MINISTER of Finance, Mrs. Kemi Adeosun, recently told a delegation of the House of Representatives Tactical Committee on Recession that, for the first time in the history of the country, the Federal Government has backed its budgeted capital expenditure with cash amounting to N1trillion.
In a statement issued by her ministry shortly after a meeting with the legislators, the minister described the sum released for capital projects as the highest so far in the country. She added that with the stability in oil prices and the return of normalcy in the Niger Delta, government could do much more on the execution of the capital components of the budget this year.
According to her, the N1trn released will make it possible for the Federal Government to achieve its objectives of job creation and stimulation of economic activities in the country. She listed the construction of a dual standard railway line that will link Lagos and Kano, as well as the rehabilitation of roads and expansion of irrigation projects, as some of the ongoing projects that can boost the economy which the cash releases will take care of.
The disclosure by the Finance Minister raises a glimmer of hope that there will be an improvement on the abysmal performance of successive governments on the execution of capital components of our national budgets. This is because many capital projects in our past national budgets were not cash-backed. The N1trn, however, is only 63 percent of the N1.8trn capital expenditure provided for in the N6.07trn 2016 Budget.
Comparatively, the release of N1trn for capital projects is good news, at least on paper. Records show that while succes- sive governments in the country have struggled to cash-back 30 percent of budgeted capital expenditure, recurrent expenditure demands have been met, 100 percent. The result of the failure to release cash for budgeted capital expenditure is the rash of abandoned projects all over the country.
For instance, in 2015, the Federal Government disbursed only N362 billion for capital expenditure, out of N557bn budgeted for the purpose, according to the Fiscal Responsibility Commission (FRC) 2015 Annual Report and audited accounts. In 2014, a total of N587bn was disbursed, which is higher than that of 2015. However, a breakdown of the N1trn released by the current government shows aggregate releases of N870bn to Ministries, Departments and Agencies (MDAs) as at the end of February, 2017.
The Finance Minister is optimistic that the capital releases will have great impact on the economy by creating jobs, stimulating economic activities in communities through upgrading of infra- structure, and improving the well-be- ing of Nigerians. We hope that this will be so.
While we heartily welcome the historic release of N1 trillion for capital projects, the development calls for close monitoring of the money to ensure that it is fully used for the intended projects, and that the projects are of the required quality. The euphoria of the announcement of this “historic” feat should not be allowed to end in histrionics. What Nigerians want to see is the impact of these cash releases on their lives and the overall development of the country. Anything short of real impact will be unacceptable.
Considering the high infrastructure deficit in the country, we urge government to release even more funds for the provision of critical infrastructure, especially in the priority areas of power, health, transportation (roads, rail, aviation), education, food and security. Perennially low capital expenditure is a direct consequence of the poor funding of the capital component of our bud- gets. One of the major problems of this practice over the years is the escalation of the project costs and the failure of the delayed projects to meet the people’s needs when they are eventually delivered, many years after.
This is the time for government and its agencies to be up and doing. With the economy having contracted by 1.5 percent in 2016, and annual economic growth forecast standing at less than two percent this year, there is need for more commitment to infrastructure spending to boost economic recovery. In this connection, we call for a better understanding between government and the National Assembly for early passage of the 2017 Appropriation Bill so that more capital projects, backed by cash, can be executed by getting con- tractors back on site.
Overall, capital expenditure over the years has been low largely due to high recurrent expenditure and low revenue generation, particularly in the last few years. In that regard, we suggest a reduction of recurrent expenditure and a total overhaul of the capital expenditure implementation strategy. It is necessary to ensure better funding, greater utilisation of resources and due implementation of projects in line with national developmental goals and priorities.

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