Akabueze, the Director general of budget office says Nigeria’s annual spending is unsustainable

The director-general of the Budget Office, Ben Akabueze, has said Nigeria’s current trend of spending more money on running the government than on building new infrastructure is unsustainable.

Akabueze told Bloomberg at a virtual presentation that low revenue collection and high recurrent costs have resulted in actual capital expenditure below two trillion naira ($4.88 billion) per year for a decade.

“Recurrent spending, allocated towards salaries and running costs, has accounted for more than 75% of the public budget every year since 2011,” Akabueze said.

“Hence, the investments required to bridge the infrastructure gap are way beyond the means available to the government.”

Bloomberg reports that annually, Nigeria requires at least $3 trillion of spending over the next 30 years to close its infrastructure gap, according to Moody’s Investors Service said in November.

The country’s tax revenue as a proportion of gross domestic product is one of the lowest globally, according to the International Monetary Fund.

IMF’s stance was echoed by Bill Gates, co-chair of the Bill and Melinda Gates Foundation, who said Nigeria’s tax collection is too low to cater for the health and other basic infrastructure deficit in 2020.

“Nigeria has about the lowest domestic tax collection of any country in the world, so it is very tough to fund infrastructure and education,” Gates told The Cable in an interview last September.

“Do a comparison of Nigeria tax collection to whatever country you think is comparable. The taxes are too low to fund the infrastructure, education system, and the health system.”

Like Bill Gates, Akabueze said, “Huge recurrent expenditure has constrained the provision of good roads, steady power supply, health care services, quality education and quality shelter.”

Akabueze is aware of the huge financial requirement to fund government structure and proposed that a revert could save Nigeria from borrowing to fund the system.

According to Bloomberg, Akabueze said Nigeria should amend its constitution to create six regions to replace the existing 36 states, which each have their own governments.

He said the country also needs to reduce the number of cabinet ministers to a maximum of 24 from more than 40 and cut federal ministries to fewer than 20 from the current 27.

“No country can develop where a large part of its earnings is spent on administrative structures rather than on capital investment,” Akabueze said.