Finance

FG, States Budget N5.6tr For Salaries, Overheads

Published

7 years ago

January 12, 2017

FG, States Budget N5.6tr For Salaries, Overheads

The federal and 36 state governments will spend half of their N13.5 trillion total budgets for the year on salaries and overheads.

Analysis of the 2017 budget documents shows that the central and 33 state governments would spend N5.9 trillion (41 percent) of their total budgets on salaries.The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).

The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.

The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.

The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.

At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.

Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.Further analysis of the budget estimates of the two tiers of government

Further analysis of the budget estimates of the two tiers of government show an increase of N1.3 trillion from last year’s N12.2 trillion.The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.

The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

The 17 northern states have a total budget of N2.38 trillion, witnessing a reduction of over N100 billion from last year’s N2.5 trillion. Of this, N1.37 trillion was for capital and N928 billion for recurrent, compared to last year’s N1.4 trillion and N1.1 trillion respectively.The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

Small spenders
The seven states with the lowest approved budgets are Nasarawa (N67 billion), Yobe (N69 billion), Gombe (N86 billion), Ekiti (N94 billion), Abia (N103 billion), Enugu (N105 billion), Niger (N108 billion), and Taraba (N110 billion).

Big spenders
Lagos, with N813 billion, is leading the league of states with huge budgetary allocations. Other big spenders are Rivers (N470 billion), Akwa Ibom (N365 billion), Cross River (N301billion), Delta (N271 billion), Bayelsa and Ogun (N221 billion each), Kaduna (N215 billion), Kano (N210 billion) and Oyo (N207 billion).

Geopolitical analysis
On geopolitical basis, the seven states of the northwest zone (minus Kebbi) have a total budget of N1.01 trillion slightly lower than previous year’s N1.12 trillion. The budget has capital and recurrent components of N635.2 billion and N376.5 billion when compared with last year’s N698 billion and N479 billion irrespectively.The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.

The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.

The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for

The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for recurrent component. The zone has a recurrent vote of N695 billion and N671 billion capital, last year.The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The southeast’s total budget this year is N581.2 billion, about N90 billion increase from previous year’s N490 billion. It is made up of N324 billion capital and N257.3 billion recurrent votes; which is slightly higher than last year’s N242 billion and N248 billion respectively.

Huge recurrent expenses
The seven states with swollen recurrent expenses are Plateau, where Governor Samuel Lalong budgeted N68.5 billion for recurrent, leaving N64.3 billion for capital.

Osun State Governor Abdulrauf Aregbesola budgeted N138.2, allocating N75.8 billion for recurrent and N62.4 billion for capital votes.

Another state in this league is Nasarawa, where Governor Tanko Al-Makura, budgeted N67 billion, out of which N37 billion is for recurrent and N30 billion for capital expenditure.

In Yobe, Governor Ibrahim Gaidam budgeted N69 billion for the year, setting aside N42 billion for recurrent spending and N27 billion for capital projects. Governor Ayodele Fayose’s Ekiti State also has a higher recurrent vote, standing at N55.6 billion out of N94 billion, leaving N38.4 billion for capital expenditure.

Abia State votes N103 billion, setting aside N57.4 billion for recurrent and N45.1 billion for capital spending.

Among the oil-rich states, only Bayelsa and Delta’s recurrent budgets exceeded their capital votes. Of the N271 billion Delta expenditure, N152 billion is for recurrent and N119 billion for capital expenses.

Bayelsa State Governor Henry Seriake Dickson budgeted N221 billion for the year. Recurrent vote will consume N137 billion, leaving N84.3 billion for capital spending.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Loans

Akinwumi Adesina Calls for Debt Transparency to Safeguard African Economic Growth

Published

1 day ago

April 25, 2024

Samed Olukoya

Amidst the backdrop of mounting concerns over Africa’s ballooning external debt, Akinwumi Adesina, the President of the African Development Bank (AfDB), has emphatically called for greater debt transparency to protect the continent’s economic growth trajectory.

In his address at the Semafor Africa Summit, held alongside the International Monetary Fund and World Bank 2024 Spring Meetings, Adesina highlighted the detrimental impact of non-transparent resource-backed loans on African economies.

He stressed that such loans not only complicate debt resolution but also jeopardize countries’ future growth prospects.

