Finance Minister, Mrs. Kemi Adeosun, has said that at the end of September, N3.9 trillion out of the N6.1 trillion budgeted for the year has been released.
Mr Mohammed Dikwa, Director, Special Projects in the ministry, who represented the minister, made the statement at a stakeholders’ forum on reducing the cost of governance in Abuja.
In a paper entitled: ‘Public Sector Financial Management Reforms as a Strategy for Cutting Cost of Governance in Nigeria’’, Adeosun said only 18 per cent of the releases was for capital expenses as against 82 per cent for recurrent expenditure.
She, however, said that the releases to the productive sectors of the economy remained the highest in recent times.
She added that Nigeria’s inability to finance most of its development projects had been largely attributed to high cost of governance in the form of large recurrent expenditure.
“In order to grow the economy and fasten the rate of growth and development, there is the need to reverse the trend,’’ the minister said.
She stated that it was important to ‘’allocate through the budgeting process, a larger proportion of funds for massive investment in infrastructure and other capital projects.’’
Adeosun said in the last two decades, costs associated with the running of the government in Nigeria had increased dramatically.
She added that there was a decline in the proportion of the budget allocated to recurrent expenditure.
Adeosun said that from 60 per cent in 1990 to 36 per cent in 1998, the budget increased to 80 per cent in 2003 but dropped to 74 per cent in 2016.
She said that the rising cost of governance had been a vexed issue in economic discourse in Nigeria.
“Reasons for rising cost of governance in Nigeria are issue of inflation, misuse of public funds and corruption, increase in population, extra-large NASS, extra-large public bureaucracy and need for accelerated growth and development.
“Others are lack of economic efficiency and lack of well-defined rules and regulations,’’ Adeosun said.
She said it showed that all tiers of government in Nigeria spent far more than they earned such that between 2011 and 2015, Nigeria had a consistent annual deficit of over N1 trillion in budget execution.
Adeosun also said that the country’s external and domestic debts amounted to over 30 per cent of national revenue during the period.
In a welcome adress, Mr Victor Muruako, acting Chairman, Fiscal Responsibility Commission, said the forum was the outcome of a very critical review of the financial management framework of Nigeria.
Muruako said the country had failed to address critical issues, such as infrastructure challenges, as well as failure to set priorities right in the face of dwindling revenues.
Muruako said that the continued high expenditure on overhead cost against capital expenditure was unacceptable.
He said that the idea of managing public income and expenditure in a responsible and responsive way in the larger interest of the country was the sole responsibility of the commission.
“It is indeed about prudent management of resources based on fundamental rules of action that provides the framework for evidence based budgeting,’’ Muruako said.
He said in the past, budgets were prepared not for the necessity and solutions required in the system but in such ‘’careless manner’’ that agencies only fixed figures on paper.
“This is why we support the zero based budget which is replacing the incremental budget where no critical effort is made to look at issues,’’ Muruako said.