2015 Budget: 279 Government Agencies Have No Capital Allocation

BudGIT Press Release

2015 Budget: 279 Government Agencies have no capital allocation.

Impairing investment in critical infrastructure for the sake of keeping government running for another year is very evident as government revenue is threatened with declining oil prices. The Federal Government had cut short of its own revenue targets and the working poor and the have-nots are now to pay the bills until a new order comes into play. Pressure from shale oil, oversupply of crude oil and advancement in technology is hitting deep at the Nigerian public finance space. The 2015 budget as presented to the National assembly only affirms our fear- capital votes will take the hit.

The 2015 capital budget is down from N1.119tn in 2014 to N384bn (8.9% of total expenditure plan) with 279 MDAs having zero capital allocations, despite allocations of over N233bn for their salaries. This means that they will only earn salaries and will not be monitoring or implementing any project within their agencies 410 agencies and departments under Ministries are allocated capital allocation less than N500m. To keep the Ministry of Works running, government plans to spend N20.71bn as overheads and another N7.6bn as personnel cost. However, the Ministry will have only N11.232bn for the construction and contract maintenance of federal highways as against the N94.2bn allocated for the same purpose in 2014. It is obvious that this will impact on contracting and procurement plans in 2015 showing again that the Nigerian government finances is dictated by swings in international oil market.

707 MDAs will spend a total of N31.16bn on travels (overheads) and government owned training centres which policy formulators are projecting to help cut down the huge spending on training have no capital allocation in 2015. Similarly, 41 Federal universities are allocated N40.56m each as against an average allocation of N185m in 2014. Nigeria foreign mission will have no capital allocation if the 2015 budget is passed as presented. It means no office equipment among others.

In BudgIT’s policy document titled “Falling Oil Price: An opportunity for reforms”, the organization warned about the impending disaster falling crude oil price could have on capital votes.  This is because recurrent expenditure such as personnel costs and overhead costs will not be affected as mandatory debt servicing costs keeps rising. Government is also not ready to trim its workforce, and there is lack of will to reduce certain overhead costs.

The haste to spend on recurrent items will remain, as they are fixed charges, unless drastic reforms such as downsizing personnel and sharp cuts in overhead cost occur. Capital expenditure vote might be further threatened by lower oil prices as government strives to keep its deficit within the limits of the Fiscal Responsibility Act whilst ensuring it meets its day-to-day obligations. This is a dire situation that the winner of the 2015 elections will face unless there is haste to take on bold solutions to truly diversify government finance sources.

Interestingly, Personnel cost rose to N1.836tn from N1.769tn (2014), the National Assembly allocation of N150bn remains untouched (reports now indicate they are mulling a 25% cut), overheads is uncomfortably above cut targets and  debt servicing is at an all-time high- now at 26% of the 2015 projected revenue targets. Recurrent Expenditure is up from N3.63tn (2014) to N3.97tn in 2015 and government is even planning to borrow N755bn from lean investors and pull out some more funds from the Savings.

This validates our previous opinion, which asks that who truly bears austerity as the Nigerian government strives to meet its obligations to its workers and also run the wheel of governance?  Here is thespreadsheet (and also attached to this press release) to the entire list of agencies showing agencies with capital votes and those without capital allocations in proposed 2015 Budget.