The Federal Government has spent less on combating poverty in 2024, as social protection spending dropped by 22 per cent, despite a surge in economic hardship and savings from fuel subsidy removal.
According to data from the Open Treasury Portal managed by the Office of the Accountant-General of the Federation, payments made towards social protection as palliatives between January and September 2024 fell to N128.5bn from N165bn in the same period in 2023. This represents a drop of N37bn.
This is in contrast to the sector’s budget allocation, which rose by 12.4 per cent from N559.9bn in 2023 to N629.4bn in 2024.
The Open Treasury Portal introduced in 2019 provides public access to details of government receipts, payments, and financial activities, and it includes daily, monthly and quarterly spendings of the Federal Government.
Social protection spending in Nigeria refers to government expenditures on programmes and initiatives aimed at reducing poverty, vulnerability, and economic inequality.
It includes cash transfers and other support systems designed to safeguard the well-being of the most vulnerable populations, such as low-income households and those affected by economic shocks or disasters.
Such spendings are intended to provide a safety net, promote economic inclusion, and enhance resilience against economic hardships.
However, despite the increased hardship and poverty in the country, the Federal Government has spent less so far this year on social protection.
The amount spent on social protection is about 2.1 per cent of the N6.04tn spent on servicing debt in the first six months of this year.
The International Monetary Fund earlier said that Nigeria allocates the majority of its revenue to debt servicing, leaving limited funds for critical development projects.
MSMEs kick
Reacting to the development, the National President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, said most Micro, Small, and Medium Enterprises are yet to receive government loans.
Egbesola commended the efforts of the Federal Government to support MSMEs through its social programmes, but noted that many small businesses had yet to receive such support this year.
He said, “It largely shows that the government understands the importance of the sector and is willing to support its growth. However, like many past funding interventions, most MSMEs are yet to receive the funds. We would have expected that the supervising government agency work more in collaboration with the critical stakeholders in the MSME ecosystem and also registered and accredited business membership organisations to ensure that real and verifiable business owners get the funds.
“This collaboration would have also ensured more transparency, joint implementation, monitoring, and evaluation of the entire exercise with verifiable testimonies to measure and justify positive outcomes. Also, the volume of funding of N50,000 to micro businesses and N1m to small businesses is low compared to the current economic realities occasioned by the high rate of inflation, the cost of doing business, and the volatility of foreign exchange. “
The NASME boss asserted that the intervention fund was inadequate as the intervention fund may not showcase the expected impact.
He added, “In a population of almost 40 million MSMEs, the targeted number of MSMEs for this intervention is small and may not showcase the expected impact. We hope the government will have more funds to do more in the future.”
In a similar vein, the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, Dele Oye, said the Federal Government’s allocation was grossly inadequate.
He said, “N75bn equivalent of $43m is too little for a sector/industry, talk less of the entire country, it will not scratch anything. Compared to the size of the problem, the government needs to reinvest a substantial size of tax income/collection at the federal, state, and local government levels in projects and single-digit loans that will enhance the capacity of the private sector to increase productivity.
“The private sector will pay more taxes from the resultant profits generated from increased productivity. It is a win-win situation for all parties when government policies are pro-business. Forget about comparison with past intervention loans because the exchange rate has made it practically impossible to make any realistic comparisons.”
Public services
Meanwhile, data from the Open Treasury Portal showed that the government spending on general public services and defence surged in 2024.
Expenditure on general public services rose by 33.3 per cent to N8.1tn this year, compared to N6.07tn in 2023, reflecting 45.95 per cent of its budget allocation.
Public service spending in Nigeria encompasses government expenditures on administration, debt servicing, and policy implementation, often accounting for the largest budget share but criticised for inefficiency and a focus on recurrent costs over capital investments.
The PUNCH also observed that defence spending increased by 32.7 per cent, from N1.53tn in 2023 to N2.03tn in 2024, with 64.08 per cent of the allocated funds spent, up from 58 per cent in the previous year.
The rise in these areas highlights the administration’s focus on governance and security, but it leaves questions about the adequacy of spending on social protection amid worsening economic realities.
It was also observed that despite a sizeable allocation of N11.77tn for economic affairs in 2024, only N1.6tn, 13.58 per cent of the total, has been spent so far.
