Key highlights
- The former Nigerian Statistician-General suggested the need to stop allocating capital to all MDAs every year.
- He said the limited capital budget should be allocated to select sectors/MDAs each year.
- This will ensure that a few projects are completed every year and they start adding value to the economy as opposed to having many projects that remain uncompleted and of no value.
A former CEO of the National Bureau of Statistics, Dr. Yemi Kale, has said that Nigeria will need to change its budget system of allocating capital to all Ministries, Departments, and Agencies (MDAs) each year to end the spate of uncompleted projects in the country.
According to him, rather than allocating capital to all MDAs every year, the government could as part of the Medium-Term Expenditure Framework & Fiscal (MTEF) Strategy, select 3 or 4 sectors/MDAs to be focused on each year. He said this will ensure that the limited government fund is channeled to specific projects for that year while attention is shifted to another in the next year.
Unpopular opinion
Describing the suggestion as an unpopular opinion, Kale, who was recently appointed as Partner, Chief Economist & Head Research KPMG Nigeria, in a Twitter thread shared on Sunday, said:
- “Why can’t we as part of MTEF, come up with a system of budgeting over 4+ years that says for capital allocation, we will focus on these 3 or 4 sectors/MDAS first, then another set next year or so, etc.
- “This way by using a more systematic plan you give almost all of the capital budget to just a few MDAs at a time based on priority tied to whatever you want to achieve. Be done with them before moving to another batch next year etc. Rather than spreading limited funds thinly.
- “By spreading thinly everywhere you have many incomplete projects littering the place and since they are not completed, no value is created for the economy. But if you focus on a few and complete them at least they start generating value and maybe extra income to add to the next batch.”
Better than borrowing
While noting that adopting this strategy would ensure that the government does not have to borrow to fund its project, Kale added:
“Is this better not than borrowing just to fund a lot of projects that won’t get completed for years & accordingly won’t add value or generate revenue? And if you must borrow then focus on a few areas yearly based on whatever priority so they are completed faster and start adding value.
“Never been a fan of spreading scare revenue across 200+ MDAs so everyone gets some capital no matter what, just because they exist even if their current functions/ expenditure plans are not vital for now and can wait.”
What you should know
Several uncompleted and abandoned government projects are scattered across the country even as MDAs continue to introduce and budget for new ones every year amid low funding. According to the Nigerian Institute of Quantity Surveyors, there were about 56,000 uncompleted and abandoned projects in Nigeria as of August 2021. The projects were estimated to cost N12 trillion.