ANALYSIS: Govt budgets billions to fund president’s, lawmakers’ lavish lifestyles; health, roads get pittance

Senate leadership with President Goodluck Jonathan at Nigeria 52 anniversary dinner

By BudgIT

It is that time of the year when political rhetoric is at its highest and politicians are selling themselves as the messiahs who will save Nigeria’s troubled economy. The economy is in real trouble, the naira has been devalued and stocks are tanking. Promises of better prudence in the management of the economy have become refrains among politicians.

The 2015 budget is also a talking point. Nigeria is deep in a quandary brought upon it by the price of Crude and austerity may be the only ladder out. With unsold cargoes for December and low oil prices, the country’s financial prospect appears bleak.

Some days to the New Year, the 2015 budget was presented to the National Assembly. Analysts felt compelled to toss around guesses, chief among which was that the benchmark used in projecting the revenue of the federation. It appears overly optimistic. Technically, it costs $21.06 to produce a barrel of Crude Oil in 2014 under the JVC agreement (Joint Venture Corporation), up from $11.31 per barrel in 2009 – while the average operating cost of getting a barrel of Crude oil from the ground, which was previously at $6.38 in 2009 is now $9.94. Nigeria appears to be gradually out-pricing itself from the Crude oil market and urgently needs to review its petroleum laws.

Nigeria has also not been able to optimise revenue from the oil and gas industry because its pricing model is outdated and without the PIB, bold reforms have not be adopted. According to the October 2011 Central Bank Monetary Policy Committee Document “ A substantial part of oil production (about 40 per cent) is currently in deep offshore wells. Based on the terms agreed in the 1990s when oil price was under US$30, royalty from oil wells deeper than 1,000 metres is zero per cent and the nation is paid only 20 per cent of the profit by oil companies after deducting their expenses. As a result, the country has had limited benefits from high oil prices and increasing output, with most of the gains going to multinational oil companies under an inequitable fiscal arrangement.”

More so, can Nigeria achieve its production target of 2.39million barrels per day? Recent estimates showed that Nigeria produced an average of 1.902million barrels per day in December with over 35m cargoes still unsold. The Economist magazine puts the operating cost of extracting shale oil at $10-$20 per barrel for large fields. If the price war is anything to go by, the conventional oil producer will be looking at keeping oil below $50 per barrel and hoping the Shale oil lobby in the USA does not have its way with subsidies. As it is, the Crude oil price is already trading below the budget estimates through fiscal year 2015, pegged at $65 per barrel.

Weekly Brent Spot Price

Historically, Crude Oil price crashes and the resulting austerity always transit into a higher capital budget vote. The 1986 budget was prepared as the Crude oil price tumbled by 60 percent. Capital Expenditure vote as a percentage of the total budget was 52.6 percent, up from 41.9 percent in 1985. The recurrent expenditure was reduced to 47 percent of the budget, as against the 58 percent recorded in 1985. The 1998 oil price crash was no different; the capital budget was up marginally as a percentage of the total expenditure, from 63.0 percent to 63.4 percent.

The subprime mortgage fiasco of 2008 that took down Lehman Brothers and snowballed into a full-blown financial meltdown is as recent, because its effects resonate in our memories – and economies. European countries, including Greece and Italy, mired in sovereign debt, were other factors that conspired with the fall of Lehman Brothers to bring Crude to its knees. The Crude oil price collapsed, and Nigeria’s 2009 budget was thrown into the ring. Capital expenditure as a percentage of total expenditure in 2009 was up from 29.6 percent to 33.4 percent, while recurrent expenditure was down to 62 percent from 65 percent.

Be that as it may, austerity is upon us today; the amount available to contractors (capital expenditure) as a percentage of the total expenditure (excluding SURE-P) is at a historical low of 8.9 percent, down from 23.86 percent in 2014, while recurrent expenditure which was at 76 percent in 2014 is now at 91 percent of the total budget. For the first time in contemporary history, with less funds for capital projects, Nigeria may be looking at shifting the burden of austerity onto the bricklayers, plumbers, artisans and construction workers.

