The President Bola Tinubu-led administration is planning to spend N6.75tn of its projected N27.5tn budget on defence and security, education, and infrastructure in 2024, The PUNCH has discovered.
This is as it earmarked N6.48tn (96 per cent of the amount to be spent on the three sectors mentioned above) for personnel and pension, an increase of N576.16bn over the 2023 provision. The administration is also eyeing N10.4tn from tax, dividends and others.
The Minister of Budget and National Planning, Abubakar Bagudu, disclosed this during the presentation of the 2024 budget breakdown on Wednesday.
Earlier, while presenting the 2024 Appropriation Bill, themed ‘Budget of Renewed Hope’ on the floor of the National Assembly on Wednesday, Tinubu said the budget proposal was aimed at completing critical infrastructure projects that would help address structural problems in the economy while lowering the costs of doing business for companies and the cost of living for the average Nigerian.
In his presentation, he declared, “The 2024 Appropriation has been themed the Budget of Renewed Hope. The proposed budget seeks to achieve job-rich economic growth, macro-economic stability, a better investment environment, enhanced human capital development, as well as poverty reduction and greater access to social security.
“Defence and internal security are accorded top priority. The internal security architecture will be overhauled to enhance law enforcement capabilities and safeguard lives, property and investments across the country.
“Human capital is the most critical resource for national development. Accordingly, the budget prioritizes human development with particular attention to children, the foundation of our nation.”
Tinubu noted that the government expects the country’s economy to grow by a minimum of 3.76 per cent (GDP as of the end of September 2023 was 2.54 per cent) despite the current inflationary headwinds which are expected to moderate to 21.4 per cent in 2024. Inflation was 27.33 per cent as of the end of October.
Highlighting the components of the 2024 budget proposal, he said, “After a careful review of developments in the world oil market and domestic conditions, we have adopted a conservative oil price benchmark of $77.96 per barrel and daily oil production estimate of 1.78 million barrels per day.
“We have also adopted a Naira to US Dollar exchange rate of N750/$ for 2024. Accordingly, an aggregate expenditure of N27.5tn is proposed for the Federal Government in 2024, of which the non-debt recurrent expenditure is N9.92tn while debt service is projected to be N8.25tn and capital expenditure is N8.7tn.”
According to The PUNCH analysis, funding to the education sector (N2.18tn) is 101.85 per cent more than the N1.08tn that was budgeted for the sector in the 2023 appropriation.
Of the amount, N1.23tn is for the Federal Ministry of Education and its agencies, N251.47bn for the Universal Basic, Education Commission, and N700bn as transfers to tertiary education trust fund.
While presenting the budget, Bagudu stated that N50bn of the amount would be for the student loan scheme of the Federal Government.
Funding to the defence and security sector (which includes the military, police, intelligence, and paramilitary) increased by 46.39 per cent to N3.25tn from the N2.22tn that was earmarked in 2023’s appropriation for the defence and police affairs ministries.
Based on the document presented by the minister of budget, the allocation to the health sector improved by 23.15 per cent to N1.33tn from N1.08tn in the 2023 appropriation.
Of the amount, N1.07tn has been provisioned for the federal ministry of health and its agencies, N137.21bn for Gavi/immunisation funds, including counterpart funding for donor-supported programmes, and N125.74bn as transfer to basic healthcare provision fund.
Additionally, N1.32tn will be expended on the provision of infrastructure in the power, transport, water resources, aviation, works and housing sectors. Explaining reasons for the low provisions, the former Kebbi governor said the president had directed for increased private sector involvement in infrastructure provision.
He revealed that all ministries have been given matching orders to woo willing domestic and foreign investors to improve the nation’s infrastructure.
Bagudu stated, “Equally on infrastructure spending, part of the instruction of Mr President to the cabinet is that as he has done in Lagos, we have to bring in private sector investments into infrastructure. He has mandated all ministries to examine how to access investors who are willing to put money into infrastructure. What the government can put into infrastructure is small compared to what the private sector can bring.
“So, a number of roads and railways, airports, housing and a number of infrastructure projects will be considered. the government funding is to capitalise private investment.”
Also, N534bn has been budgeted for social investments and poverty reduction programmes in 2024. The government expects to spend N10.26tn on non-debt recurrent expenditure, N8.25tn on debt servicing, N243bn on sinking funds, and N8.70tn on capital expenditures.
The minister further noted that the 2024 budget was prepared amidst the backdrop of a challenging global and domestic economic environment.
He declared, “This Prevailing global environment is characterised by slowing global growth; persistent inflationary pressures prompting monetary tightening with the inherent negative impact on capital inflow to emerging markets economies.
“Also constrained investment spending; supply-chain disruptions; and rising geo-political tensions, including the Russia and Ukraine war have severely affected global food and energy prices.”
