July 7, 2022

Experts blame 2023 elections for N4.1tn rise in recurrent expenditure – The Punch

  • November 23, 2021
  • 8 min read
Experts blame 2023 elections for N4.1tn rise in recurrent expenditure – The Punch

Punch Newspapers
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Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed
The amount budgeted for recurrent expenditures has increased from N2.65tn spent in 2016 to N6.83tn in the proposed 2022 budget, according to data obtained from the budget implementation report of the Federal Government.
This shows an increase of N4.18tn or 157.74 per cent in six years, fuelling concerns over rising cost of government overheads amid a weakening economy.
The PUNCH analysis revealed that recurrent expenditure recorded significant increases each year during the period under the review.
The recurrent expenditure was N2.65tn in 2016, out of a total expenditure of N6.06tn. Capital expenditure was N1.59tn, while money budgeted for debt service was N1.48tn. There was a fiscal deficit of N2.2tn.

In 2017, it rose to N2.99tn, representing an increase of N340bn or 12.83 per cent. Out of a total expenditure of N7.44tn, capital expenditure was N2.18tn, while money budgeted for debt service was N1.66tn. There was a fiscal deficit of N2.36tn.
In 2018, recurrent expenditure rose by N520bn or 17.39 per cent, raising the total recurrent expenditure to N3.51tn. Out of a total expenditure of N9.12tn, capital expenditure was N2.87tn, while money budgeted for debt service was N2.01tn. There was a fiscal deficit of N1.95tn.
The following year, the recurrent expenditure increased by N540bn or 15.38 per cent to N4.05tn. Out of a total expenditure of N8.91tn, capital expenditure was N2.09tn, while money budgeted for debt service was N2.25tn. There was a fiscal deficit of N1.95tn.

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The recurrent expenditure was N4.84tn in 2020, out of a total expenditure of N10.59tn. This shows an increase of N790bn or 19.51 per cent. Capital expenditure was N2.47tn, while money budgeted for debt service was N2.7tn. There was a fiscal deficit of N2.28tn.
However, the increase in 2020 may be attributed to the inclusion of the new National Minimum Wage in the budget.
In 2021, the expenditure continued to soar as N5.64tn was budgeted for recurrent expenditure, representing an increase of N800bn or 16.53 per cent. Out of a total expenditure of N13.59tn, capital expenditure was N4.13tn, while money budgeted for debt service was N3.32tn. There was a fiscal deficit of N5.2tn.
Of the N5.64tn recurrent budget, about N3.84tn had been spent between January and August.
In the latest 2022 budget proposal which has passed the second reading at the Senate, the recurrent expenditure hit an all-time high of N6.83tn, representing an increase of N1.19tn or 21.1 per cent. From the 2022 recurrent (non-debt) expenditures, personnel costs gulped N4.11tn; pensions, gratuities and retirees’ benefits gulped N577bn; and overheads gulped N792.39bn.
Out of a total expenditure of N16.39tn, capital expenditure was N5.35tn, while money budgeted for debt service was N3.61tn. There was a fiscal deficit of N6.26tn.
The 2022 recurrent expenditure represents 41.67 per cent of the nation’s entire budget and is the single largest element of the budget. It is also N700bn more than the total expenditure for 2016.

Within the years of the Buhari’s regime, a total of N30.15tn has been budgeted for recurrent expenditures. This total exceeds the N16.39tn total budget proposed for the 2022 fiscal year and is about 85 per cent of Nigeria’s current debt stock of N35.47tn.
Experts have lamented the constant increase in the nation’s cost of governance. In May 2021, the Federal Government, through the Minister of Finance, Zainab Ahmed, had said it was working to reduce the high cost of governance by doing away with unnecessary expenditures, which might include salary cuts for workers.
However, the increase in recurrent expenditures in the 2022 budget suggests the government may have backpedalled on the plan.
Increase due to upcoming elections, other factors – Experts
Meanwhile, experts have said that factors such as the upcoming elections, inflation, naira devaluation and abuse of funds, among others have led to the significant increase in the budgets.
A political economist and former presidential candidate, Prof Pat Utomi, stressed the role of inflation and naira devaluation in the rise in the recurrent expenditures.
He said, “I think it is important to bear in mind that the real value of our currency has been ebbing away and inflation has been significant for the last couple of seasons.

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“So, in reality, if you look at that amount of money today compared to the real value of the naira in 2016, it is not the same amount. Basically, more naira is needed to get the same thing done today than in 2016.

“However, it does not take away from the fact that there is still a problem with the cost of governance.”
According to him, there is contempt for Nigerians among the political class and a higher number of political officer holders are more concerned about themselves than the people.
“If you look at protocol cost of governance, it is scandalous. There is a certain apparent contempt for the Nigerian people and their plights.
“There is an issue with the way we fund our politics in Nigeria. The man who borrows or steals several billions to run for Senate, governorship or whatsoever, it is only natural that his first obligation is to recoup his investments, pay off his creditors, and prepare for tomorrow before he thinks about the people.
“When recurrent expenditure balloons, especially as elections are approaching, you can see a direct relationship between the need to take money out of the treasury and the ballooning budget.”
He advised the populace to begin to hold the government more accountable.

“It is sad that we are not ready to hold politicians accountable. I think the people should pressure for a forensic audit of every state government account to track the spending of our budget and where most of the money goes. This is why the budget is ballooning – the abuse of the public treasury,” he advised.
A professor of Economics at the Olabisi Onabanjo University, Prof Sheriffdeen Tella, blamed attempts by those in government to amass funds for the coming elections.
He said, “There is a lot of executive payment underground that is ongoing for political appointees and politicians. They seem to have more assistants and have to pay them towards the upcoming elections. There are serious payments underground so that politicians can have money for the elections in the following year.”
He added that it was unfortunate that a further increase would likely occur when the National assembly approves the budget.
“Unfortunately, there seems to be a game between the executive and the National Assembly. Despite all these visitations by ministries before the National Assembly, whatsoever budget presented will likely increase,” he added.
A senior lecturer in the Department of Economics, School of Management and Social Sciences, Pan-Atlantic University, Dr Olalekan Aworinde, linked the development to rising salaries and possibly the upcoming election.
He said, “The increase may suggest that the government wants to employ more people and need to pay these people with those huge funds allocated for payments of salary.

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“Also, one cannot rule out the fact that politicians are likely going to inflate the budget for the purpose of elections. A number of lawmakers when they go for their oversight functions at ministries will likely go with bags to collect their share of the increase. However, let’s wait and see how everything plays out with the coming elections.”
Efforts to reach him were unsuccessful as his number was not going through. However, when called, the spokesperson of the Budget Office, Afolabi Olajuwon, simply said he was not in the position to speak on it.
Meanwhile, the Director-General of the Budget Office, Ben Akabueze, during a policy dialogue on corruption and cost of governance in Nigeria organised by the Independent Corrupt Practices and Other Related Offences Commission, had expressed concerns over the increasing cost of governance.
He had said, “There have been persistent calls for reduction of governance cost in Nigeria in view of the impact on the governmental fiscal situation. The current system is clearly unsustainable; hence this national dialogue on corruption and the cost of governance in Nigeria is very timely.
“Cost of governance has generally been on the rise; actual MDA recurrent spending rose sharply from N3.61tn in 2015 to N5.26tn in 2018 and N7.91tn in 2020.
“This excludes the costs of government-owned enterprises and transfers to the National Assembly, National Assembly and the National Judicial Council. Recurrent spending accounted for more than 75 per cent of actual MDA expenditures between 2011 and 2020.”
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