Statutory Transfers

Untouched and unscathed by austerity, the National Assembly was allocated N150bn yet again in 2015; up from N49.89bn in 2005. The National Judicial Council (NJC) gets N73bn while the Universal Basic Education Fund is getting N76.3bn, up from N70.47bn in 2014. The Niger Delta Development Commission takes a N7.4bn cut, with allocations in the proposed 2015 budget now at N54.53bn. This is an election year and INEC should get N74.5bn if the proposed 2015 budget is passed as presented. It is a shame and this is a conversation that needs to be held; regarding the breakdown of statutory transfers, especially the N150bn allocated to the National Assembly.

National Assembly Allocation

Debt Servicing

Funds spent servicing debts jumped from N289.5bn in 2006 to N943bn in 2015. Pundits would look at the yield on FGN bonds, higher lending rates, the risk appetite of banks among others. Chief among them is our country’s rising debt profile, as collected revenue falls short of the amount projected. How did we get to the level where we spend 22 percent of the entire budget servicing debts?

Sectoral Breakdown

A quick peep into the books of the Federal Ministry of Works seems to beg questions. Capital allocation is slashed by 89.4 percent from N106.3bn in 2014 to N11.23bn in 2015; the ministry’s overhead is up from N19.77bn to N20.7bn. Given that the Ministry of Works has fewer projects to oversee, why is its overhead costs rising? Why is a ministry, whose output is expected to be N11.23bn (as Capital Allocation) with N28.35bn (made up of Personnel costs of N7.64bn and Overheads worth N20.7bn) given that amount as overhead? Many will question why the Presidency is spending N174.19m to purchase canteen and kitchen equipment, yet the Akure-Ilesha Road gets a lesser N125m for its construction? Road users won’t mind the allocation though, given that many roads in need of repairs are getting absolutely no allocation.

The Nigerian Army is taking a cut in its overhead cost from the 2014 level of N10.7bn to N7.85bn. Also, the Nigerian Police Formations and Command overhead cost is down from N8.49bn in 2014 to N5.895bn today. The Nigeria Immigration Service, Nigeria Security and Civil Defence Corps as well as the Federal Fire Service – all are taking cuts. Interestingly enough, the Nigeria Police Formations and Command has a capital budget of N17bn (If the 2015 budget is anything to go by) while the Nigerian Army will run with a Capital budget of N5.22bn.

Many will also question why the Presidency plans to spend N1.92bn on travels in an austerity year. Why will N56.58m be spent on the procurement of crested crockery (plates and spoons) by the Presidency? Why spend N61.03m on household and catering equipment and make available N387.11bn for Capital Expenditure, which is 9% of the entire expenditure? Can’t the N826.69m the presidency is spending to upgrade the villa’s facilities wait till next year?

The budget seems to be tougher on the working poor and have-nots. We are already running short of revenue targets as the oil price at $46 per barrel is already well below the benchmark price. Unfortunately some should be piercing the bubble while others will resort to prayers hoping for a miracle.

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BudgIT is an organisation analysing the Nigerian budget and other public data in creative  and more comprehensible manner.


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  • olawale

    Government of the corrupt is called Jonathanism..the clueless and callous leader…wake up Nigeria..Change

  • ddodododo

    my brother olawale, relax change is already here

  • Baba Messi

    Why hav the APC men/women of ‘integrity’ in the national Assembly NEVER for once spoken out against the unconstitutional salaries and allowances they pay themselves as against the amount fixed by the RMFAC???
    Can someone please as Mr squeaky clean Buhari POINT Blank what he intends to do about this unwholesome and demonic pay ‘our’ representatives collect on ‘our’ behalf IF He finds it into d villa?? (though it’s becoming obvious that except for a divine intervention, Grandpa will never rule this country again).
    These are the issues some of us are interested in..not shouting ‘changee’ for the sake of it.

    • Funso

      Baba Messi, why are you messi NG up? A few questions for you: (i)which party has been the majority in the National Assembly? Your party-PDPig, (ii) when will President Jonathan and his woman Mrs Diezani Alison Madueke return the $20 billion NNPC money they stole? Answer these two questions and stop messi ng around the net.

