Assessing Nigeria's revenue problem
Last weekend, President Buhari presented a ₦20 trillion 2023 budget, tagged the “Budget of Fiscal Consolidation and Transition”, to the National Assembly.
Key takeaways:
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Slow revenue growth has contributed to Nigeria’s growing budget deficit.
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The government’s earned revenue has also failed to meet its expected targets. Additionally, inflation is eroding the value of earned revenues.
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The composition of government revenue, which has historically been oil-centred has gradually shifted to an even split. However, non-oil revenue growth is yet to account for lost oil revenues.
While the presented budget size was expected, most people were still in a frenzy. This excitement was mostly because the budget is the largest (nominally) in Nigeria’s history and consequently has the highest deficit (the difference between revenue and expenses) witnessed since 1999, when Nigeria’s current democratic period began.
2023’s expected budget deficit of over ₦10 trillion (to be mainly funded by debt) is more than five times ₦2.2 trillion—what it was in Buhari’s first (2016) budget.
This size draws one's attention to two things. The first is that the federal government’s historical large
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