Tie All Long-term Funds from Debt Capital Market to Self-liquidating Project in 2025, FG Told

Ndubuisi Francis in Abuja

In order not to compound Nigeria’s already huge debt burden, a university don and former Commissioner for Finance, Imo State, Prof. Uche Uwaleke has advised the federal government not to spare any effort to ensure that all long-term funds sourced from the debt capital market are tied to self-liquidating projects.
His admonition is contained in an article titled, “2025 Proposed Budget: Concerns, Nuts and Bolts,” which he made available to THISDAY.
Uwaleke, who is also the President, Capital Market Academics of Nigeria (CMAN) and Director, Institute of Capital Market Studies, Nasarawa State University, Keffi said that as the National Assembly considers the 2025 budget proposals presented by the President, it was important that the contents are properly interrogated before the appropriation Bill is passed. “A major snag to a thorough interrogation of the Bill is its late presentation to the National Assembly. Much as section 81 of the Constitution allows the President the liberty to lay the Appropriation Bill at any time before the commencement of the next financial year, it goes without saying that late submission of the budget Bill makes it difficult for the National Assembly to undertake proper scrutiny of the proposals and so the approval process is hamstrung by the limited time available for debate.
“Extant literature supports the fact that the timing of the submission of budget proposals significantly affects the quality of analyses and deliberations by the Legislature.
“As a rule of thumb, a national legislature requires a minimum of three months for effective consideration of the annual budget estimates. Regrettably, this has not been the practice in Nigeria over the years,” Uwaleke said.
To help close this identified gap in the budget process, the financial expert submitted that a budget law similar to the US Congressional Budget Act of 1974 which lays out a formal framework for developing and enforcing a “budget resolution” to guide the budget process be established in Nigeria.
The envisaged budget law, he stated, should provide a timetable for the various budget stages; strengthen a non-partisan National Assembly Budget Office to aid in budgetary information and planning as well as encourage stronger collaboration between the various stakeholders.
Such a law, he added, should ensure that, like the General Bills, the Appropriation Bill is subjected to public hearing.
“Indeed, the review of the budget Bill by the National Assembly provides a major opportunity for public scrutiny and civic engagement in respect of any concerns the public may have.
“I have a concern that the 2025 budget will most likely witness a high level of off-budget funds thereby masking the true picture of government fiscal position.
“Although recurrent (non-debt) spending has made provision of circa N846 billion for the new minimum wage related adjustments, it is doubtful if this amount will be sufficient to accommodate the attendant bailouts to Sub Nationals by the Federal Government in support of the implementation of not only the new national wage floor but also agreements with various labour unions including those of universities given the paltry balance in the Excess Crude Account.
“These potential off-budget funds are capable of undermining government’s plan to progressively reduce deficits and borrowings over the medium term. For the 2025 budget not to run into a major hitch, it is important that, as much as possible, all claims on public financial resources are identified and reconciled within the framework of the budget possibly incorporating potential investment income from restructuring of MOFI as well as positive impact of expected tax reforms to fund such claims in the event that the oil revenue projections do not materialize.
“A related concern I have is the financing of the N13.4 trillion deficit in which asset sale/privatization proceeds will contribute a mere N312 billion, while N3.8 trillion represents multilateral/Bilateral project-tied loans. “The bulk of the borrowings (N9.3 trillion) will be largely.
discretionary and non-project tied. In order not to compound the already huge debt burden the country is facing, every effort should be made to ensure that all long-term funds sourced from the debt capital market are tied to self-liquidating projects.
“The budget breakdown, contained in the Executive proposal, is meant to provide the nuts and bolts that will facilitate budget implementation and control.
“Besides the concern which the financing of the deficit raises, there are equally other weighty issues that deserve careful scrutiny by the National Assembly. For example, a thorough review of the line items that make up service wide votes and capital supplementation can free-up significant funds that can be channeled to other critical areas such as agriculture and solid minerals.
“For instance, the National Assembly should interrogate the composition and rationale for the ‘margin for increase in costs and recurrent adjustment (N12 billion) as well as the line item tagged ‘contingency recurrent’ (N36 billion). “Curiously, the same figures appeared under service wide votes in 2024. Equally, under capital supplementation is a line item known as ‘contingency capital (N200 billion) which also featured in 2024 budget for same amount.
“The opaque description of these items as well as their presentation calls for closer scrutiny. In the same vein, a situation in which projects are merely listed as ‘ongoing’ without stating the completion target expected in 2025 leaves much to be desired.
“For example, listed under Ministry of Transport as ‘ongoing’ are 10 projects for which the sum of N42 billion is earmarked. These include the completion of Abuja-Kaduna railway project; Lagos-Ibadan and its associated additional works; rehabilitation of Itakpe-Ajaokuta rail line and ‘construction of 12 Nos station buildings and track laying works at railway ancillary facilities areas Agbor’. “Others include ‘installation of signal and telecommunication system on Itakpe-Ajaokuta-Warri railway line, installation of acoustal sensing security surveillance system for the Abuja (Idu)-Kaduna and other security gadgets’, as well as completion of feasibility studies for new standard gauge rail lines. To see the shortcomings in this presentation, most of these projects also featured in the 2024 budget breakdown where a provision of N33 billion was made.
“Even the ‘feasibility studies for new standard gauge rail lines’ listed as completed in 2024 budget is also appearing to be completed in the 2025 budget!
“Besides, the document was silent on the completion stages of these projects and did not indicate how much each of these projects would cost. This sort of narrative does not allow for a correct assessment of progress made in the projects’ execution.
“The same presentation flaw is observed with respect to projects listed under the Ministry of Works in the 2025 budget where about N290 billion has been allocated for the rehabilitation/repair of roads. For example, the sum of N1 billion each has been provided for the ‘ongoing’ construction of Rijiya Gusau Road in Zamfara State and Nsukka-Obollo-Afor-Ehamafu-Nkalagu road in Enugu State.
“It stands to reason that long-term projects such as roads or railways spanning several years should first be included in a country’s perspective plan (or at least medium-term plan) indicating timelines and then each year, the annual budget draws from it showing (preferably in kilometres as opposed to ‘sections’) achievable targets.
“This renders the use of “ongoing” a poor indicator to have in an annual budget. It bears repeating that for the budget information to discipline fiscal actions, it must be transparent. This demands the avoidance of the use of opaque and arbitrary language to enable the electorate verify the budget information as well as monitor performance.
“A good example is specifying road or rail projects in terms of kilometres to be attained. Without such numbers, it is difficult for the populace to hold the government accountable.
“In order to ensure that resources are properly allocated, MDAs with large overheads relative to total spend such as the Ministry of Budget and Economic Planning (N1.3 trillion), National Rural Electrification (N1.3 trillion), Nigerian Electricity Liability Management Ltd (N680 billion) among others, should be made to provide reasons why such disproportionate overheads should not be considerably slashed.
“It is cheering to note that the FG’s total independent revenues are expected to increase from N1.9 trillion in 2024 to 3.5 trillion in 2025 largely on account of expected increase in operating surplus to N2.6 trillion from N1.1 trillion last year. Similarly, an increase in dividend expected from NLNG is projected to grow to N727 billion from N346 billion last year.
“But projected dividends from Bank of Industry (N4.7 billion), Development Bank of Nigeria (N2.6 billion) and Bank of Agriculture (nil) are lower than the previous year.
“This calls for a review of the yearly allocation of N10 billion for recapitalisation of DFIs as this amount is grossly inadequate to even attract private sector interest.By the same token, i think the Ministry of Solid Minerals Development deserves more than the N16.7 billion earmarked for it in 2025,” Uwaleke said.