Nigeria proposes ₦26trn budget for 2024

Nigeria's Federal Executive Council has put forward a bold proposal for a ₦26 trillion budget for the upcoming fiscal year of 2024. This ambitious plan comes alongside the approval of the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper. To delve deeper into the intricacies of the budgetary assumptions and Nigeria's revenue generation strategy, Theo Emuwa, a Partner at Aelex, joined CNBC Africa for an insightful discussion. At the heart of the matter lies the question of feasibility. Emuwa emphasized the importance of applying resources judiciously, highlighting recent discrepancies such as seeking a hefty external loan while simultaneously allocating funds for expensive vehicles. He stressed the need for borrowing to be directed towards enhancing productive capacity rather than frivolous expenditures, urging a strategic approach to financial decisions. Another critical aspect under scrutiny is the composition of the budget with regards to capital and recurrent expenditure. Emuwa noted a historical shortfall in meeting benchmarks for sectors like health, education, and infrastructure. Drawing a parallel with developed nations that prioritize education spending, he underscored the necessity of aligning budgetary allocations with long-term developmental goals. The conversation then shifted to revenue mobilization, with a focus on tax policies and compliance. Emuwa acknowledged longstanding issues concerning Nigeria's tax to GDP ratio, which lags behind both regional and global averages. While recommendations from entities like the IMF advocate for eliminating tax waivers and enhancing domestic revenue mobilization, the effectiveness of enforcement mechanisms and institutional capacity remains a pivotal concern. Amidst discussions on revenue collection targets set by the FIRS and upcoming compliance exercises like the VAT assessment, the need for proactive measures to tackle tax evasion and enhance tax administration came to the forefront. Emuwa highlighted the importance of enforcing existing tax laws rigorously and ensuring accountability to maximize revenue collection potential. As the dialogue drew to a close, reflections on Nigeria's debt management strategy and adherence to statutory limits were emphasized. Cognizant of the IMF's assessment that the nation's debt remains within manageable thresholds, the imperative of fiscal prudence and sustainable financial governance emerged as key takeaways from the discussion. In conclusion, the proposed ₦26 trillion budget for 2024 signifies a pivotal juncture for Nigeria's economic trajectory. As the nation navigates the complexities of revenue generation, expenditure prioritization, and debt sustainability, concerted efforts towards fiscal discipline, enhanced tax compliance, and strategic resource allocation will be imperative in fostering economic growth and long-term prosperity.