.9 billion in February but declined sharply in March and April and partially recovered in May and June. CapEx accounted for 53.35% of retained revenue, down from 96.06% in 2023. Meanwhile, President Tinubu has sacked five ministers and appointed seven new ones.
People often confuse potential with exploitation and mineral resources as sources of wealth. As a result, many Nigerians believe that the country is rich and should be able to provide social benefits and amenities for its citizens. However, it is important to clarify that while the government does earn some income, that income is a pittance compared to the sheer size of the population and the infrastructure that needs to be developed. The decline in capital expenditure suggests Nigeria has yet to reposition itself from relying heavily on revenue for debt servicing and recurrent expenses. It also reflects a reduced focus on infrastructure investment, which may constrain economic growth and job creation. Government capital expenditure has a multiplier effect on economic growth, and inconsistent monthly spending highlights growing fiscal constraints. Over the years, past administrations have focused more on recurrent expenses and debt servicing than on capital projects. The current administration says it wants to reverse this trend, as its reforms have boosted revenue and reduced the fiscal deficit. According to the Budget Office of Nigeria, the country’s fiscal deficit fell to ₦6.92 trillion last year from ₦7.03 trillion in 2022. This decline marks the first drop since 2018, when the deficit decreased from ₦3.81 trillion in 2017 to ₦3.64 trillion. A reduced budget deficit allows the government to spend more on capital projects and human capital, which are critical for spurring economic growth, creating jobs, and reducing poverty. However, it is undeniable that the government has perhaps prioritised foreign trips and certain frivolous expenditures rather than focusing on substantial capital projects, and this is where the cabinet rejig comes in. Sacking five ministers and replacing them with seven made no difference to the fact that the Tinubu cabinet was already the country’s largest. This has raised questions about the government’s priorities and whether the political elites are truly concerned about the country’s economic challenges.