Sun. Oct 2nd, 2022

The Ministries, Departments and Agencies (MDAs), construction firms and other essential service providers are in severe financial strain over delay in the release of the 2022 budget for implementation of capital projects.

Budget components

The MDAs, which largely needed release of the budgetary allocation to facilitate the provisions of infrastructures, purchase of equipment and other essentials, are groaning as the 2022 budget implementation is yet to take off two months following the expiration of the extended period for the implementation of the 2021 budget.

Besides, the non-release of the new budgetary expenditure has seriously affected the proposed consensus agreement on 11 capital projects.

The revised and approved 2022 budget has N5.4 trillion capital expenditure which represents about 34% of the 2022 expenditure profile and also represents an 18% increase in the 2021 capital expenditure component.

Collaborative sponsorships of capital projects are necessary to expand and strengthen the nation’s economic structural ventures as well as enhance Nigeria human capital development. 

Clause 12 of the provisions of Section 318 of the Constitution provides for the 12- month budgetary lifespan period starting from the first day of January to December 31, 2021.

But the 2022 Appropriation Act was first amended to extend the implementation from December 31, 2021 to March 31, 2022, and subsequently in April it was further extended to May 31. The latter period ended two months ago.

Affected ministries

The ministries mostly affected by the delay in the release of the budget for execution of core capital projects are Works and Housing, Defence, Power, and especially government owned enterprises-revenue generating agencies, like Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS) and the Nigerian Maritime Administration and Safety Agency (NIMASA).

Blueprint investigations revealed that many MDAs are unable to carry out basic and major capital-intensive projects as the federal government has yet to authorise the release of needed funds for the execution of these projects, a good number of which are essential to breathe life into the nation’s infrastructure base in various sectors including power, housing, transport: rail and road, agriculture and defence. 

Security, a major need of the country due to lingering insurgency and recurrent incidences of unknown gunmen attacks across the federation, has equally suffered some setbacks because of non-release of the budget for the procurement of essential tools to confront and contain the soaring non-state actors.

Worst hit

Blueprint’s investigation showed that the ministries of Works, Housing, Defence, Agriculture, Power, Trade and Investment, Petroleum Resources and Internal Affairs among others, as well as government owned enterprises – revenue generating agencies-like the Nigeria Customs Services, Nigeria Immigration Services, NIMASA, Nigeria Ports Authority (NPA),  Federal Airports Authority of Nigeria(FAAN) and Federal Road Safety Commission(FRSC), among others, are reeling in the strain of non-availability of funds for implementation of their intended capital projects.

Also, the Rural Electrification Agency of Nigeria (REAN), Nigeria Airspace management Agency(NAMA), Nigeria Metrological Agency(NiMET), Nigeria Railway Corporation (NRC), (Nigeria Institute for Transport Technology (NITT) Zaria,  National Boundary Commission (NBC) and Federal Road Maintenance Agency(FERMA) are some of those unable to embark on capital projects like construction of facilities and provision of essential infrastructures to meet their core mandate because of delay in the release of the 2022.

A director in NiMET, one of the affected MDAs who spoke under anonymity, lamented that the non-release of the budget has had adverse effect on the purchase of essential facilities.

He said: “We can’t replace basic equipment to monitor and proffer proper seasonal weather and climate services for farmers and herders. Besides, we have zonal and other offices to equip them to function properly.”

Also, an anonymous senior staff of the NRC said: “The Corporation started train services which Nigerians are gradually becoming used to the ease and comfort of commuting to different destinations in relative security. Others would like the services extended to them.

“Going by the huge interest as witnessed in the Abuja-Kaduna, Itakpe-Warri and the Lagos-Ibadan passengers’ volume, the need to bolster them and open up other stations are inviting yet limited by non-release of the budget.”

“Though the rail project is largely driven by the Chinese firms and funds from the tax credit scheme introduced by this administration, there are still aspects of the venture which are supported by federal government budgetary provisions”, the staff who said he has no mandate to speak therefore should not be mentioned, commented.

300 projects affected

The rehabilitation and construction of about 300 basic and major road networks covering more than 13,000 kms across the 36 states of the federation are provided for in the 2022 capital budget expenditure.

