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Posts tagged ‘Capital expenditure’

Budget 2014: Another Ritualistic Redundancy By Law Mefor.

By Law Mefor

Budget presentation by the Executive Arm of Government to the National Assembly for Appropriation has since become nothing but an annual hollow, redundant ritual. The budget is never implemented, thus making nonsense of the time and expense deployed to passing it into law in the first place. The 2014 Budget is no exception either.
The first signs that 2014 Budget is also doomed to fail like the rest started with the President and the National Assembly disagreeing on the Oil Benchmark. Owing to this, the President had to delegate the Minister of Finance to perform the presentation ritual, the first time it is happening in Nigeria. Though the President is not duty-bound by the Constitution or any other extant law to lay the budget in person, it has since become a welcome tradition that he does so and it also offers the President an opportunity to feel the legislative arm of government and create a latitude for a sustained camaraderie and rapprochement between the arms of government. So, for the President to decline, and not for any national exigency, is indicative of impending turbulent budget year. One also can only hope that the budget get passed within the 2nd Quarter of 2014, as the First Quarter appears doomed already with the National Assembly resuming only on the 15th of January.

The content of the 2014 budget proposal is not inspiring. Over 70% of the entire budget is going to Recurrent Expenditure.  Out of the N4.6 Trillion budget for 2014, only 27% is for Capital. If passed generally as it is, out of this 27%, only about 30% will eventually be implemented, going by when the budget will be passed which can not be earlier than April, and going by the 2013 budget performance, which dismally stands at about 35%. We need to also note that things like computers are listed as Capital whereas they are not, in the strict sense. Are we really serious about exiting poverty and underdevelopment by servicing only recurrent expenditure?

The Minister of Finance and the Coordinating Minister of the Economy Dr. Ngozi Okonjo-Iweala had once promised to devise ways to drastically reduce Recurrent Expenditure and shore up the Capital. But from what she laid before the National Assembly, one can see she is not working in that direction or she has given in.

There is no way Nigeria can exit the poverty belt in the manner the issue of Budget is handled. Fact is: actual development is hinged on Capital development. There has never been a time, since the return to Civil Rule in 1999, where Recurrent Expenditure is not implemented 100% and this essentially goes for the servicing of the bloated bureaucracy and political office holders, to the detriment of the economy and suffering masses.
Recurrent Expenditure has very little if not nothing to do with the suffering masses of Nigeria. Whereas Capital Expenditure, which is where the masses can feel the impact of development and dividends of democracy, has never been implemented up to 50% since 1999.

Over the years, the rate of Capital budget performance has continued to dwindle; this year’s budget performance is clearly below 40% where it comes to Capital whereas Government has already hit 100% implementation of Recurrent Expenditure. Government does not exist for the sole servicing of bureaucracy and politicians. The people who directly benefit from these amorphous budgets are not up to 1% of Nigeria’s population, and something must be done to focus more on the rest 99%, by reducing the cost of running Government in Nigeria, which appears too expensive.

The way and manner therefore budgets are prepared, passed and implemented in Nigeria is nothing but annual ritualistic redundancy and cannot lead  to staged development. In fact, it has led to further disarticulation of the economy and making it impossible for the country to be economically independent. Neocolonial economies can become independent if production is encouraged and need of citizens to purchase mainly foreign goods put in check. But today, Nigeria is not budgeting for the stimulation of productivity and doing something to add value to the primary products the nation exports, especially oil.

The Executive Arm is also known to blatantly violate the Appropriation Act by simply ignoring it and carrying on regardless of its provisions, despite being a (pivotal) law. Examples of this abound: the President was reported days ago to have instructed the Minister of Finance to find funds for the National Confab and there is no place such funds are provided for in the budget before the National Assembly. Another example; Stella Oduah just approved the purchase of bullet proof cars and other vehicles running into  about a billion naira without any appropriation, as shown in the Report of the House Committee on Aviation headed by Hon. Onyejeocha, turned in just this week. Whereas the 1999 Constitution as amended, clearly stipulates that there shall be no Governmental Expenditure without appropriation.

The willful and flagrant violation of the Appropriation Act forms part of the culture of impunity, which is destroying the nation by fueling corruption, as institutions of Government are trampled upon by the same Government officials who should strengthen and defend them. Impunity breeds corruption and corruption breeds underdevelopment, as the funds meant for development are stolen in broad-day light.

Nigeria needs to make a clean break from the current undemocratic practice and do away with the prevailing culture of impunity and executive lawlessness, for violation of the Appropriation Act is an assault on the Constitution and therefore a  grave offense, apart from the injury it inflicts on macroeconomic planning and development of the country.

Let us make a square facing to nation building and national development and where to start is by ensuring that at no time is the Recurrent Expenditure higher than the Capital Expenditure. For a growing economy, it is the only way to ensure Staged Development.

Law Mefor,  Forensic Psychologist and Journalist, is National Coordinator, Transform Nigeria Movement (TNM) Abuja; +234-803-787-2893; email;

The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of SaharaReporters

For Nigerians, It May Be Time To Panic By Adejoh Idoko Momoh.

