Dollar rates: In terms of the foreign exchange (forex) rates in the United States dollars equivalent, Nigeria may not have increased its budgetary and capital spending in the last 10 years, data from the Central Bank of Nigeria (CBN) have shown.
A review of a 10-year total budgetary spending and allocation to capital expenditure revealed that the country is not exactly spending more when converted to the benchmark of the USD.
The current administration has repeatedly claimed to have upped annual spending, especially in the area of capital allocation and releases.
President Muhammad Buhari was quoted to have said: “This administration was able to invest an unprecedented sum of over N1.2 trillion in capital projects through the 2016 budget… the highest ever in the history of this country.”
However data from the Central Bank of Nigeria showed that in the 2009 budget, along with two other supplementary budgets approved for that year, a total of N1.28tn was spent on different capital projects.
The claim that N1.2tn spent on capital projects in 2016 is the highest in the country’s history was inaccurate. The available evidence suggests a slightly higher amount of N1.28 trillion was spent in 2009.
The budget implementation reports of the Federal Ministry of Budget and National Planning, and that of the CBN showed that in 2016, Nigeria spent N1.2tn; in 2015, it was N362.3bn; in 2014, it was N587bn; then in 2013, it was N1tn, and N744bn by 2012.
In 2011 the budget was N810bn; N956.1bn in 2010; N1.3tn in 2009; N787.2bn in 2008, and in 2007, the budget was N491bn.
The Federal Ministry of Finance last week further disclosed that a total of N1.580tn capital cost was released to Ministries, Departments and Agencies for the 2017 federal budget.
The Minister of Finance, Mrs. Kemi Adeosun, who disclosed this in Abuja last Tuesday, added that the N1,580tn total capital releases for 2017 were remarkably higher than the N1,219tn total capital releases for 2016.
However, while the government’s claims are correct in naira terms, an exclusive data shared with Daily Trust by the head of the FSDH research, Ayodele Akinwunmi, showed that, when converted to prevailing exchange rate, the annual budgetary provision has hardly increased significantly.
The data revealed that 2010 saw the highest provision with $34.6bn total budget amount and capital allocation getting $12.4bn with N148.8 as the exchange rate.
Year 2013 followed closely with $32bn total budget and $10.4bn capital allocation with N155.75 as the exchange rate; year 2012 came close with $31.2bn total budget and $8.5bn to capital projects at an exchange rate of N155.94/USD.
In 2016, the total budget came to $23.9bn, with a capital component of $4.68bn at an exchange rate of N253.44/$.
In 2017, the total provision dropped to $20.38bn as the total budget, with $6.46bn as capital component at N365/$.
Year 2018 has come in at a total of $25.30bn, while capital allocation stands at $6.58bn at N360.41/$.
Why this matters
The question in some quarters is whether the conversion really matters since the budget is going to be spent in Nigeria and not in the US.
Analysts like Akinwunmi, however strongly posit that it matters because of the high component of non-locally consumed items in the country.
He said, while such benchmarks are not peculiar to Nigeria, one key area the dollar input affects is in the development of infrastructure. “Some of the key capital projects that have been budgeted for this year include roads and railways which actually have a high component of foreign input besides a good proportion of local labour.
“All the equipment that will be used in a road construction or in building a railway would need to be imported and the government would need dollars to bring them in not naira,” the FSDH researcher said.