Some of the affected roads and bridges are the Kano-Abuja, Kano-Maiduguri, Lagos-Ibadan Expressway, Keffi-Akwanga-Lafia, Airport Junction-Kuje, Abuja- Lokoja, Enugu-Port Harcourt, Kano-Maiduguri, Enugu-Onitsha, Oyo-Ogbomosho, Ilorin-Jebba, Abeokuta-Ibadan , Calabar-Itu, Second Niger Bridge, Ikom Bridge, Loko-Oweto Bridge, Ibi Bridge and Bamenda-Mfun Bridge, Chanchangi Bridge, Bodo Bonny Bridge, among others which depend on budgetary releases to cover aspects of their rehabilitation and construction.

Equally, there are rail projects like the Kaduna-Kano, Port-Harcourt-Maiduguri, Lagos-Calabar and the Lagos-Kano all of which require some funding from the federal budget before the Chinese firm takes up the larger chunk of financing of the project.

There are also various housing projects which are pending because of the delay in the 2022 budget.

6 MDAs account for N1.4trn for capital projects in 2022

According to the details released by the Budget Office, the Ministry of Works and Housing will spend N470 billion in 2022 on capital projects, the Ministry of Agriculture and Rural Development N285 billion, while Defence has a budget of N204 billion for capital projects.

Education and Health Ministries have on their capital expenditure budget of N159 billion and N130 billion respectively, while the National Population Commission (NPC) which has scheduled a national census for 2023 has a capital budget of N180 billion.

These six ministries and agency take N1.4 trillion of the N2.7 trillion allocated for capital expenditure of government ministries, representing 51.8% of the total capital expenditure for ministries.

In the revised and approved budget, capital expenditure saw the greatest increase with N5.4 trillion, a 12.5% increase over the initial proposal presented by President Muhammadu Buhari.

N4.7trn released – Minister

However, Minister of Finance, Budget and National Planning, Hjiya Zainab Ahmed, said the federal government has so far released N4.72 trillion for capital expenditure as at April 31st, 2022. 

This was contained in the 2022 fiscal performance details between January and April, which she read out Thursday, April 21, 2022.

According to the document, the federal government’s total revenue for the period was N1.63 trillion, while debt service gulped N1.94 trillion, stressing that urgent action was required to address revenue underperformance and expenditure efficiency at national and sub-national levels.

“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro rata spending target of N5.77 trillion at end of April,” the document reads. “The actual spending as of April 31st was N4.72 trillion.

“Of this amount, N1.94 trillion was for debt service, and N1.26 trillion was for personnel costs, including pensions. As at April, N773.63 billion has been spent on capital expenditure.

 “As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 percent of the pro rata target of N3.32 trillion.”

The document added that the federal government’s share of oil revenues was N285.38 billion (representing 39 percent performance), while non-oil tax revenues totalled N632.56 billion — a performance of 84 percent.

FG Budgets N3.85trn for Capital Projects in 2021

It’s on record that the 2021 budget estimates had N3.85 trillion for capital projects.

At the post-budget presentation analysis, the finance, budget and budget planning minister had said the administration continued to prioritise spending on infrastructure and human capital to catalyse rapid economic development. 

Also, Mrs Ahmed had listed some of the proposed capital allocations to include N745billion for capital supplementation, N710bilion for projects funded by multilateral and bilateral loans, N110.80 billion for MDAs’ expenditure, N247billion for capital component for statutory transfers and N355billion for grants and aid-funded projects.

Others are N366bn for sixty (60) government owned Enterprises (GOEs), N25bn for Nigeria Youth Investment Fund while N20bn was allocated to Family Homes Fund.

94.1% implementation on infrastructure and human capital development

February this year, the federal government disclosed that it had executed 94.1 per cent of the 2021 budget in the areas of infrastructure and human capital development.

Speaking at a town hall meeting organised by the Ministry of Information and Culture, Hajiya Ahmed had said as at November 2021, from the expenditure side of the capital budget, N12.56 trillion or 94.1 per cent had been spent out of the N13.57 trillion pro rata budget.

However, she was quick to say that efforts were in top gear to further boost the economy through strengthening of the nation’s infrastructure base as the federal government works assiduously to realise this, adding, in 2022 alone, it intends to spend about N1.42 trillion on infrastructure and N2.11 trillion on human capital development.