By Adejoh Idoko Momoh

Consider these scenarios: 50,000 teachers cannot pass a basic test in elementary English; illiteracy rate of about 70%; only 10 out of 1.6 million candidates that sat for university entrance examinations scored a pass mark of 300 and above out of a possible 500. Add this to a situation where 10.6 million children are out of school – the highest school aged children out-of-school population in the entire world, then relate these to the fact that all these take place in a nation with a GDP growth rate higher than all other African nations except South Africa.

This conundrum is representative of the inherent contradictions in Nigeria, where the government keeps brandishing largely useless growth figures in our faces, but where people are confronted daily by an increasingly divided citizenry, deteriorating security conditions, decaying infrastructure, rising unemployment, unprecedented corruption, impunity and falling standards of education.

Ordinarily, the scenario depicted above would be hilarious if it wasn’t so serious. Unfortunately, for 170 million Nigerians who normally should set the pace for the rest of Africa in human capital development and educational attainment terms, the reality on ground is that they are plagued with a largely dysfunctional system that encourages an ever growing population of young people who would constitute an uneducated, unemployable generation with little useful roles to play in society.

The Ministry of Education would be quick to come up with excuses: attribute its many failures to a lack of finance and complain that it is not allocated some 25% of Nigeria’s national budget as is recommended by the United Nations. Yet of its dismal 1% budgetary allocation in 2012, the ministry only expended 20% of its capital provisions as at September the same year. This simply points to the fact that the ministry itself has no vision to accommodate the resources they often put forward as needed.

This immediately brings questions to mind, can this ministry that cannot implement a 1% budgetary provision wholly be trusted with 25%? Can the government afford to fund this ministry as much as it deserves? Is it not a fact that a former Education Minister, Dr Oby Ezekwesili admitted the above, and included the ‘Adopt A School’ program as part of Corporate Social Responsibility? Sadly, no sooner than she left office was her ‘Crisis’ reforms document thrown out too. What place does alternative education have in our current education system? How did our technical schools that served to train experts at skilled work loose relevance?

The truth is Nigeria’s education sector is in need of reforms and every Nigerian should take up this responsibility, demand an education revolution from our government. Peaceful protests like the Occupy Nigeria or the Project Cure rallies that have been beneficial for fuel subsidy as well as currency restructuring would do just as good for education. The creation of specialist universities may prove to be more beneficial than universities that aim to offer all courses. Would it not be a more informed thought if the President considered strengthening the capacities of existing universities as opposed to building new universities in every state?

Challenges abound with reforming our education system. Time for one; reforms would take a little more than 4 years focused on planning, training, implementing and some more training. Take China as example, the country has had over 50 years of mandatory 9 year basic education and various laws guaranteeing access to education for minorities, women and the handicapped, yet the country has not totally attained universal basic education coverage. Nigeria has not even started. Discouraging as this may be, it is not reason to delay the reform process that would benefit generations of Nigerians to come.

Yes, there is a Universal Basic Education Board and 35 other state versions called State Universal Basic Education Board but what are these SUBEBs doing? Take a state like Kaduna for instance with a school aged out of school percent population of 51.6%, the state SUBEB has a zero capital allocation for the years 2013 and 2014, while there is a recurrent expenditure of N116.5m and N128.2m respectively. In view of the above, you decide if this demonstrates political will to curb the education menace?

This lack of political will to train and develop the people we refer to as Nigeria’s future goes beyond formal education; we see it even in the field of technical education too. The 2013 National budget has a capital provision of N40 million set aside for the National Business and Technical Education Board while its recurrent provision is N1.2billion, also there is a N300million capital provision for the National Board for Technical Education Secretariat while its recurrent expenditure is N1.3billion- about 300% above Capital Expenditure. With miserable capital provisions as detailed above most technical schools are shut down, the few that function do not have updated curriculums and therefore offer training that is of very little relevance to modern trends and realities.

For Nigerians who belong to the dwindling middle class and are rich enough to afford foreign education or training for their children and perhaps feel like the dearth of education infrastructure in Nigeria should not bother them, they are sadly mistaken. I conclude with the tale as narrated below, it is my hope that from it we all have a rethink.

A man wise beyond his years once said, ‘the children we do not train now would kill those we have trained.’ He then explained how a Harvard trained student came visiting his parents in Lagos for a week and how on a hot afternoon made worse by the failure of the Power Holding Company of Nigeria (P.H.C.N) to provide electricity, he decided to take a walk. As he walked, he saw a miscreant steal a lady’s purse and sought to challenge the man. The man simply pulled out a gun, shot this foreign educated student and rode off on his motorbike.

Adejoh Idoko Momoh,


Survey: Sequester Not Hurting Business.

Washington‘s budget tightening is having a minimal effect on businesses, a survey of business economists released Monday shows.

The National Association for Business Economics survey asks how higher taxes and lower government spending effected businesses in the first three months of 2013.

Ninety-three percent of respondents say the political developments had no effect on employment levels in the first quarter, and 95 percent say they had no impact on capital spending plans.

