Budget delays, not revenue, undermining Tinubu’s economic targets- Alaje, economist

Chief Economist at SPM Professionals, Dr Paul Alaje, has urged President Bola Tinubu to ensure that delays in budget implementation and procurement processes do not continue to undermine the intended impact of government spending on Nigerians. Alaje, in an interview on Channels Television’s Politics Today, monitored by David Lawani, acknowledged that the Federal Inland Revenue Service (FIRS) has performed strongly in revenue generation, stressing that the real value of a budget lies not in revenue figures but in execution. He noted that Nigerians have yet to feel the practical impact of successive budgets

Are we facing a severe fiscal problem? Is there effectively no functional 2025 budget in place? What exactly is the situation?

There have been several concerns about the 2025 budget. Not too long ago, the minister mentioned that about 80 per cent of the 2024 budget, particularly the capital component, had been implemented. The question then arises: if we are still discussing the 2024 budget in 2025, there are clearly concerns, especially regarding releases.

To be adequately educated, when we talk about capital expenditure, what are we referring to?

We are referring to investment in the economy. Meanwhile, we also have current expenditure, whether you call it recurrent expenditure or debt servicing, which is money mostly spent on consumption. What truly builds a nation is capital investment. The impact and growth we constantly talk about depend mainly on this. The target of Mr President to grow the economy to a $1 trillion economy by 2030 is closely linked to our ability to promptly implement these fiscal documents, which are Nigeria’s largest and most important policy documents. For 2024, we already had gaps, and those gaps have now been carried over into 2025.

How would you assess the implementation of the 2025 budget so far?

The most recent release reveals that for 2025, only about 30 per cent of the budget has been implemented, while 70 per cent of the capital component remains unexecuted, which is very worrisome. If you are implementing only 30 per cent of capital expenditure, that means the federal government’s contribution to Nigeria’s development through budget implementation is minimal, at the national level, and we are not even talking about states or local governments. Thirty per cent is relatively small. The authorities should take urgent action to ensure we do not see a repeat of this in subsequent years. When the 2025 budget was passed, there was a lot of excitement. Some roads need to be constructed or repaired. There are rail projects expected to come on stream. But when you limit implementation to 30 per cent, infrastructure agencies will be the primary ones affected. Please remember that what we need most now is to complement what monetary authorities have been doing for some time, namely, increasing interest rates. High interest rates are already significantly impacting industries. If you check the NBS third-quarter report, you will see the effect of interest rates on the economy, with growth of about 1.25 per cent year-on-year. But how much did manufacturing grow? Manufacturing is the most sensitive and critical element of our economy. If the sector does not get the necessary fiscal support, moving into another year under these conditions, for the reasons I have consistently outlined, including delayed fund releases, lack of cash backing, and other bottlenecks, we will continue to face serious challenges.

The government insists that revenue targets are being met, yet Nigerians say they feel no impact. What is your reaction to this lack of impact?

When you say revenue targets have been met, what exactly does that mean? Are we saying the entire revenue budget has been met? Are we referring to the revenue target tied to expected expenditure? Or are we saying revenue targets in the oil sector alone have been achieved? What exactly are we referring to when we say “revenue target”? That statement is not very clear. The authorities must clarify what they mean and what those figures represent.

How do you explain the continued residue of the 2023 and 2024 budgets showing up in 2025?

Several people, including the chairman of FIRS, have said that they achieved 100 per cent of the revenue target for the 2023 budget. If that is the case, then FIRS has done what it said it would do, and that is commendable. However, the total 2023 budget ranged from ₦22 trillion to ₦24 trillion. When you compare that with the 2025 budget, you will see that 2025 is above ₦40 trillion, nearly ₦50 trillion. By the end of the year, looking at collections and projections, we may even be approaching ₦60 trillion or more.

What does that tell us?

We are dealing with a budget that is more than double the 2023 budget. So FIRS has done well in terms of revenue growth and improvement.

But the critical question remains: why is this not impacting the economy enough?

In 2023, what we injected into the economy was between ₦22 trillion and ₦24 trillion. If we talk purely in naira terms—because exchange rate is a significant determinant of these disparities—you will see that while FIRS has tried to cover exchange rate gaps through increased collections, the value of money in 2023 is not the same as the value of money in 2025. The quality of money has changed. Inflation and exchange rate pressures have eroded value. So when you look at both sides, you will see that budget implementation is the real issue. FIRS is responsible for generating revenue. What is delaying releases?

How do we automate the release process?

This is not the first time we have seen delays or seizures in budget implementation activities. A few days ago, I read in the papers that the President mentioned setting up a committee to assist contractors owed billions of naira. That is the reality. If money does not go to local contractors, the economy cannot be adequately stimulated, especially in infrastructure-related sectors. If funds do not come out and everything must go through prolonged procurement processes, nothing prevents government agencies from initiating procurement as early as January each year, or even immediately after the budget is presented. Procurement processes, such as advertisements, can start early. However, when agencies encounter challenges with these processes running in parallel, we must return to the Fiscal Responsibility Act. According to the Act and best practice, the budget should be presented to the National Assembly by September, or at the latest by October, not at the end of the year. If this is not done, we will continue to see gaps, with profound implications for investment, infrastructure development, unemployment, and inflation.

Looking at 2023, 2024, and now 2025, in terms of budget implementation, would you describe this government as a failure?

I do not like to answer that question with a simple yes or no.

Then how would you objectively rate this government’s performance so far?

I rate the government at 4 to 5 out of 10 for implementation. The reason is that, for capital expenditure, the government’s goal should be near 100 per cent implementation, especially since we have borrowed money against many of these projects. Imagine borrowing money, failing to implement the projects, and then paying debt service on what has not been implemented. The cost of that is enormous. We have government agencies that are supposed to monitor this process at the federal, state, and local levels. It is not enough for funds to be released; what matters is that they are actually implemented. For current expenditure, the government should aim for complete execution. But what matters most to many Nigerians, those who are not civil servants or politicians, is the capital component of the budget. That is where jobs are created. That is where infrastructure is delivered. That is where economic improvement becomes visible. And that is what must be done as quickly as possible if we genuinely want to improve the economy.