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FG, states to spend N11.14tn this year – Report

By BusinessNews Staff on February 13, 2014

The total amount budgeted by the 36 states of the federation and the Federal Government has been estimated at N11.14tn, according to a new report.

The report by BGL Plc, a Nigeria-based financial research firm, shows that the total amount budgeted by the states for this year is N6.49tn.

This development takes the total budget of the federation to N11.14tn when the Federal Government’s 2014 budget estimate of N4.65tn is added, according to the BGL statistics obtained by our correspondent on Monday.

In contrast to the 2013 budget, the 2014 budget allocation to capital expenditure by the Federal Government fell to 24 per cent from 31.3 per cent, according to the report.

The decline in Federal Government’s capital expenditure to N1.12tn has the tendency to further elongate the estimated 30 years of infrastructural investment needed to meet the international benchmark of 70 per cent value of infrastructure as a percentage of the Gross Domestic Product, according BGL.

The report says, “In this regard, the budgets of the states present a better allocation to capital expenditure than the Federal Government’s budget as the combined budgets of the states allocated 56 per cent to capital projects.

“This implies that barring political manipulations and high level fund diversion, it is expected that infrastructural development would be driven by states in 2014.

“On the federal level, the overall fund allocated to capital projects by the federation is up to N4.77tn.”

While there was a reduction in the federal budget from N4.99tn in 2013 to N4.65tn in 2014, the combined budget of states (excluding the budget for FCT) for 2014 of N6.49tn represents a two per cent increase over the N6.39tn of 2013, according to BGL.

The report further states, “It is important to state, however, that there exists a high level of heterogeneity and mismatch among the states in terms of size and demographic structure. The average projected spending by the states is N180.38bn, with about 25 states budgeting below the average.

“Meanwhile, the economies of some states like Lagos (N489.69bn) and certain oil-producing states such as Delta (N391.51bn), Rivers (N485.5bn), Akwa Ibom (N469.34bn) and Bayelsa (N304.5bn) are so large that they command about 33 per cent of the entire budget of all the states for the year 2014.

“The mismatch is also evident in the way resources are allocated relative to population size. Premised on the assumption (which is adjudged as reasonable) that the size of a state’s budget is directly proportional to its actual and potential resources, the budget sizes relative to the population sizes of states make a strong case for a more efficient way of allocating resources.

“A comparative analysis of Lagos and Bayelsa can be used as a case study. With a 2014 budget of N489.69bn and an estimated population of 21 million people (Lagos State, 2014), Lagos has a budget per capita of N23,319.

“On the other hand, Bayelsa with a 2014 budget of N304.50bn and an estimated population of 2 million people has a significantly higher budget per capita of N152,250.”

[Punch]

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