Nigeria's 2016 budget: Insights and analysis

Nigeria's Federal Government is facing challenges in executing its 2016 budget, with only 20 per cent of capital expenditure accomplished and revenue falling 50 per cent below target in the first six months of the year. Yvonne Mango, Director and Sub-Saharan Africa Economist at Renaissance Capital, shared insights on the budget performance in an interview with CNBC Africa. Mango expressed disappointment in the budget performance, stating that the late passage of the budget by the Senate and its implementation has contributed to the underperformance. The current recession in the country has also added urgency to the need for fiscal stimulus. While the government plans to continue implementing the budget into May 2017, Mango emphasized the importance of faster implementation given the economic challenges Nigeria is facing. Despite releasing $753 billion of the $1.8 trillion target for capital expenditure, there are delays in foreign financing, which are crucial for funding the CapEx budget. The government recently received $600 million from the African Development Bank, but further inflows depend on necessary reforms. This delay in funds has hindered the timely execution of the budget. Recurrent expenditure has exceeded targets by 12 per cent, with personnel costs being a significant factor in this overachievement. Wages have been paid on target, showing progress in this area. However, Mango highlighted that cap-ex spending tends to lag due to delays in securing foreign financing. Debt servicing is also a major concern as it currently occupies around 60 per cent of revenue, crowding out other essential expenditures. The government's intention to increase debt to finance projects will further escalate debt servicing costs if revenue mobilization does not improve. Internal revenue generation has also fallen below target this year, compounding the financial challenges. Mango recommended faster budget implementation and resolving issues with lenders to accelerate the release of foreign financing. She emphasized the urgency of swift action to boost cap-ex spending and stimulate economic growth in 2017. As Nigeria grapples with a recession and revenue shortfalls, effective budget execution and revenue mobilization are critical for economic recovery and sustainable development.