2023 supplementary budget: Mainly recurrent, enriching other nations

Oluwatosin Oladetan, (MBA, ACCA, PMP, NIM, FMVA, BIDA), a business and corporate strategist, financial analyst, project manager, process improvement and engineering professional, is a Volunteering Contributing Analyst.

President Bola Tinubu of Nigeria presented a supplementary budget of N2.18 trillion to the country’s National Assembly in October 2023. This supplementary budget is a 10 percent proportion of the original proposed 2023 budget. Ten percent is about 37.4 percent of the 18-year climax year-on-year inflation rate of 26.7 percent attained by Nigeria in September 2023, an uptick from the August year-on-year inflation rate of 25.8 percent. This infers that this proportion of the original budget is not out of place amidst the heightening ‘shege’ (the now popular lexicon for the toughening adverse condition of the people) influenced by the removal of fuel subsidy, Nigerian currency devaluation, and other adverse economic indices.

The supplementary budget is split between the recurrent expenditure of  N1.02 trillion (46.7%), capital expenditure of N0.96 trillion (44.1%), and contingency on capital expenditure of N0.2 trillion (9.2%). The budget has been speedily approved by the National Assembly based on the president’s plea to obtain the required approval for the execution of the expenditure prior to the end of 2023 which is just in a matter of weeks. It is very pertinent to note that the appropriation did not present a strong position for the expansion of revenue which is already deficient to a large extent in the approved 2023 budget, this implies that the current planned deficit gap will be further expanded by another 19 percent to be at N13.52 trillion.

The Ministry of Defense (MOD) has the second largest share of the supplementary budget as the planned expense presented was N476 billion (22% of the total supplementary appropriation). This amount is split across the various arms and the class of expenditure presented was recurrent – 45.3% and capital – 54.7%. The defense headquarters has an estimated expense of ₦50.00 billion (recurrent – 67%, capital 33%). The defense headquarters’ capital expenditure relates to the procurement of critical and urgent operational support. The Nigerian Army has the largest pie of the Ministry of Defense budget; this is an estimated expense of N211.54 billion (recurrent – 55%, capital – 45%). The Nigerian Army’s capital expenditure relates to the procurement of Cayuse helicopters, TB2 UAS, and refurbishment of artillery guns. The Nigerian Navy has an estimated expense of N62.80 billion (recurrent – 33%, capital -67%). The Nigerian Navy’s capital expenditure relates to the procurement of vehicles, arms, ammunition, ballistics armour protection equipment, critical equipment, a presidential yacht which is said to have been reallocated to further expand the education loan fund for funding student loans originally presented at N5 billion, and the construction of naval bases. The Nigerian Airforce has an estimated expense of N112.20 billion (recurrent – 14%, capital – 86%). The Nigerian Airforce capital expenditure relates to the purchase of Beechcraft, UAVs, aircraft ammo requirements, radar coverage equipment, and aircraft spare equipment. The Defense Intelligence Agency has an estimated expense of ₦17.04 billion, 100 percent recurrent expenditure. The Ministry of Defense or National Defense College has an estimated expense of ₦22.96 billion (recurrent – 58%, capital – 42%). The Defence College capital expenditure relates to the cladding completion of the Ministry of Defence Headquarters as well as the procurement of epail armaments and guard boots.

It is important to note that none of the Ministry of Defence’s capital expenditure relates to developing the facilities and infrastructures required for Nigeria to become an exporter of military ammunition or crafts, rather they relate more to procurements resulting in huge capital outflow from the country as these expenses are incurred. It is worrisome for the country with the largest population in Africa to rely solely on imported equipment and technologies for its military advancement. This poses a challenge to the MOD and necessitates a clarion call to the MOD to seek relevant partnerships, opportunities, and avenues to transform Nigeria from an importer of non-human military resources to an exporter of these technologies, equipment, and ammunition to other countries within and beyond Africa.

The Police formation and command planned expense presented was ₦50 billion (recurrent – 59%, capital – 41%). A larger share of the police formation and command capital expenditure relates to the purchase of marine boats and helicopters which could have been more effective if these expenditures rather related to upskilling, enhancing motivation and dedication of the police command considering the toughening times faced by an average police officer who is required to commit him/herself to the public service.

The Federal Capital Territory administration’s planned expense presented was N100 billion (100% capital). The FCT has more pressing needs for 14 percent of the allotted spend which will be incurred in the construction of a Court of Appeal, and the rehabilitation of the federal secretariat.