While giving insights on the performance of the 2023 budget, Bagudu stated that Federal Government has gotten N8.65tn in revenues as of September 2023 with an oil revenue of N1.42tn and non-tax revenue of N2.50tn
Bagudu stated that the estimated aggregate expenditure for 2023 (inclusive of the supplementary budget) is N24.82 trillion, but actual spending has been N13.7tn.
Earlier in the day, President Bola Tinubu presented the budget of N27.5tn to a joint section of the National Assembly while urging firms in the country to join in infrastructure development across the country.
This is coming a few days after the Federal Executive Council approved the 2024 Appropriation Bill of N27.5tn, an increase from the N26.01tn earlier considered, and a $1bn budget support loan from the African Development Bank.
At the time, Bagudu also announced that some parameters of the recently approved Medium Term Expenditure Framework by the Senate had been changed by FEC.
He said, “That approved Medium Term Expenditure Framework has the exchange rate of N700 to $1 and equally, the benchmark crude oil price at $73.96 cent.
“However, in Mr. President’s determination to find more money to fund our priorities, today the Federal Executive Council further revised the Medium-Term Expenditure Framework and Fiscal Policy Framework and two of the important decisions were to use an exchange rate of N750 to $1 and also a benchmark crude oil reference price of $77.96, meaning $4 more than the earlier approval.”
According to the president, the country remains committed to meeting its debt obligations with projected debt service at 45 per cent of total expected total revenue.
He said, “Budget deficit is projected at N9.18tn in 2024 or 3.88 per cent of GDP. This is lower than the N13.78tn deficit recorded in 2023 which represents 6.11 per cent of GDP. The deficit will be financed by new borrowings totalling N7.83tn, N298.49bn from privatisation proceeds and N1.05tn drawdown on multilateral and bilateral loans secured for specific development projects.”
The president, however, noted that the government is challenged when it comes to funding. According to him, “in view of the limited resources available through the federal budget, we are also exploring Public Private Partnership arrangements to finance critical infrastructure.
“We, therefore, invite the private sector to partner with us to ensure that our fiscal, trade and monetary policies, as well as our developmental programs and projects, succeed in unlocking the latent potential of our people and other natural endowments, in line with our national aspirations.”
FG eyes N10.39tn
To fund its budget, the Federal Government expects to make N18.32tn as revenue. N7.94tn is supposed to come from oil-related sources, and the balance of N10.39tn is projected to be from non-oil-related sources. Projected independent revenue is expected to be N1.9tn, grants and donor-funded projects N685.63bn, and dividends from NLNG, Bank of Industry, Development Bank of Nigeria, Galaxy Backbone, and Bank of Agriculture are projected at N357.92bn.
Commenting on the need to boost tax revenues, President Tinubu in his speech said, “We are currently reviewing our tax and fiscal policies. Our target is to increase the ratio of revenue to GDP from less than 10 per cent currently to 18 per cent within the term of this Administration. The government will make efforts to further contain financial leakages through effective implementation of key public financial management reforms.”
Reliance on loans
Meanwhile, the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, in his remarks said the budget projections are based on realistic assumptions and can be implemented to stabilise the Nigerian economy for rapid inclusive growth.
He spoke during the public presentation of the federal government of Nigeria’s 2024 budget proposal held at the finance ministry headquarters on Wednesday in Abuja.
He affirmed the budget will be executed with less reliance on borrowings but promote domestic and foreign investment and privatisation of critical government assets. He said, “The budget is N27.5tn and what I think is critical is that this budget is based on assumptions which are realistic.
“It is based on projections which I think is okay to the average person and reasonable. Therefore, it is something that we can expect to be successfully implemented. The breakdown of different elements shows the direction of this administration in order to stabilise the Nigerian economy for rapid inclusive growth. There is going to be less reliance on borrowing.
“The budget deficit is being brought down to about from 6.1 per cent to 3.8 per cent of GDP. That is a huge change in direction from unlimited borrowing to focusing on revenue and expenditure management. There will be value for money on expenditure and increased revenue. The key target is to increase tax to GDP from under 10 per cent to 18 per cent in a couple of years. That target, a hugely ambitious one is what we need to meet to reduce reliance on borrowings.”
He highlighted that debt service as a proportion of revenue is expected to fall with the government expected to boost the economy through the inflow of domestic and foreign investment.
He added, “As you have heard from the president, There will be privatisation, private-public partnerships, and Internally Generated Revenue to improve on revenue.”
Despite this reduction in deficit to GPD, the Federal Government noted that the high projected level of fiscal deficit in 2024 is partly due to the proposed salary review of federal workers across the board, increased pension obligations, and higher debt service costs.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.
