In the first half of 2024, Nigeria has experienced a notable decline in its capital expenditure (CAPEX), which fell by 25.3 percent to N1.99 trillion from N2.68 trillion in the same period of the previous year. This decline is particularly concerning as it comes against the backdrop of the government implementing four budgets simultaneously, including the 2024 annual budget, a N2.17 trillion supplementary budget, and amendments to existing budgets to incorporate the Renewed Hope Infrastructure Fund. While the government has moved to introduce these budgets to address critical national priorities, such as infrastructure, agriculture, and security, the actual spending data reveals an alarming trend toward reduced investment in infrastructure, which could hinder long-term economic development and recovery.
An analysis of month-by-month spending shows inconsistent patterns throughout the year, beginning with zero allocation in January 2024, compared to N379.1 billion in January 2023, indicating a sluggish start to fiscal activity. CAPEX peaked in February 2024 with N893.9 billion, representing a brief surge, but this was quickly followed by a dramatic drop to N258.6 billion in March — a staggering 65 percent decline. By April, capital spending plummeted further to just N42.1 billion, leading to heightened concerns regarding the government’s fiscal capability. Although there was some recovery with CAPEX reaching N478.9 billion in May and N325.4 billion in June, these figures still fell short of what was experienced in the same months of the previous year, underscoring a downward trend in investment for crucial infrastructure projects.
The growing fiscal constraints are evident, particularly as rising debt obligations and recurrent expenditures crowd out spending on developmental projects. In the first half of 2024, capital expenditure accounted for only 53.35 percent of the N3.73 trillion retained revenue, a significant drop from 96.06 percent in the first half of 2023. Total government expenditure during this period surged by 29.5 percent, driven largely by recurrent spending, which itself ballooned by 51.4 percent to N10.17 trillion. A staggering 68.2 percent of this recurrent expenditure was allocated to debt servicing, increasing by 68.8 percent from N3.58 trillion to N6.04 trillion year-on-year. This growing expenditure gap exacerbated the fiscal deficit, climbing by 28 percent from N6.59 trillion in the previous year to N8.44 trillion, raising critical concerns regarding fiscal sustainability and the government’s inability to prioritize growth-oriented investments.
At the 30th Nigerian Economic Summit, the Minister of Budget and Economic Planning, Abubakar Bagudu, reiterated the government’s commitment to addressing these fiscal challenges through its multiple budget strategy. He underscored the necessity of focusing on national priorities such as food security, infrastructure, and human capital development, while intending to implement innovative measures that would enhance funding, including expanding access to consumer credit and reforming housing financing. Bagudu aimed to ensure that the introduction of various budgets is geared towards reducing the fiscal deficit and promoting an increase in capital expenditure, which has been sorely lacking this fiscal year.
Despite the minister’s assurances, data indicates that the government’s investment in capital projects continues to decline. The Federal Government’s approach of operating multiple budgets concurrently has faced scrutiny and condemnation from various stakeholders, including civic-tech organizations like BudgIT, which label the situation as troubling. The National Assembly has extended the life of previous budgets while working on the 2024 budget, which has been pegged at a total of N35.06 trillion. This comprehensive budget allocates resources across various categories, with only a small percentage—approximately 19.46 percent—of the capital expenditure budget utilized in the first half of the year, signaling a systemic issue with budget execution and allocation effectiveness.
As Nigeria faces these ongoing fiscal realities, the government’s challenge is not just to manage the concurrent budgets effectively but to restore investor confidence and prioritize developmental projects that can drive economic recovery. The push for sustainable economic growth in Nigeria hinges on the government’s ability to reconcile its fiscal priorities with the urgent need for infrastructure investment and social services. Maintaining a balance between debt servicing and capital expenditure will be critical for the country’s path toward economic stability in the long term.
