For a better budget performance, the Lagos Chamber of Commerce and Industry has charged the Federal Government to improve on capital expenditure in the incoming 2024 fiscal year.
The LCCI gave the task in a statement signed by its Director General, Dr. Chinyere Almona, in Lagos on Thursday.
Almona’s call represented LCCI’s formal reaction to the Federal Government’s proposed 2024 budget of N27.5 trillion ($33.4 billion).
President Bola Tinubu had on Wednesday presented the proposed Appropriation Bill to the joint session of the National Assembly.
The budget, which is the biggest in the country’s history, represented a 21.4 percent increase compared to N22.65 trillion in the previous year, with strong focus on defence, internal security and job creation.
LCCI noted that over the years, the performance of the capital expenditure has been very low relative to the recurrent expenditure, with implications for the country’s infrastructure sector.
The LCCI lamented that the situation “is worrisome and calls for urgent solutions”.
Almona charged: “Particular attention must be paid to investing more in transport infrastructure in order to mitigate the high cost of fuel and resolve the many logistical challenges that have impacted the movement of goods across the nation.
“Looking beyond oil revenues, the government must build investors’ confidence and enhance our forex earnings through non-oil exports. We need to invest more in export infrastructure through automation and implementation of critical port reforms to reduce the bottlenecks in our export logistics and processes.
“In addressing the most significant components of human capital development, we urge governments at all levels to be committed to significantly improving budget implementation in strategic sectors of the economy, including agriculture, education, health, infrastructure, and security.”
Almona stressed that efforts must be made to scale up revenue collection by the Federal Inland Revenue Service through consistent tax administrative measures, digitalization and policy reforms.
She said it was commendable to note that the strategic objective of the expenditure policy is expected to tackle macro-economic stability, investment environment optimization, human capital development, poverty reduction and social security.
A review of the proposed budget revealed an oil price benchmark of $77.96 per barrel and a daily production estimate of 1.78 million barrels per day, and an exchange rate of N750/US$ was adopted.
Similarly, it proposed non-recurrent expenditure of 9.92 trillion, which is N1.59 trillion or 19.1 percent higher than the 2023 budget, while debt service is projected to be N8.25 trillion (N1.94 trillion or 30.7 per cent more than the 2023 budget) and capital expenditure is N8.75 trillion.
The LCCI noted that the assumptions in the proposed Appropriation document are conservative, particularly in terms of oil prices and exchange rates.
Still, it said daily oil production remains a major concern due to persistent underinvestment, vandalism, oil theft, and rising production costs in the oil sector.
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The Chamber also noted that relative to Nigeria’s GDP size, the proposed budget is 12.2 percent, which is very low compared to its African peers like South Africa, with a government expenditure to GDP ratio of 32.5 percent, Egypt (24.7%), Kenya (23.0%) and Ghana (27.1%).
LCCI posited that this was a serious issue that needed to be addressed by the government in the light of its renewed hope agenda.
NASS is expected to round off its study and scrutiny of the proposed Bill in about three weeks time, after, sends back to the Presidency for another look. The assent to the Bill is also expected before the end of 2023 fiscal year, so as to achieve January 2024, new budget model.