According to a report by Agusto Consulting, Nigeria’s fiscal priority will result in the loss of 25% of its 14.7 trillion naira budget. In the 2022 budget, Nigeria plans to spend 3.9 trillion naira on loan interests, 0.9 trillion naira on statutory transfers, 4.1 trillion naira on payroll and funded pension, 1.4 trillion naira on other recurrent expenditures and 4.5 trillion naira on capital expenditure, while envisaging a total income of 5.5 trillion naira through net revenue, 0.4 trillion naira from external borrowing, 4 trillion naira from the markets and 4 trillion naira from the Central Bank of Nigeria; all of which adds up to 13.9 trillion naira. However, the data shows that it might be unlikely for the Nigerian government to be able to fund its capital expenditure in total as it is already in deficit and estimates that as much as 25% might be left off this year. Business Edge starts this work week with a focus on the threat Nigeria’s capital expenditure faces. Lekan Onabanjo is joined by Gospel Obele, Chief Economist at Streetconomics Ltd.
As Gospel Obele explains what it means for the country to be unable to fund 25% of its CAPEX, it becomes quickly clear that Nigeria’s financial standing is less than sturdy. “It simply means that growth and development aspiration for the year is may not get to see the light of day, primarily because [Nigeria doesn’t] have the necessary investment in the fiscal year. It is worrisome,” he says.
While the Business Edge guest appreciates the global crunch being felt in the aftermath of the COVID19 pandemic and other issues, he opines that the Nigerian budgetary system itself is not ideal. “The Nigerian budgeting system needs reform. Budgets are the critical and the most important policy instrument to drive a country’s initiatives, development plans etc. At 14 to 16 trillion naira, the Nigerian budget is still extremely low. There are brands in developed markets that are four to five times that value.”
Watch in full above.