Adesina explained the urgent need for accountability and transparency in debt management, citing the continent’s debt burden of $824 billion as of 2021.

With countries dedicating a significant portion of their GDP to servicing these obligations, Adesina warned that the current trajectory could hinder Africa’s development efforts.

One of the key concerns raised by Adesina was the shift from concessional financing to more expensive and short-term commercial debt, particularly Eurobonds, which now constitute a substantial portion of Africa’s total debt.

He criticized the prevailing ‘Africa premium’ that raises borrowing costs for African countries despite their lower default rates compared to other regions.

Adesina called for a paradigm shift in the perception of risk associated with African investments, advocating for a more nuanced approach that reflects the continent’s economic potential.

He stated the importance of an orderly and predictable debt resolution framework, called for the expedited implementation of the G20 Common Framework.

The AfDB President also outlined various initiatives and instruments employed by the bank to mitigate risks and attract institutional investors, including partial credit guarantees and synthetic securitization.

He expressed optimism about Africa’s renewable energy sector and highlighted the Africa Investment Forum as a catalyst for large-scale investments in critical sectors.

Banking Sector

UBA, Access Holdings, and FBN Holdings Lead Nigerian Banks in Electronic Banking Revenue

Published

2 days ago

April 24, 2024

Samed Olukoya

United Bank for Africa (UBA) Plc, Access Holdings Plc, and FBN Holdings Plc have emerged as frontrunners in electronic banking revenue among the country’s top financial institutions.

Data revealed that these banks led the pack in income from electronic banking services throughout the 2023 fiscal year.

UBA reported the highest electronic banking income of N125.5 billion in 2023, up from N78.9 billion recorded in the previous year.

Similarly, Access Holdings grew electronic banking revenue from N59.6 billion in the previous year to N101.6 billion in the year under review.

FBN Holdings also experienced an increase in electronic banking revenue from N55 billion in 2022 to N66 billion.

The rise in electronic banking revenue underscores the pivotal role played by these banks in facilitating digital financial transactions across Nigeria.

As the nation embraces digitalization and transitions towards cashless transactions, these banks have capitalized on the growing demand for electronic banking services.

Tesleemah Lateef, a bank analyst at Cordros Securities Limited, attributed the increase in electronic banking income to the surge in online transactions driven by the cashless policy implemented in the first quarter of 2023.

The policy incentivized individuals and businesses to conduct more transactions through digital channels, resulting in a substantial uptick in electronic banking revenue.

Furthermore, the combined revenue from electronic banking among the top 10 Nigerian banks surged to N427 billion from N309 billion, reflecting the industry’s robust growth trajectory in digital financial services.

The impressive performance of UBA, Access Holdings, and FBN Holdings underscores their strategic focus on leveraging technology to enhance customer experience and drive financial inclusion.

By investing in digital payment infrastructure and promoting digital payments among their customers, these banks have cemented their position as industry leaders in the rapidly evolving landscape of electronic banking in Nigeria.

As the Central Bank of Nigeria continues to promote digital payments and reduce the country’s dependence on cash, banks are poised to further capitalize on the opportunities presented by the digital economy.

Loans

Nigeria’s $2.25 Billion Loan Request to Receive Final Approval from World Bank in June

Published

3 days ago

April 23, 2024

Samed Olukoya

Nigeria’s $2.25 billion loan request is expected to receive final approval from the World Bank in June.

The loan, consisting of $1.5 billion in Development Policy Financing and $750 million in Programme-for-Results Financing, aims to bolster Nigeria’s developmental efforts.

Finance Minister Wale Edun hailed the loan as a “free lunch,” highlighting its favorable terms, including a 40-year term, 10 years of moratorium, and a 1% interest rate.

Edun highlighted the loan’s quasi-grant nature, providing substantial financial support to Nigeria’s economic endeavors.

While the loan request awaits formal approval in June, Edun revealed that the World Bank’s board of directors had already greenlit the credit, currently undergoing processing.

The loan signifies a vote of confidence in Nigeria’s economic resilience and strategic response to global challenges, as showcased during the recent Spring Meetings.

Nigeria’s delegation, led by Edun, underscored the nation’s commitment to addressing economic obstacles and leveraging international partnerships for sustainable development.

With the impending approval of the $2.25 billion loan, Nigeria looks poised to embark on transformative initiatives, buoyed by crucial financial backing from the World Bank.