The Office of the National Security Adviser’s planned expense presented was N29.70 billion (recurrent – 92%, capital – 8%). The 8% capital expenditure will result in a monetary outflow from the nation as it relates to the partial settlement of outstanding liabilities for procurement of treated/operational vehicles for the State House and ONSA.

The Department of State Services (DSS) planned expense presented was ₦49.05 billion (100% capital). All the planned expenditures of the DSS will result in monetary outflow out of the country as none of the planned equipment can be sourced within the Federal Republic of Nigeria Territory.

The State House planned expense presented was N28.00 billion (100% capital). The total amount allotted to this expenditure line item is just too frivolous and not required for the advancement of ‘Renewed Hope’ in the deplorable situation Nigeria has experienced within the year 2023.

The Federal Ministry of Works planned expense presented was N300 billion (100% capital). This represents 14 percent of the total appropriation for the 2023 supplementary budget, but it is only N58 billion (19%) of the total planned expense that relates to the development of new infrastructure, while the larger 81 percent relates to rehabilitation, payment for the end phase of projects, dualization, liabilities, emergency repairs, construction, special intervention, critical intervention, proposals among others which would have been mitigated if the right infrastructural development and project management practices have been deployed on these projects whose provisions have been factored in prior budgets.

The Federal Ministry of Agriculture and Food Security planned expense presented was N200 billion (recurrent – 52%, capital – 48%). The Ministry of Agriculture’s capital expenditure presented relates to the provision of agricultural implements, infrastructures, and assorted inputs for the rainy season as well as dry season farming of wheat, maize, rice, and cassava. These expenditures will advance opportunities for Nigeria to expand her non-crude income and increase access to food supply within her territory, not excluding the opportunity for wealth expansion of the average Nigerian actively involved in agriculture with access to these seedlings and infrastructure.

The Federal Ministry of Housing planned expense presented was N100 billion (100% capital). The expenditures relate to the National Housing Programme construction of 40,000 units of Renewed Hope mini estates/cities, slum upgrade, urban renewal, and provision of developmental infrastructure facilities across the nation. Access to these facilities and infrastructures upon their completion, which will not be in the year 2023, to the common Nigerian who do not belong to any political, governmental, or ruling affiliation will be carefully considered to review the impact of these developmental projects on the average Nigerian.

The Independent National Electoral Commission (INEC) planned expense presented was N18 billion (100% recurrent) of which further details as regards the allocation are not available as at the time of this writing.

The largest share of the Nigerian 2023 supplementary budget allocation is N615 billion (28% of the total allocation) and it is allotted to a recurrent expenditure class that has always been questionable and prone to misappropriation over the years, which is the Service Wide Vote. About ₦210 billion (34% of Service Wide Vote) is allotted to four months wage award due to the memorandum of understanding (MoU) President Bola Tinubu had with the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC). This MoU requires the payment of N35,000 in addition to a 40 percent special salary increase to all federal government workers. The largest chunk, which is N400 billion (65% of Service Wide Vote), is allotted to the ‘Renewed Hope’ conditional cash transfer distribution of ₦25,000 per month to 15 million poor and vulnerable households as a relief to the naira devaluation, fuel subsidy removal, heightened inflation, and other economic hazards. These relief measures targeted at ameliorating the poverty level are not sustainable in the long run as they are not sufficient to compensate for the increase in economic adversity and weak fiscal and economic policies implemented. These are only short-term reliefs targeted at some individuals and sects of people that will soon be outlived.

A large chunk of the 2023 supplementary budget approved by the Nigerian National Assembly will result in monetary outflow from the nation and huge recurrent expenditures. Only N253.20 billion (12%) of the total N2.18 trillion supplementary budget speaks to nation-building activities which is a split of N100 billion capital expenditure allocated to the Ministry of Housing, N95.20 billion for capital expenditure allocated to the Ministry of Agriculture and Food Security and the N58 billion for new capital expenditures allocated to the Ministry of Works. It is a very worrisome and abysmal situation for a developing nation during economic and developmental adversity like Nigeria to further deepen the budget deficit by more expenditures not relating to nation-building activities.

Our hope is that the proposed 2024 appropriation act will posit more revenue advancement opportunities which will aid the development of a better Nigeria and the accomplishment of the renewed hope that was promised by President Bola Tinubu.