Nigeria’s $36.7 Billion 2025 Budget Among Africa’s Lowest Despite Fiscal Reforms

Nigeria’s 2025 budget, set at $36.7 billion, ranks among the lowest on the African continent, despite ongoing fiscal reforms aimed at boosting government revenue and economic resilience, according to a recent report by the Centre for the Promotion of Private Enterprise (CPPE). The report highlights that while steps like the removal of the fuel subsidy and efforts to unify exchange rates have increased fiscal space, Nigeria’s spending capacity still lags far behind other major African economies.

Compared to peers, Nigeria’s budget remains constrained. South Africa allocates $141 billion, Algeria $126 billion, Egypt $91 billion, and Morocco $73 billion for the year, signaling a significant gap between Nigeria’s financial resources and its socio-economic needs. Analysts warn that this limited fiscal capacity could hamper the government’s ability to fund transformative investments in infrastructure, human capital, and social welfare, despite the country being Africa’s most populous nation and one of its largest economies.

CPPE CEO Dr. Muda Yusuf stressed that inflation and currency depreciation have tempered the impact of nominal revenue gains. While improvements in VAT and corporate tax collections have boosted government coffers, the real value of these gains has been eroded. “High inflation and exchange rate challenges have tempered the real impact of nominal revenue growth. It is crucial to evaluate fiscal performance realistically to avoid overstating reform successes,” Dr. Yusuf noted, calling for transparent reporting and careful fiscal planning.

The think-tank urged both federal and state governments to improve accountability and spending efficiency. State governments have seen higher allocations and improved internally generated revenue, but the CPPE emphasized the need to align investments with local economic priorities. Key recommendations include focusing spending on infrastructure, productivity enhancement, food security, human capital, and security, while eliminating waste and linking outlays to measurable outcomes.

Tax reforms remain a sensitive area for the private sector, according to CPPE. While measures such as easing burdens on low-income earners are welcome, recent increases in capital gains tax and adjustments to personal income tax have raised concerns. The report also revisits the 5% fuel levy for road maintenance, emphasizing that while fiscally logical, careful implementation is needed to balance economic and social welfare realities. Dr. Yusuf concluded that Nigeria’s fiscal reforms have made progress, but deeper revenue diversification, prudent management, and social sensitivity are key to building a more resilient and inclusive economy.

source: Leadership