This is only a slight improvement on the 14.83 per cent utilisation recorded in 2023 when N1.25tn was disbursed from an N8.43tn budget.
Health spending also saw a modest increase of 31.4 per cent, rising from N392.9bn in 2023 to N516.4bn in 2024.
However, the sector’s budget utilisation fell from 45.79 per cent in 2023 to 41.9 per cent this year.
These figures highlight a persistent gap in funding for critical sectors that directly impact the lives of citizens.
The PUNCH further observed that education spending improved in absolute terms, with N1.28tn spent in 2024, up by 36 per cent from N937.9bn in 2023.
However, the sector’s budget utilisation dropped from 50 per cent to 46.07 per cent.
Housing and community amenities received a major budget boost, with N515.2bn allocated in 2024, a 269 per cent increase from N139.5bn in 2023.
Payments also rose to N261.1bn, up by 168 per cent from N97.5bn last year, reflecting 50.68 per cent of the allocation.
While these figures indicate some progress, the spending is still insufficient to address Nigeria’s pressing housing deficit and the dire state of its educational facilities.
The data from the Open Treasury Portal, which provides detailed insights into the government’s financial operations, shows a misalignment in priorities.
While the government increased spending on general public services and defence, sectors critical to alleviating poverty and improving the standard of living, such as social protection, economic affairs, and health, received less attention.
The 22 per cent drop in social protection spending is particularly troubling given the FG’s savings from subsidy removal and the worsening economic conditions facing millions of Nigerians.
Earlier this year, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said the Federal Government will be saving N8tn annually from the fuel subsidy removal and exchange rate unification policies.
The World Bank earlier said that the Federal Government incurred a significant loss of N13.2tn in foregone revenue as a direct consequence of the implementation of its foreign exchange subsidy policy between 2021 and 2023.
Also, the bank’s Chief Economist in Nigeria, Alex Sienart, said the recent increase in the Federal Government’s revenue in the first half of the year is largely due to the removal of implicit FX subsidy.
Last year, the Washington-based lender said about 7.1 million Nigerians would become poor if the Federal Government failed to compensate or provide palliatives for them, following the removal of fuel subsidy.
In October 2024, the World Bank said over 129 million Nigerians now live below the national poverty line.
This figure represented a sharp rise from 40.1 per cent in 2018 to 56 per cent in 2024.
The Washington-based lender also said that as inflation rises, low labour income pushed an estimated 14 million Nigerians into poverty in 2024.
In response to the rising poverty levels, the report noted that the Nigerian government has launched temporary cash assistance initiatives targeting 15 million households.
Each household will receive N75,000, distributed in three instalments, benefitting an estimated 67 million people overall.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, recently said that 25 million Nigerians have so far received the N25,000 conditional cash transfer.
This means that only about 37 per cent of the targeted number of Nigerians have benefited from the cash transfers since it was launched in October last year.
President Bola Tinubu launched a social safety net programme that will distribute N25,000 to 15 million homes for three months in observance of the 2023 International Day for the Eradication of Poverty.
The World Bank gave its approval to the National Social Safety Net Programme-Scale Up on December 16, 2021, and it was to continue until June 30, 2024.
However, the bank extended the closing date for the loan project by 18 months to December 31, 2025.
The Federal Ministry of Humanitarian Affairs and Poverty Alleviation is tasked with carrying out the $800m World Bank loan project.
However, the Federal Government had to suspend the cash transfer programme for further investigation and revamping following alleged misappropriations within the programme.
Betta Edu was earlier suspended as a humanitarian affairs minister due to the misappropriation of N585m earmarked for palliative distribution.
Also, Edu’s predecessor, Sadiya Umar-Farouq, was investigated by the Economic and Financial Crimes Commission.
The ex-minister is being probed over an alleged laundering of N37.1bn during her tenure as a minister.
Of the $800m authorised for the National Social Safety Net Program-Scale Up, the World Bank has already released about $299.99m to Nigeria.
The elimination of fuel subsidies and other recent policies have had a disproportionate impact on Nigeria’s poor and vulnerable, who stand to benefit greatly from a monthly cash transfer system that the Federal Government intends to fund with this loan.
The IMF recently urged Nigeria to expand its cash transfer program to include rural areas in response to the country’s growing challenges of food insecurity and rising poverty.
PUNCH
