…Bank Of Agriculture Gets Fresh N1.5tn For Recapitalisation
… Solid Minerals Allocation Raised To N1tn
President Bola Tinubu is seeking to increase the 2025 budget proposal from the original N49.7tn to N54.2tn.
The request to increase the budget proposal was communicated to the Senate in a letter addressed to the President of the Senate, Godswill Akpabio.
While reading the President’s letter at plenary on Wednesday, Akpabio said Tinubu stated that the request for the increase in the size of the 2025 budget proposal was informed by the prospects of more revenue generation from relevant government agencies.
Akpabio subsequently referred the president’s request to the Senate Committees on Finance and that of Appropriation.
President Tinubu submitted the budget proposal to the National Assembly on December 18, 2024.
The various Senate and House committees, while scrutinising the budget estimates, had complained about inadequate provisions for the various Ministries, Departments and Agencies (MDAs).
In his letter to the Senate and the House of Representatives, dated 3rd February, 2025, President Tinubu stated that he was prompted to make the request because the government has generated additional N4.5tn revenue from some of its revenue generating agencies.
The letter read, “I am writing to inform you of the availability of additional revenue amounting to N4,530,479,970,637 and to propose its allocation within the 2025 Appropriation Bill to enhance the budget’s responsiveness to the nation’s most pressing priorities and aspirations.
“This additional revenue, sourced from key agencies, represents a pivotal opportunity to address Nigeria’s critical challenges and advance its development agenda.”
Tinubu listed sources of the additional revenue as follows: Government-Owned Enterprises (GOES)- N1,823,879,970,637; Federal Inland Revenue Service (FIRS)-N1,497,600,000,000 among others.
“With this additional revenue, the 2025 Appropriation Bill’s total budget size will increase from N49.7 trillion to N54.2tn, demonstrating our commitment to inclusive growth and security,” the letter added.
The president listed the various sectors that will receive additional funding in the 2025 budget to include the solid minerals sector, which will now get N1tn instead of the N9 billion, as contained in the original proposal submitted to the National Assembly by the president.
Also, the Bank of Agriculture (BoA) is to get N1.5tn to meet up with its recapitalisation obligations, with mandate to transform Nigeria’s agricultural landscape, ensure food security, and empower smallholder farmers and agribusinesses.
The budget of the Bank of Industry (Bol) also got an upward review to N500bn, to provide critical support to small and medium enterprises (SMEs), drive local manufacturing, and reduce dependence on imports.
Critical infrastructure projects to get N1.5tn in the following areas: Irrigation Development through River Basin Development Authorities – N380bn;
Transportation Infrastructure (roads and rail) -N700bn (N300bn for the construction and rehabilitation of critical roads and N400bn for light rail network development in urban centers);
Border Communities Infrastructure to get N50bn; Military Barracks Accommodation -N250bn; and Military Aviation-N120bn.
After reading the letter, Akpabio assured that the 2025 Appropriation Bill will be passed by the National Assembly in the days ahead.
Financial experts have warned of the potential risks associated with the growing fiscal deficit, currently at N13trn, and the need for careful revenue assumptions in the proposed revised budget.
The experts speaking in a exclusive chat with THE WHISTLER on the feasibility of funding the proposed increase in Nigeria’s 2025 budget from the initial N49.7trn to N54.6trn stressed that the focus should be on the effective execution of capital projects rather than simply increasing the budget, highlighting concerns over inadequate fund releases and the impact of Nigeria’s rising debt profile.
The experts emphasize the importance of balancing ambitious spending with fiscal sustainability, urging the use of additional funds to address the budget deficit and mitigate potential reductions in foreign aid.
The Managing Director of Arthur Stevens Asset Management, Mr. Olatunde Amolegbe expressed support for the proposed increase in Nigeria’s 2025 budget from the initial N49.7tn to N54.6tn.
Speaking on the feasibility of funding the revised budget, he however, emphasized the need for an ambitious financial plan to address the country’s infrastructural deficit and pave the way for economic productivity.
Amolegbe highlighted that, on a per capita basis, Nigeria’s budget remains significantly lower than that of other nations with comparable demographics in terms of population and age. He stressed that without adequate government spending, it would be challenging to lift citizens out of poverty and improve their standard of living.