    • tai28

      Do you know anything called separation of power? President can not interfere in legislative arm’s affairs. So legislators renumeration can not be a presidential campaign point. They are your representatives, if you don’t approve of what they are doing, it is within your right to protest against it.

    • ROHCNAWN

      I AM FOR GMB BUT YOU ARE RIGHT. I HOPE GMB WILL STOP MANY THINGS GOING ON IN THE NATIONAL ASSEMBLY

    • ROHCNAWN

      GMB IS AWARE OF YOUR CONCERN BECAUSE HE MENTIONED IT SOMETIME THIS YEAR. IF THE HEAD IS CORRECT EVERY THING WILL WORK

  • Shuaibu Bola Victor

    The truth remains that if at all Nigerian Masses need a change and different pattern of administration, APC is never an alternative. APC is a wolf in a sheep clothing. APC, to say the least, is the worst thing that can ever befall Nigeria. They are worst than PDP. The leaders of APC are not only power greed but are behind and connected to all manner of insurgents prevailing in Nigeria. Ok, look at the endorsements of APC presidential candidate(Buhari) coming from Shekau, Malema, Mend etc
    But what we(Nigerian masses) know is, come Febuary, 14, 28, we are going to resist APC across all elective positions in Nigeria.
    GEJ till 2019.Hurray!

    • ROHCNAWN

      LET US MEET ON THAT DAY

      • Shuaibu Bola Victor

        It is not fare aware again. I will tell you where to meet me for GEJ election victory celebration. GEJ till 2019.

  • Maria

    Thieves.

  • Chidi

    JONATHAN, WHERE IS UR PHD CERTIFICATE, BECAUSE U TALK LIKE MY TWO YEARS OLD SON?

    • Tunsj

      He has none.

  • Chris1408

    Nigerian politicians are worse than armed robbers and kidnappers put together. Animals in Agbada

    • Tunsj

      Very good points. Also, the legislators are the highest paid in the world.

  • richkid

    The change we Need is not APC, it has always been like this. The association of past criminals (APC) and there violence have always been the part of this but because of there greed the table turned around against them, now they want it at all cost, no way. GEJ will deal with it this time

  • pheliciti

    Without doubt, whoever wins the election will have a very tough presidency except he deals with the corruption. Nigerians would not understand any story. It beats me for example that we have returned to the days where a large chunk of our annual budget goes into debt servicing, especially when it was the same Okonjo Iweala that presided over the repayment of old debts under the direction OBJ. What is the point of repayment of debt if only to re – amass it using treasury bills issue and debt financing of cash calls. This clearly is to allow business to continue without suspicion (funded by debt) while legitimate money available is stolen.

  • Femi T.

    National cake, divide it and leave Nigerians with crumbs to eat. No wonder Jonathan wants Nigerians to make cassava bread. Eat cassava bread in morning, cassava (Gari) in the afternoon and another starch in the evening welcome to diabetic world and short life span.

  • Arewabetter

    Heartless, gutless and spineless with anus and head that are interchangeable. What other words can you use to describe such actions? The most painful of all these irresponsible acts is the poor funding of the Nigerian military with its dire consequences in the form of the increased insurgencies. Do you know what Lt General Minimah said about the Nigerian army? Here it is: ”A real soldier is known when he is put in the war-front. The one who is not a soldier will run away and abandon his job. Our soldiers are recruited from Nigerian society and, today, most people are not called to be soldiers, they joined because they are desperately in need of jobs.” What have you to say about these statements? Starved for funds since PDP came into power (for more than 16 years) and now crippled with politicians’ actions related to thievery, robbery, embezzlement as well as the practice of nepotism, tribalism and favouritism, Nigeria’s troop readiness, training, morale, and discipline has suffered, and most of the military gear has become ANTIQUATED. How do you expect them to eliminate Boko Haram from the Nigerian soil? May God protect Nigeria from further atrocities and calamities.

  • tyson

    blame it on Jonathan again @54 u are still wearing drappers–instead of thanking him for putting the nation forward