Nigeria’s $36.7 Billion Budget Lags Behind African Peers Despite Revenue Growth – CPPE Warns

Nigeria’s $36.7 billion national budget remains significantly smaller than many of its African peers, despite recent fiscal and tax reforms boosting government revenue, the Centre for the Promotion of Private Enterprise (CPPE) has revealed. In a policy brief released on October 12, CPPE Director-General Dr. Muda Yusuf noted that while revenue collections have improved, inflation and currency depreciation have reduced the real value of these gains, limiting Nigeria’s capacity for transformative investments in infrastructure, social welfare, and human capital.

The analysis highlights a stark fiscal disparity across Africa. South Africa’s budget stands at $141 billion, Algeria’s at $126 billion, Egypt’s at $91 billion, and Morocco’s at $73 billion—far exceeding Nigeria’s allocation, despite Nigeria having the continent’s largest population and one of its biggest economies. “Despite its size, Nigeria’s budget remains relatively small, restricting the government’s ability to drive meaningful development,” Dr. Yusuf said.

The CPPE credited two landmark reforms—the removal of fuel subsidies and unification of exchange rates—for significantly increasing government revenue. Collections from value-added tax (VAT) and Company Income Tax (CIT) have also risen, reflecting stronger compliance and a gradual economic recovery. State governments, in turn, report higher revenues and increased allocations to agriculture, infrastructure, and social development programs. Yet, Dr. Yusuf cautioned that inflation and exchange rate pressures continue to temper the real impact of these fiscal gains.

While applauding reforms such as higher exemption thresholds for low-income earners and zero-rated VAT on essentials like food and education, the CPPE also raised concerns over rising compliance costs, the jump in capital gains tax from 10% to 30%, and potential welfare implications of personal income tax changes. The organization recommended stakeholder consultation, flexible policy adjustments, and careful implementation of proposed measures like the 5% fuel levy for road maintenance to avoid social disruption.

Looking forward, the CPPE stressed the need for efficient spending and clear fiscal priorities. Key areas include infrastructure development, boosting manufacturing and technology-driven enterprises, food security, security enhancement, and human capital development. The think tank urged governments at all levels to link spending to measurable outcomes, strengthen subnational fiscal capacity, and maintain fiscal discipline. “With prudent management, stakeholder collaboration, and social sensitivity, these reforms can lay a foundation for a more resilient, productive, and inclusive Nigerian economy,” Dr. Yusuf concluded.

source: The guardian