The Director-General of the Budget Office, Ben Akabueze, says the huge recurrent expenditure in Nigeria is shrinking the funds allocated to the building of new infrastructure.
According to him, the practice of spending more money on running the government than on infrastructure development is unsustainable.
Bloomberg reported that Akabueze made this known during a virtual presentation.
He stated that low revenue collection and high recurrent costs have resulted in actual capital expenditure below N2 trillion ($4.88 billion) a year.
“Recurrent spending, allocated towards salaries and running costs, has accounted for more than 75 percent of the public budget every year since 2011,” he said.
“Hence, the investments required to bridge the infrastructure gap are way beyond the means available to the government.”
Vice President Yemi Osibanjo at a retreat in March estimated that Nigeria needs N2.3trillion over the next 30 years to bridge the infrastructure gap.
He said the only way to effectively address the massive infrastructure deficit facing the country was through Public-Private Partnership (PPP) arrangement.
The country’s tax revenue as a proportion of the gross domestic product is one of the lowest globally, according to the International Monetary Fund (IMF).
“Huge recurrent expenditure has constrained the provision of good roads, steady power supply, health care services, quality education, and quality shelter,” Akabueze said.
“No country can develop where a large part of its earnings is spent on administrative structures rather than on capital investment,” he said.
He urged the government to amend its constitution to create six regions to replace the existing 36 states that each have their own governments.
According to him, the country needs to reduce the number of cabinet ministers to a maximum of 24 from over 40 and cut federal ministries to 20 from the current 27.