By Lemmy Ughegbe, PhD
On February 28, 2025, President Bola Tinubu signed into law the 2025 Budget of Restoration, a ₦54.99trn fiscal plan, marking a 41.9 percent increase from the previous year’s budget.
This spending framework arrives like a towering lighthouse in a storm, casting hopeful beams into the darkness of Nigeria’s deteriorating economic landscape yet also threatening to collapse under the weight of its grandiose projections.
The nation is shackled by a spiralling cost of living, high inflation, rising unemployment, and deepening poverty. Will this budget be the sturdy raft that carries the country across turbulent economic waters, or will it merely add to the swelling tide of broken promises, ultimately making it a Budget of Woes?
The 2024 budget, named the Budget of Renewed Hope, was set at ₦27.5trn, making the 2025 Budget of Restoration a historic increase. This dramatic leap in allocation is akin to a farmer planting twice as many seeds in soil with great potential, hoping for a lush harvest if properly nurtured, despite the obvious challenges.
Debt servicing in 2025 stands at ₦14.87trn, a figure so colossal it feels like an insatiable beast devouring nearly half of Nigeria’s expected revenue. This underscores Nigeria’s deepening debt crisis, raising alarm bells about fiscal sustainability.
A substantial ₦14.12trn is earmarked for recurrent expenditure, fuelled by a bloated bureaucracy, mounting personnel costs, and government subsidies that have become more of a crutch than a tool for progress.
Capital projects increased to ₦24.99trn, a significant investment that, if well implemented, could spur economic growth, create jobs, and improve national infrastructure.
The 2025 budget is based on key economic projections, including an exchange rate of ₦750 per US dollar and a benchmark crude oil price of $77.96 per barrel, with an anticipated daily oil production of 1.78 million barrels per day.
These assumptions are critical because they directly affect revenue generation. Nigeria’s ability to meet these targets remains uncertain, given persistent oil theft, underinvestment in the energy sector, and OPEC production cuts.
In recent years, the country has struggled to meet its crude oil production targets due to pipeline vandalism and operational inefficiencies, casting doubt on the feasibility of this revenue estimate.
The exchange rate assumption also appears optimistic, considering the naira’s volatility. If the projected exchange rate is not achieved and the naira continues to depreciate beyond government estimates, it will increase the cost of imports, further driving inflation and worsening economic hardship for Nigerians.
Despite the lack of economic indices or tangible rise in productivity and export to explain the recent resurgence of the naira, the gradual rise in its value may offer some comfort. The gap between official and parallel market exchange rates will likely persist, affecting investor confidence and leading to further capital flight.
While these projections pose challenges, the increased capital expenditure presents a rare opportunity for Nigeria to address its infrastructure deficit, particularly in transportation, energy, and housing.
The government has indicated plans to prioritise road construction, rail expansion, and power generation, projects that, if successfully executed, could stimulate productivity and enhance trade.
Additionally, the administration’s commitment to improving the ease of doing business by investing in digital infrastructure and streamlining bureaucratic processes could help attract foreign and local investors, fostering economic diversification.
Given Nigeria’s heavy reliance on oil revenue, it is also imperative to consider alternative sources of economic growth. While South Africa’s budget structure places greater emphasis on progressive taxation, Nigeria’s tax base remains underdeveloped.
Expanding taxation and a renewed focus on local industries and manufacturing could help stabilise revenue streams. Additionally, the government’s renewed efforts to boost agricultural exports and increase non-oil revenue could help reduce dependence on volatile oil prices.
Nigeria and South Africa, Africa’s two largest economies, provide an interesting comparison in fiscal policies. South Africa’s 2025 budget is projected at R1.9trn (approximately ₦62trn), demonstrating a stronger fiscal structure despite having a smaller population.
South Africa funds its budget primarily through progressive taxation, while Nigeria continues to rely on oil revenue, an unstable source of income akin to chasing shadows in the wind.
While both countries contend with debt burdens, South Africa’s borrowing strategy is measured and structured, like a builder laying bricks carefully, ensuring stability. On the other hand, Nigeria resembles a reckless gambler stacking debt upon debt, hoping the next roll of the dice will be a lucky one.
South Africa prioritises education, healthcare, and social welfare, while Nigeria’s spending pattern remains skewed towards administrative excess and a security sector that guzzles funds yet struggles to curb growing insecurity.
Education and healthcare remain underfunded despite the increased budget, like neglected children in a wealthy household. Nigeria’s education budget in 2024 stood at ₦1.8trn (7.9 percent), and healthcare received ₦1.5trn (5.2 percent)—figures so meagre that they barely scratch the surface of the needs of a nation bursting with young, under-educated citizens and an overburdened, under-equipped health system.
In contrast, South Africa’s commitment to 20 percent of its budget for education and 15 percent for healthcare is a testament to its prioritisation of human capital development, a lesson Nigeria refuses to learn. However, with increased funding for skills acquisition programs, the government’s renewed focus on technical and vocational education holds promise for empowering young Nigerians with practical knowledge that aligns with the job market.
The 2025 budget’s ₦4.2trn allocation for infrastructure is promising but feels like pouring water into a leaking basket, given Nigeria’s history of budget padding, abandoned projects, and contract inflation. Meanwhile, insecurity continues to tighten its grip on the country.
Over ₦3.1trn has been allocated for defence, yet banditry, insurgency, and organised crime flourish, proving that financial injections without strategic implementation are akin to attempting to douse a wildfire with a teacup of water.
The government’s renewed push for community-based security initiatives and intelligence-led policing could enhance public safety if properly executed.
The ₦54.99trn budget requires strong revenue generation, but Nigeria’s revenue-to-GDP ratio remains an abysmal 7-9 percent, compared to South Africa’s robust 29 percent.
Efforts to boost tax collection through VAT and corporate taxes face an uphill battle in a nation where the private sector is already choking. Oil revenues, once the golden goose, have become erratic, battered by fluctuating global prices and relentless oil theft, a parasite that continues to drain national wealth.
Over ₦13trn (3.89 percent of GDP) is expected to be borrowed, further entangling Nigeria in a web of debt, while privatisation efforts move at the pace of a reluctant snail. Inflation looms like a merciless spectre, expected to remain above 25 percent, ensuring that food prices, rent, and transportation costs will stay out of reach for many Nigerians despite the government’s optimistic numbers.
The 2025 Budget of Restoration is a grand symphony of figures and proclamations, yet beneath the surface, troubling notes linger. ₦14.87trn for debt servicing is a glaring warning sign, a black hole into which nearly half the nation’s revenue disappears, limiting any real investment in growth.
The dependence on high-interest loans places Nigeria at the mercy of creditors, eroding national autonomy. However, if effectively implemented, this budget has the potential to spark a resurgence in economic activity, drive employment, and build the infrastructure necessary for sustainable growth.
Nigerians need more than astronomical figures; they need relief that touches their daily struggles, tangible progress, and a truly restored future. Otherwise, what was promised as a Budget of Restoration may be a ‘Budget of Woes.’
Lemmy Ughegbe, PhD writes from Abuja
Email: lemmyughegbeofficial@gmail.com
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