However, he acknowledged that the proposed budget increase would inevitably widen the existing fiscal deficit, which currently stands at approximately N13trn. He noted the importance of reviewing any adjustments made to revenue assumptions in the revised budget to assess the actual scale of the increase.
“For me, as long as the budget is faithfully implemented and funds are utilized judiciously, there should be no major concerns,” Amolegbe stated.
He further underscored the importance of monitoring key financial ratios, such as debt-to-revenue and debt-to-GDP, to ensure the country does not become over-leveraged. He advised policymakers to maintain a delicate balance between ambitious spending and fiscal sustainability to safeguard the nation’s economic future.
An economist and President of the New Dimension Shareholders Association of Nigeria, Mr. Patrick Ajudua expressed that the immediate focus should not be on increasing the proposed budget figure.
According to Ajudua, the primary concern should be ensuring the effective execution of the capital budget, rather than merely increasing the total allocation.
Ajudua pointed out that there has been a significant cumulative increase in the financial performance of key revenue-generating agencies, including the Federal Inland Revenue Service (FIRS), Nigeria Customs Service, and ports, among others.
Despite these positive revenue trends, he emphasized that the real challenge lies in the timely release of funds to facilitate the successful implementation of capital projects.
“It is concerning that annual budgetary releases often hover around 60 per cent, which is far from satisfactory,” Ajudua noted. “This level of performance could severely hinder economic growth and national development, as it limits the government’s ability to execute critical projects.”
Another pressing issue highlighted by Ajudua is Nigeria’s rising debt profile, which now runs into trillions of dollars. He raised concerns about the sustainability of the economy, questioning whether the country can continue to shoulder such a substantial debt load while maintaining the viability of its capital budget.
A further area of concern is the funding of the national budget deficit. According to Ajudua, the additional revenue generated from improved performance by revenue agencies should be directed towards bridging the budget deficit. This, he argued, would help create the necessary fiscal space to ensure the successful execution and delivery of vital projects.
In addition, Ajudua suggested that the government should prioritize using these additional funds to address gaps created by the expected reduction in foreign aid from the United States. He noted that the U.S. is expected to cut funding for key sectors such as health, education, and other developmental areas, which would place additional pressure on Nigeria’s domestic resources.
By focusing on effective fund management, especially in addressing the budget deficit and maximizing revenue generation, Ajudua believes Nigeria can create a more stable and sustainable fiscal environment, ensuring the timely delivery of essential projects and fostering long-term economic growth.
The Managing Director of Highcap Securities Limited, Mr. David Adonri, raised concerns over the financial management practices of the Federal Government, stating that they do not inspire confidence.
He attributed this to persistent conflicts between the country’s fiscal and monetary policies, which he believes are working against each other.
According to Adonri, while the government’s fiscal policy remains expansionary, as evidenced by the increasing fiscal deficit, the monetary policy is contractionary, aimed at controlling inflation fueled by excessive public spending and limited supply of goods.
This misalignment, he argues, creates economic instability and undermines efforts to achieve sustainable growth.
He expressed particular concern over the recent N4tn increase in the national budget, highlighting that the government is already struggling with a massive budget deficit.
Adonri warned that such an increase poses a significant risk to the government’s goal of reducing inflation to 15 per cent in 2025, as projected in the Appropriation Act.
“The lack of a conscious effort by the government to balance the budget and restore discipline in public finance is alarming,” Adonri stated.
“Bringing stability to the economy and achieving non-inflationary growth should be a top priority, yet we continue to see policies that work against these objectives.”
With Nigeria grappling with high inflation and economic challenges, Adonri emphasized the urgent need for coordinated fiscal and monetary policies that align towards long-term economic stability. He urged the government to adopt prudent financial strategies to curb excessive public spending and ensure sustainable economic growth.
– Gbade OGUNWALE and Chris UGWU
2025 Budget: Economic Analysts Warn Of Fiscal Risks As Tinubu Raises Spending From N49.7tn To N54.2tn is first published on The Whistler Newspaper
Source: The Whistler
