The Central Bank of Nigeria recently released its quarterly statistical bulletin wherein information regarding government expenditure was highlighted. According to the bulletin, a whooping N3.8tn was spent on recurrent expenditure in the first nine months of 2017 while only N541.4bn went into capital expenditure. As at H1-17, only 26.3% of CapEx budget for 2017 had been achieved.
However, media reports indicate that a total of N750bn has only just been released in December by the ministry of finance. We see a similar trend to 2016 when capital releases were batched into the last month of the year, as suggested by official data. Nigeria faces a huge strain and enormous deficit on its infrastructure, despite years of oil market boom, as successive governments consistently miss the opportunity to deploy buoyant oil revenue to develop critical infrastructure.
There is the need for urgent intervention in the real sector of the economy via consistent and substantial capital expenditure as more productive spending is key to driving the underperforming non-oil economy.
With recent rebound in oil prices and the increasing outlook for the further uptrend, Nigeria needs to prioritize capital spending, beyond giving special status to select sectors. This is the only means by which structural bottlenecks constraining growth in the real sector can be removed.