by Oluseun Onigbinde

In a nation where we think oil is the driver of growth, we apparently took nothing from the oil revenue to build any new infrastructure. In the chart above, our domestic borrowing exactly equals to the releases for capital infrastructure in the budget.

How rich is Nigeria?

Possibly when one gazes into the thick forest, swamps of oil and the tons of minerals locked within the ground, one can truly affirm the wealth of this nation. Or whenever we peer into the large population of this country in a moment when European and Asian nations complain of low birth rate, you will affirm the blessing on this country.

However in monetary terms, you can assess the Federal Government of Nigeria on the state of wealth. A country like Nigeria which has experienced five different oil booms still battles with providing common infrastructure.

Let me run you through some figures to clearly understand the weak pulse of the Nigerian State.

Since 2007, the Nigerian state has battled to fix infrastructure, whether its either power which only recently experienced a drop of over 1,000MW or major trunks roads which are perennially undergoing patching.

Consider the 2012 Budget Implementation Report released by the Budget Office of the Federation; it reveals how and where we are. It’s  important to note that out of N1.39tn budgeted for capital expenditure in 2012, only N744bn was released.

At the release stage, the money (N744bn) stays at the Central Bank of Nigeria till a ministry is due to access it.  Out of the N744bn, N686bn was accessed by the ministries and government agencies, meaning the rest (N58bn) will be counted as unspent capital expenditure.

Poring over the details, it’s saddening that of the total expenditure of the Federal Government put at N4.13tn in 2012, only N744bn which is a mere 17.2% of the total actual expenditure finally got allocated for capital expenditure. This clearly shows that capital expenditure budget (a plan) put at 28.5% at the beginning of the year actually came down to 17.2% at year-end in implementation.

Also note that breakdown of that capital expenditure is unavailable. Details of the capital expenditure might just end up as completion of ministry headquarters in Abuja, buying new Hilux Vans or even appropriated as vague items such “Monitoring and Evaluation” which ends up in private pockets.

In the Budget Implementation Report, it shows that even at a closing average oil production of 2.2mbpd, Nigeria’s oil revenue at budget price (FG share) is not enough to pay its workers and pensioners (see chart below).

In a nation where we think oil is the driver of growth, we apparently took nothing from the oil revenue to build any new infrastructure. In the chart above, our domestic borrowing exactly equals to the releases for capital infrastructure in the budget. I guess you expect that savings from the oil revenue known as the Augmentation or Excess Crude Account would be used for capital expenditure. This should have been added to the borrowing of N744bn but it all ends up making up the recurrent expenditure and one wonders how a nation will claim sound fundamentals with such finances. Even the 2012 fuel subsidy put at N1.01tn (BudgIT estimate) is far higher than what we expended building tangible infrastructure.

It is a thus clear that oil revenues are unsustainable for the size of what our government and its workforce has become. The capital expenditure whose funding glaringly translates to societal growth now seems exclusively funded by debts (in compliance with the Fiscal Responsibility Act).  Not even taxes from Custom levies, VAT, Company Income Taxes, revenue from independent government agencies or others get to fund capital expenditure.

Whether we doubt the data churned out by the Budget Office of the Federation and Office of the Accountant General or we agree that Nigeria’s government revenue needs rapid expansion through diversification, we should all just note that oil revenue; a volatile quantity can’t take us rapidly up the ladder of development and only the conscious expansion of the ability of the individual to scale enterprise is the route to our greatness. But even this still requires public sector efficiency in terms of activating competitiveness metrics mainly infrastructure, taxation, business registration, access to financing, regulation, protection of contracts and intellectual property.

Follow this writer: @seunonigbinde

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