What Nigeria’s 2018 Budget Looks Like: More For Salaries Than Infrastructural Development

Shakirudeen Taiwo


This budget shows Nigeria may not be ready yet for development.

President Muhammadu Buhari during 2018 budget preparation.President Muhammadu Buhari during 2018 budget preparation.(Saharareporters)

Nigeria’s President, Muhammadu Buhari presented the country’s 2018 budget to the National Assembly on Tuesday, November 7, 2017. In it, there is more to recurrent than infrastructural facilities needed to spur economic growth in the country.

The proposed total expenditure for 2018 is N8.6 trillion, representing 16 percent over 2017 budget. According to Buhari: “The aggregate expenditure comprises recurrent costs of N3.494 trillion; debt service of N2.014 trillion; statutory transfers of N456 billion; the sinking fund of N220 billion; and capital expenditure of N2.428 trillion.”

With this, Nigeria will also be paying more on salaries of its over-bloated civil service.  A cost which tends to gulp over 50 percent of the country’s annual budget since 1999. This concern was also raised by the President during 2018 budget presentation.

Personnel costs is projected to rise by 12 percent in 2018. Although we have made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform….Furthermore, I have directed agencies not to embark on any fresh recruitment unless they have obtained all the requisite approvals. Any breach of this directive will be severely sanctioned,“said President Buhari.

One fact that may negate this concern, and establish status quo is the promised increase in number of political appointees by the Federal government. A move that shows the government is not really going to address the issue of over-sized civil service.

Since 2015, the country’s budgets have all catered to just payment of salaries with less implementation of the capital components.

Also of more concern is that the high part of the proposed spending would be used in servicing debts. 26% (N2.2 trillion) of the 2018 budget is allocated for this purpose. This amount is 2 percent less allocation to capital expenditure in the year. This, therefore, confirms the development-cost impacts of huge debts profile of the country. A concern well raised by major multinational development bodies and economists in the country.

Also Read: Why government can’t execute capital projects in the 2017 budget – Nigeria’s Finance Minister

Analysis of Nigeria's 2018 budget and revenue assumptions.            Analysis of Nigeria’s 2018 budget and revenue assumptions.(@rumaio/twitter)

The budget proposal also shows a revenue shortfall to expenditure to the tune of N2.36 trillion. And it is expected to fill with domestic and external borrowing. Already, the country’s Eurobond debts currently stood at $1.5 billion.

There is a concern that the 2018 budget may go the way of other previous budgets (2016 & 2017) as over 25% percent of needed revenue are hinged on borrowing. Thus, raising issues about the Federal Government’s gross lack of know-how and poor handling of budgeting procedures.

A member of the Nigeria’s upper legislative house, Senator Foster Ogola, also expressed this fear as regards heavy reliance of the country on debts to finance its annual spending plan.

Mounting external debts of Nigeria is fast becoming a burden.          Mounting external debts of Nigeria is fast becoming a burden.(ATLAS)

Also Read: $54.5 billion public debt may suffocate Nigeria if the economy fails to improve

“The implementation of 2015, 2016 and 2017 budgets have been poor because of the burden that comes with them. Where you prepare a budget of N4trn and 50 percent is to be funded from loans not yet secured, you can imagine what happens. The lender always has a superior hand. And if you don’t meet his conditions, he won’t lend. So, you won’t have enough money to fund the budget,” Ogola said.

Some of the key capital programmes and projects planned for 2018 include N9.8 billion for Mambilla hydro-power project, N12 billion for counterpart funding for power transmission project, N35.42 billion for National Housing Programme, N10 billion for 2nd Niger Bridge and N300 billion for rehabilitation of major strategic roads in the country.

President Muhammadu Buhari during 2018 budget preparation.

(Source: Business Insider)

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