FG Capex spend: Too little too late

Nigeria’s Federal Government last year responded to a collapse in growth by outlining plans to increase spending in 2016 to give a Keynsian type fiscal uplift to Africa’s largest economy.

Latest data from the Finance Ministry show the policy response is not going according to planned.

Out of a planned N1.8 trillion in capital expenditure for 2016, the FG has only managed to spend 42 percent or N753.6 billion, two months to the end of the year.

Breakdown of the spending shows the highest single expenditure went to power at N209.2 billion, you also had transport N30.5 billion, Health N18.4 billion, Education N16.7 billion, Niger Delta N8.1 billion and other N312.5 billion see table.

Lacking in the list is the breakdown for expenditure on roads, bridges and other critical infrastructure that Nigeria lacks.

Infrastructure spending is generally regarded as having a multiplier effect on the economy.

Furthermore we think the $2.4 billion (N753.6 billion) spent on capex so far is a drop in the bucket in Nigeria’s $440 billion economy.

With consumer spending collapsing, private sector investments retrenching and current account in deficit from falling volume and value of exports, we struggle to see where growth will come from this year as the proposed fiscal stimulus turns to a did.

Add policy mistakes from the central bank, power and dollar shortages for manufacturers and rising inflation and unemployment and the picture becomes bleaker still.

Nigeria is on its way to a full year recession, the first since 1991 and we forecast a -1.7 percent contraction in GDP for the third quarter of 2016, largely on account of botched policy responses by government.

PATRICK ATUANYA