25% capital expenditure unrealisable – Experts 

However, in April, a report by AgustoConsulting, a renowned firm of economics, finance and strategy experts, showed that about 25 per cent of the projected N4.5trillion capital expenditure in the 2022 revised and approved budget may not be funded based on fiscal exigencies and the funding priority of the federal government in the 2022 fiscal year.

Analyzing ‘The 2022 Appropriation Act: Impact on the Construction Industry’, the report explained that the plan of the federal government was to spend N14.7trilion in 2022.

It stated that the government could raise N5.5trillion through revenue, N0.4trillion from external borrowing, N4trillion from the markets and N4trillion from the Central Bank of Nigeria, making a total of N13.9trillion.

Further, the experts were of the view that the government would prioritise its spending of the projected N13.9trillion that it would raise, and stated that about N4.5trillion would go as interest on loans, N4.1trillion on payroll and unfunded pensions, N0.8trillion on statutory transfers and N1.1trillion on other recurrent expenditures.

“Balance available to finance capital expenditure is N3.4tn. This means that the federal government of Nigeria should be able to fund N3.4tn out of the planned capital expenditure of N4.5tn (75 per cent),” they stated.

11 projects awaiting consensus

The minister was also reported to have  disclosed that a total of 11 capital projects worth about $3.387 billion were currently awaiting consensus before the federal government signs loan agreements with the World Bank, the African Development Bank (AfDB) and French Development Bank, for their execution.

Some of these agreements would depend on the release and implementation of the 2022 budget as the needed collaborative funding is expected largely to be within the proposed financial framework as provided for by the 2022 fiscal expenditure.

She had listed the projects awaiting consensus before the signing of loan agreements to include the $673.2 million Kano Urban Light Rail Project (Phase I); construction of Lafia By-Pass road and the dualisation of 9th Mile (Enugu)-Otukpo-Makurdi Road Project ($845.75 million).

Others are the E-Border Solution ($175.5 million), the $350 million Nigeria Electrification Project (Off Grid), the $32.3 million North Core Interconnection Power Transmission Line (Regional Project under West African Power Pool) and the Nigeria Electricity Transmission and Access Project: ($486 million).

They also include the Nigeria Electrification Project ($200 million), Nigeria Transmission and Expansion Programme ($210 million), Abuja Power Feeding Transmission Scheme ($170 million), and the Northern Corridor Transmission Line ($245 million).

The minister listed some ongoing key infrastructure projects funded by external loans from the China EXIM Bank as the Zungeru Hydropower Plant Project ($984.32 million); Lagos–Ibadan Railway Project ($1.26 billion); upgrading and rehabilitation of Keffi-Akwanga-Lafia road ($460.82 million).

Also listed were the supply of rolling stock and depot equipment for Abuja Light Rail Phase 1 Project ($164.91 million); the $328million NICTIB Phase II (GalaxyBackbone); Four Airports Terminal Expansion Project Phase II ($208.91 million), as well as ancillary works on four airports terminal expansion ($183.62 million).

‘It’s extreme implications’

But a political economist, Adefolarin Olamilekan, has cautioned, saying the federal government has yet to learn from previous mistakes on delay and poor implementation of budgets. 

According to Adefolarin Olamilekan, a political economist and development researcher, the situation portends danger for the nation’s infrastructure development and especially security and the proposed 2023 national census.

He urged the federal government to be proactive in disbursing funds for capital projects in order to restore hope to Nigerians.

“Capital project that is the bedrock that propels the economy, creates access to industrialization, provides for ease of logistics and generates employment for the teeming millions of youths and enhances citizens’ livelihood.

“So far, the current administration has followed the same ritual of delay in addressing capital budget demands. It points to the fact that managers of our economy seem careless about accelerating core infrastructure development, but tend to focus on issues that have less minimal impact on the general wellbeing of the citizens.

“The implication is the obvious infrastructure and development gaps in the economic life of the nation. Even politically, the federal government as it stands today may not have anything concrete to show to Nigerians when its tenure elapses in 2023,” he said.

The economists lamented that already capital projects like rail and road transport, defence, health and agriculture, and even preparations for the 2023 general elections, have recorded setbacks.

“The Nigerian state must prioritise capital projects funding as this remains the only means to grease the economy. Without doing this, Nigeria’s economy would stagnate. Prioritising capital projects will ensure timely completion of projects to avoid the challenges of contract cost re-evaluation,” said the expert.

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