N’Assembly decries low funding for capital projects

National Assembly Complex

The National Assembly on Wednesday expressed concerns over the wide gap between recurrent and capital expenditures in the 2024 budget, citing the low level of fund releases for capital projects as a major obstacle to achieving tangible development.

At a joint session between the Chairmen of Senate and House Committees on Appropriations and the Presidential Economic Team to review the 2025 Appropriation Bill, Senator Solomon Adeola and Hon. Abubakar Bichi called for increased funding for capital projects in the ongoing 2024 budget.

They argued that capital projects are the most direct way for Nigerians to benefit from government activities, as recurrent expenditures primarily serve a limited segment of the population.

The 2024 fiscal year, initially pegged at N28.7tn, was revised upward to N35.06tn  to accommodate N3.2tn for “Renewed Hope” infrastructure projects and N3tn for additional recurrent expenditures.

These adjustments were approved following a request by President Bola Tinubu to address critical infrastructure needs and operational demands.

Despite the budget expansion, the 2024 budget performance has been underwhelming, according to a report by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

The report revealed that while recurrent expenditures achieved a 43% implementation rate, capital expenditures lagged significantly at only 25%.

Senator Adeola, representing Ogun West Senatorial District, called for a drastic shift in the budget structure, advocating for a 60:40 ratio between recurrent and capital expenditures, compared to the current 80:20 ratio.

“Capital releases to MDAs drive economic activities and development across the nation. The non-release of funds for capital projects is a significant factor in the poor performance of the 2024 budget so far. Funds must be released to avoid abandoned projects and ensure the success of the Renewed Hope Agenda,” Adeola stated.

He emphasised that MDAs must not approach their 2025 budget defence with records of poor performance in implementing their capital mandates.

Bichi echoed these sentiments, highlighting the disproportionate impact of recurrent expenditures.

 “Most recurrent expenditure items, which have achieved near 100% implementation, directly benefit only about 10% of the population. In contrast, capital projects in healthcare, education, infrastructure, and energy directly benefit the majority of over 200 million Nigerians,” he said.

The finance minister, Edun, acknowledged the backlog of capital releases awaiting funding but cautioned against reverting to unsustainable spending practices, referencing recent fiscal crises in France and Germany as cautionary tales.

The Minister of Budget and National Planning, Atiku Bagudu, attributed the high recurrent expenditures to Nigeria’s developmental challenges and legacy issues, such as insecurity, which continue to strain resources.

Bagudu noted that insecurity has adversely affected agriculture and other economic activities, compounding budgetary pressures.

Director General of the Budget Office, Tanimu Yakubu, cited unpaid pensions and gratuities inherited by President Tinubu’s administration as significant contributors to recurrent costs.

While he noted progress in addressing pension liabilities, he suggested that the National Assembly might need to legislate limits on recurrent expenditures in future budgets.

The meeting, attended by the Minister of State for Finance, Doris Uzoka-Anite, and permanent secretaries from the Ministries of Finance and Budget and National Planning, also addressed concerns over tax waivers and holidays.

Participants warned that these policies could further deplete government revenues if not carefully managed.