Overall, the results paint a picture of businesses feeling better than they were in the fourth quarter, but not as good as they were a year ago.

The NABE did caution, however, that businesses might have already accounted for the higher taxes and lower government spending in the fourth quarter, and adjusted their hiring and spending plans before the end of 2012.

The NABE surveyed a small sample, 58 members, between March 19 and April 2. They represent a variety of sectors, including finance, transportation, health care and manufacturing.

Among the results:

  • Fifty-five percent of respondents reported rising sales — up from 37 percent in the fourth quarter, but down from 60 percent a year ago.
  • Twenty-nine percent reported rising profit margins — up from 25 percent in the fourth quarter, but down from 40 percent a year ago.
  • Thirty-one percent said wages and salaries are rising — up from 27 percent in the fourth quarter, but down from 44 percent a year ago.

The improving quarter hasn’t translated into more jobs. Only 22 percent said they added employees. That was down from 25 percent in the fourth quarter, and 28 percent a year ago.

Expectations for the future followed a pattern similar to many of the other results — better than the fourth quarter, worse than a year ago. Sixty-five percent said they expect the economy to grow by more than 2 percent over the next year, up from 50 percent in the fourth quarter but down from 78 percent a year ago.

Overall, they listed global economic conditions, the possibility of further government spending cuts and the “regulatory environment” as their biggest concerns for the next three months. The services industry, including retail, health care and restaurants, was most concerned with the possibility of further government spending cuts. The finance industry and goods producers, such as manufacturing and construction companies, were most concerned by global economic conditions.

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Mimiko Presents N150b Budget, says We Have Redefined Governance.

Ondo State Governor, Dr Olusegun Mimiko has presented to the State’s
House Of Assembly  a  N150 billion budget meant to run the affairs of the
state  for the 2012 fiscal year.

Tagged “A Caring Heart  Budget  III” the 2012 budget is 7 billion higher than
that of 2011 and it is   geared towards  further consolidation of the present
administration’s three years  land mark achievements.

Presenting  the Caring Heart budget to the state’s Lawmakers  on the floor
of the  State House of Assembly in Akure  yesterday, the governor explained
that   N85.5b of the budget is  meant for  capital expenditure while N64.5
billion is estimated for recurrent expenditure inclusive of N8.2b statutory grant
to Ondo State Oil Producing Development Commission (OSOPADEC).

The governor also informed that the budget would be serviced by expected
N75b revenue from the Federation Account, the retained N12b internally
generated revenue projection and N38b drawdown from the Bond issue as
well as external and internal sources which will commence from this fiscal
year among other sources.

The sectoral breakdown of the budget shows road construction and
maintenance taking the lion share of N16.025b  with  education gulping N12.
198b while N8.2b is the estimated spending on the provision of health

Others are Agriculture N3.7b, Trade and Industry N3.3b, Enhancement of
Electricity Supply N0.8b, Social and Community Development N6.6b, Water
Supply N3.6b, Housing and Environment N6.7b, Administration of Justice N1.

Mimiko explained that “one feature of the capital estimates for the 2012 fiscal
year is the emphasis placed on completion of all on-going developmental
projects while only very important new initiatives were taken on board.

“A total of N2.2 billion has been earmarked for the operation of the legislature
to provide the needed impetus for the delivery of the dividends of democracy
to the people of the state.

“The judicial arm of government received enormous support in the course of
the out-gone fiscal year. The Court of Appeal, as well as the Customary
Court of Appeal, effectively took off in the course of the year. Also, the
National Industrial Court will soon commence operation in the state.

“ In the current fiscal year, over N1 billion has been provided to support the
judicial arm for its operations.

At the workers level, the governor informed that  a new Public Service
Training Institute sited in Ifedore Local Government is nearing completion. He
added the the Institute has an International Governing Council and  set to
produce world-class graduates.

Reviewing both the 2011 budget and his administration’s performance  since
inception, Mimiko explained that on the revenue side, the performance of the
2011 budget started on a sluggish note, especially the expected revenue
from Federation Account. He hinted however that  as the year progressed,
the different classes of revenue continued to improve.
Mimiko divulged that  as at December, 2011, a total of N118.997 billion had
been generated from all sources as against the expected generation of N143.
500 billion, implying a shortfall of N24.997 billion. Informing however that
inspite of all these challenges, the government has  been able to record
appreciable success in the implementation of the 2011 Budget.

“On a general note, it is heartening to state that within this short period in the
annals of this State, we have redefined governance; achieved a respectable
level of infrastructural renewal; invested heavily in the productive capabilities
of our people; and raised the bar in all sectors of governance.

The governor who also spoke on the current political situation in the state,
cautioned political leaders irrespective of political affiliation, to guard their
utterances for sustenance of peace in the state.

“As we approach the electioneering period in the state, I wish to implore the
people of Ondo State to conduct ourselves with decorum. Let me also call on
the media to avoid mischief makers who are purveyors of misinformation in
order to mislead the public. This State belongs to all of us, hence we should
all work together to move it forward” Mimiko pleaded.

By  African Examiner.

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