A nation in debt: Nigeria’s fiscal recklessness continues

Nigeria’s fiscal planning remains a paradox of ambition and inertia. The Federal Government’s proposed ₦47.5 trillion budget for 2025—expected to breach ₦50 trillion once adjusted by the National Assembly—unveils a troubling reality. While it appears expansive in naira terms, its dollar equivalent shrinks to $27.96 billion, a stark 22 percent contraction from the $35.97 billion budgeted in 2024. For a nation with mounting infrastructure deficits and developmental needs, this signals a dissonance between scale and substance.

“Lavish travel expenses and oversized government convoys prompted President Tinubu to impose austerity measures on executive travel. These steps, while commendable, barely dent the systemic waste undermining fiscal prudence.”

Seven years of Budget Office data expose this pattern. Statutory and recurrent expenditures consistently exceed their allocations, averaging over 100 percent performance, while capital expenditure—a critical driver of economic growth—struggles to reach 76.9 percent. Such priorities reveal a government more invested in sustaining its bureaucratic machinery than addressing the infrastructure and public service needs of its citizens.

This fiscal myopia is devastatingly evident in Nigeria’s infrastructure gap, which the African Development Bank estimates at 75 percent. The country ranks 24th out of 54 African nations in infrastructure adequacy—a glaring indictment of decades of underinvestment. Former President Muhammadu Buhari underscored this at COP26, estimating Nigeria requires $1.5 trillion over the next decade to close this gap. Yet, the government has managed an annual average of just $7 billion in capital expenditure in recent years.

Nigeria’s Ministries, Departments, and Agencies (MDAs) embody a culture of inefficiency and excess. The infamous case of a ministry allegedly spending ₦16.4 billion on “bush clearing,” later revised to ₦2.5 billion, exemplifies the opacity in public spending. Lavish travel expenses and oversized government convoys prompted President Tinubu to impose austerity measures on executive travel. These steps, while commendable, barely dent the systemic waste undermining fiscal prudence.

The government’s persistent failure to implement the Oronsaye Report—a blueprint for reforming Nigeria’s bloated civil service—further highlights the lack of political will to address the inefficiencies that devour scarce resources. Bureaucracies, as public choice theorists like Anthony Downs and William Niskanen suggest, often prioritise budget expansion over efficiency or public welfare. Nigeria exemplifies this trend to its detriment.

Read also: Nigeria’s debt service to revenue reduced to 68% from 97% — Tinubu

Recurrent spending accounts for a lion’s share of the budget, leaving capital investment grossly underfunded. Infrastructure development, a cornerstone of economic transformation, is relegated to an afterthought. The government’s ambitions for a multimodal transportation system or a competitive manufacturing base remain aspirations rather than actionable priorities.

Jude Chiemeka, CEO of the Nigerian Exchange Limited, succinctly captured the gravity of the situation: Nigeria’s infrastructure investment, at 30 percent of GDP, pales compared to the World Bank’s 70 percent benchmark. This shortfall is not merely financial—it reflects a political class unwilling to commit to the long-term investments necessary for sustainable growth.

Reversing this trend demands a fundamental rethinking of Nigeria’s budgetary priorities. Capital investment must take precedence over recurrent expenditures. Public-private partnerships, innovative financing via capital markets, and better utilisation of dollar bonds could bolster infrastructure spending.

The government recently raised $900 million via a dollar bond to fund critical projects—a step in the right direction. However, such efforts require stringent oversight to ensure resources are directed effectively and not lost to corruption. Transparency and accountability must underpin every initiative.

Infrastructure, as a public good, demands government leadership. While private sector involvement can complement public efforts, the state must spearhead investments to address gaps that market forces alone cannot fill.

The 2025 budget offers Nigeria a chance to realign its spending priorities. This is not merely a fiscal exercise but a moral imperative. Redirecting resources toward infrastructure will not only bridge the gap but also create jobs, stimulate economic growth, and improve living standards for millions of Nigerians.

A nation’s budget is more than numbers; it is a reflection of its values and vision. Nigeria cannot afford to perpetuate the current cycle of bloated recurrent spending at the expense of its future. The time to act decisively is now. Anything less would be another squandered opportunity in the country’s quest for sustainable development.

To break this cycle, the government must prioritise fiscal discipline, transparency, and accountability. It must implement stringent measures to control recurrent spending and streamline government operations. Enhancing transparency and accountability in the budget process is also crucial to ensure that public funds are used efficiently and effectively. Additionally, the government should allocate adequate resources to critical infrastructure projects, such as roads, railways, and power generation.

Diversifying the economy to reduce dependence on oil revenue is another essential step. The government should promote investment in non-oil sectors and create a conducive business environment. Furthermore, strengthening social safety nets to protect vulnerable populations and reduce poverty is imperative. Effective governance, including combating corruption and strengthening institutions, is also crucial to improving public service delivery.

By taking these steps, Nigeria can create a more prosperous and equitable future for its citizens. The choice is clear: either continue down the path of fiscal mismanagement or embark on a transformative journey towards sustainable development.