Nigeria’s govt expenditure among world’s lowest — Akabueze
The Director-General of the Budget Office of the Federation, Mr. Ben Akabueze, says Nigeria’s government expenditure is among the lowest in the world.
Akabueze said this during a chat with journalists and representatives of civil society organisations in Abuja on Friday.
While presenting a breakdown of the 2022 budget proposal which stands at N16.39trillion, he justified the Federal Government’s borrowing plan, adding that it was necessary because the government’s revenue was too low.
The Budget Office boss said the expenditure of the federal, state and local governments combined was less than 15 per cent of GDP.
He said, “It is absolutely critical that we fix our revenue challenge because oftentimes people just say cut expenditure. The truth is cutting expenditure is not currently a viable option for two main reasons. Number one, our public expenditure to GDP ratio is about the lowest even on the continent of Africa.
“As a country, our public expenditure to GDP ratio is under 15 per cent. Even on the continent of Africa, that ratio, the average is over 30 per cent. The global average is over 30 per cent. I am talking of the whole of government – federal, state and local governments. The reality is that in aggregate, governments in Nigeria are not spending too much, they are actually spending too little.
“So, the solution is not to cut government spending. The solution is to make government spending more efficient and actually increase the scope for the government to be able to spend more because our public expenditure to GDP is so low, that is why the delivery of public goods and services is weak.”
Akabueze argued that there is correlation between low public expenditure to GDP ratio and low revenue to GDP ratio.
He further stated that the government’s revenue to GDP was also among the lowest in Africa.
“Our revenue to GDP ratio is also the lowest in Africa. I told you earlier on that it is about nine per cent. So, if our revenue to GDP ratio is at nine per cent and our public expenditure to GDP ratio with recent significant growth is about 14 per cent, then already you see a gap between nine and 14 and that gap is funded by debt. That gap of five per cent is funded by debt,” Akabueze stated.
He also argued that cutting the personnel cost which currently stands at N4.11trillion would not be right because public sector wages are already low compared to the private sector.
On the implementation of the Stephen Oronsaye report which recommends the scrapping of some government agencies to save cost, Akabueze said the government was still considering the option, adding that another committee had been set up to look into it.
The Budget Office boss, however, argued that implementing the report would require strong political will.
Akabueze stated that there was a need for Nigeria to boost its tax revenue, adding that only about 40 million Nigerians pay tax to the government.
He said fuel subsidies were putting a strain on the government’s finances, adding that the government only budgeted for subsidies for half of 2022.
