People & Money

Budget Bloopers: Unveiling the Comedy of Misplaced Priorities in the 2023 Budget

On January 3, 2023, Muhammadu Buhari, officially approved the N21.83 trillion budget appropriation bill, thus enacting the largest budget in the history of Nigeria. The budget was based on an N10.49 trillion revenue, an N11.34 trillion deficit, with N6.31 trillion budgeted for debt servicing.

 According to Tracka, a platform owned by BudgIT, a detailed budget analysis reveals that 40% of the total budget (amounting to N8.33 trillion) has been allocated for recurrent expenditure. In comparison, 29% (equivalent to N6.41 trillion) has been earmarked for capital expenditure. The remaining 29% of the budget was earmarked for debt servicing.

Also Read: Nigeria to Increase Spending in 2021, Maintains Budget Deficit

 Recurrent expenditure in the budget features overhead costs, statutory deductions, personnel costs (salaries and bonuses), pensions and gratuities. Capital expenditure features the amount spent on physical capital such as infrastructure and social capital such as grants, aids, etc.

 Upon giving an academic introduction to the topic, it’s time to delve into the in-depth critique of this budget and the very many misplaced priorities contained in the budget.

 Given the country’s revenue crisis and substantial debt servicing expenses, it would be reasonable to expect a more cautious and austere approach to budget preparation. However, the government decided to create the largest budget in history at a time when Nigeria is facing a significant decline in revenue, this can only be described as a comedic irony.

 The irony becomes even more pronounced when one closely examines the intricacies of the budget using a deeper lens. I used the Tracka platform to follow up on the budget and the budget can only be described as a cacophony of bloopers. For example, the FG budgeted N81.7 billion for the construction of streetlights, more than the amount proposed for primary healthcare centres and schools combined. For a country with the highest number of out-of-school children in the world, 20 million out-of-school children per UNESCO’s report, this is absurd.

In a country with a maternal mortality rate of 512 maternal mortalities per 100,000 live births, it is not a wise decision to spend N4.4 billion on traditional ruler palaces while allocating only N3.6 billion for primary healthcare centres.

 Another major finding by Tracka is that the budget features 687 projects worth N112 billion allocated to agencies outside their mandate. And here is a list of some of these projects;

1. Construction of Dengi-Kwalmiya-Gagdi-Wawus S/B Bauchi Road in Plateau State assigned to the Nigerian Army with a budgetary allocation of N4.58 billion. What business does the Nigerian Army have with constructing roads?

2. Supply Of Medical Equipment In Selected Healthcare Centre And Hospital In Ogun State assigned to Nigeria Institute Of Oceanography And Marine Research for N1.25 billion.

Also Read: How to Reset Africa’s Relationship with the IMF

3. Construction/Provision Of Perimeter Fencing & Access Road Of Liberty Free, Akwa Ibom State assigned to Oil And Gas Free Zones Authority, Nigeria for N1.10 billion

A shortlist of wrongly assigned projects in the 2023 FG Budget

 Tracka

This is not without paying attention to the Zonal Intervention Projects, popularly known as “constituency projects.”Every year, these projects receive a total allocation of N100 billion spread across all 36 states. However, these projects are often considered as some of the most bogus parts of the budget.

For example, the project with the code ZIP20230230 (the construction of 4 community palaces in Aniocha-Oshimili federal constituency) has a budgetary allocation of N480 million. While another constituency project tagged “Establishment Of Legislative Centre For Security Analysis” received an allocation of N1 billion.

 The term “legislative centre for security analysis” is vague and lacks a clear meaning. It raises questions about the project’s legal framework and how it relates to the existing National Institute for Legislative and Democratic Studies which is the recognised organ of the parliament to provide policy analysis as well as academic research into legislative matters. Also, how is this a constituency project? For which constituency? For such a vague project to receive an allocation of N1 billion, it’s a further depiction of the blunders contained in the budget.

For a budget based on more than a 50% deficit, it is expected that the government would try to prioritise actual projects with effects on the economic growth of the country. However, we see a budget that is riddled with hidden opportunities for embezzlement, designed to divert scarce resources.

Away from the ZIPs, another set of weird observations in the budget is the ERGP projects (Economic Recovery and Growth Plan). ERGP is a medium-term economic plan set for 2017-2020, and the plan was aimed at pulling Nigeria out of the recession encountered in 2016. ERGP had to be temporarily suspended during the COVID-19 pandemic to pave the way for the Nigeria Economic Sustainability Plan (NESP) which was phased out in 2021.

After the NESP, the government under Buhari introduced the National Development Plan 2021-2025 as a medium-term economic roadmap. It was also expected that the NDP 2021-2025 would serve as the basis for the budgetary framework of the 2023 appropriation budget.

However, the government still played a fast one as projects tagged ERGP were still contained in the 2023 budget. And as expected, these projects are poster images for misplaced priorities. For example, one ERGP project with the tag ERGP202302166 was allocated N100 million for the construction of a 1.5km Township Road In Idanre LGA In Ondo Central Senatorial District, Ondo State. This project is assigned to the Federal Ministry of Agriculture and Rural Development.

The absurd nature of this project is in the fact that N100 million cannot construct 1.5 km of road in Nigeria. According to data from the World Bank, the average cost of 1 kilometre of road in Nigeria in 1997 was about $95,000, and by factoring inflation over 25 years, this figure is expected to quadruple to about $380,000. Plus, some experts have put the ideal cost of 1km of road in Nigeria at N238 million. If N100 million can obviously not complete this project, why put it in the budget in the first place? Then, what business does the Ministry of Agriculture have with constructing township roads in local government areas in Nigeria?

First of all, ERGP projects should not be contained in the 2023 budget. However, if they are, the projects should not be used as channels to drain the country’s resources, as it contradicts the plan’s objectives. However, the ideal is not the reality in Nigeria as yearly appropriation budgets in Nigeria normally contain a portion that is for sharing with the people in power and the people connected to them. For example, in 2022, in clear violation of the country’s law, N10 billion was paid into 18 different personal accounts.

Also Read: Nigeria’s Agbami: A $874 Million Per Quarter Temptation

In a country facing challenges such as declining oil revenues, high levels of debt, and harsh economic conditions, it is anticipated that the government would implement strict measures to reduce the cost of governance. Simultaneously, there should be a focus on increasing government spending to support the poor and vulnerable populations. However, we see government officials creating intentional bloopers in the budget to further enrich themselves.

These intentional budget manipulations serve to further enrich the individuals involved. And such actions erode trust and hinder progress towards a fair and equitable society. For the next administration, it is crucial for transparency and accountability to be upheld in budgetary processes, ensuring that resources are allocated efficiently and in alignment with the nation’s development goals.

 

David Olujinmi

David Olujinmi studies Engineering but his true passion is research and analysis. He writes about finance, particularly the capital market, investment banking, and asset management. More »

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