BudgIT, a civic-tech non-governmental organisation leading the advocacy for fiscal transparency and accountability in budget and public finance, has revealed that the Federal government of Nigeria is biting more than it can chew by introducing more capital projects in the 2021 proposed budget.
The organisation expressed concerns over the huge number of capital projects the country plans to embark on in 2021 while having multiple uncompleted ones lying around.
Capital expenditures refer to funds that are used for the purchase, improvement, or maintenance of long-term assets to improve the efficiency or capacity of the company. Long-term assets are usually physical, fixed and non-consumable assets such as property, equipment, or infrastructure, and that have a useful life of more than one accounting period.
In a statement titled “Prioritise Capital Projects that Deliver Value, BudgIT asks the Federal Government” and signed by Iyanu Fatoba, Communications Associate, BudgIT, noted that the Federal Government cannot afford to keep pumping the country’s limited resources into new projects while abandoned capital projects suffer inadequate investment.
“The government had offered hope that capital projects in the 2021 FG budget will be accompanied by precise GPS coordinates to encourage project monitoring. Not only was this not provided in the budget proposal, many capital projects also had no specific locations in the country” the statement read in part.
“Of the 13,343 capital projects we analysed, a sizable number of projects were falsely categorized as capital projects even though in reality they are not. For instance, meetings, allowances, anniversaries and celebrations were miscategorised as capital projects. Some cases in point include; N3.3bn for “Posting and Return Entitlement of Ambassadors and Officers” in the Ministry of Foreign Affairs, N74.5million allocated for “Anniversaries and Celebrations” in the Nigerians in Diaspora Commission (NIDC), N40 million for “Peculiar Allowance” in Nigeria Christian Pilgrim Commission, which are all categorized as capital expenditures.”
This aside BudgIT disclosed that analysis showed projects between the N10million and N50million band representing 42.2% of capital projects analysed, speculating that this was an intentional approach to avoid elaborate procurement plans, ‘thereby reducing broad oversight on contracting’.
The NGO posits that the current structure of capital projects is “too wasteful, incoherent, and grossly inefficient. Whilst capital expenditure is higher in terms of value, there is a need to properly ensure that these projects deliver optimal value for Nigeria”.
Gabriel Okeowo, BudgIT’s Principal Lead, said “we analysed over 13,000 capital projects in the 2021 budget and observed that 55.51% of the total allocation for capital expenditure are earmarked for new projects, many of which may end up uncompleted by 2021. This is contrary to the hope Mr. President offered in his budget speech that ongoing projects will be prioritized in the 2021 Budget“
“Nigeria is currently in recession and strategic spending on capital infrastructure project completion should be a priority”, Okeowo added
In same vein, Oluseun Onigbinde, BudgIT’s Director and Co-founder stated “the fragmentation of capital projects is an urgent conversation that the Federal Government needs to address. In an era of dwindling revenues caused by low oil prices and the current slump in the global economy, it is important for the government to pay attention to a few projects of immense social and economic value”
BudgIT advised the Federal Government to allocate more funds to ongoing projects so as to ensure the government’s commitment to their completion, as well as capital projects that directly affect the welfare of the citizens, and it also called for punishment of Ministries, Departments and Agencies that split capital expenditure and undermine accountability.