Nigeria Does Not Need Bigger Budgets, But Efficient Spending

EDGY OPTIMIST By Obinna Chima


The Minister of Budget and Economic Planning, Senator Abubakar Bagudu, recently called for a fundamental scaling up of the size of Nigeria’s national budget, arguing that the country cannot achieve its ambition of becoming a $1 trillion economy while operating what he described as one of the smallest budgets among the world’s most populous nations.

Speaking in Abuja, Bagudu said Nigeria must stop preparing budgets merely according to available resources and begin to consider what it would take to achieve its development aspirations.

“Perhaps the starting point for this discussion should be: What should the national budget be? Because without starting from there, maybe we will not reach the right conclusion. I don’t have one definitive answer, but I would say that of the 10 most populous countries in the world, Nigeria has the smallest national budget,” he had argued.

Bagudu tied the debate to President Bola Tinubu’s Renewed Hope Agenda and Agenda 2050, the long-term framework developed through a whole-of-society approach.

“How can we, as a step towards that wider dream, generate a $1 trillion economy in the next four years? And not just a $1 trillion economy, but a $1 trillion economy that includes everyone,” he had said further.
Using the popular expression about cutting one’s coat according to one’s size, he warned against budgeting only on what the  government can immediately afford.

“If I decide to cut my coat according to my size, then I should remain in the same shape. Maybe I will not even have the spare capacity to sew a cloth for another person,” he said.

Citing Brazil, another large federation, he said: “But Brazil’s 2025 budget is at least 25 times the size of Nigeria’s budget. So, do I expect to achieve the same outcomes as Brazil? Is it that these needs do not exist in Nigeria? I believe they do.”

But while the former Kebbi State Governor’s argument that Nigeria needs greater fiscal capacity to finance its development ambitions is understandable, I do not agree with his assumption that a larger budget is the starting point for achieving the $1 trillion economy target that had been set by the government.

The size of a national budget, in itself, is not a reliable measure of economic strength or development potential; rather, the critical consideration is how efficiently available resources are mobilised, allocated and deployed to stimulate productivity, create jobs and improve living standards.

Expanding the budget size will also widen the gap between budget promises and actual delivery especially for a country already grappling with mounting debt obligations, revenue constraints and competing demands on public finances.
Additionally, expanding expenditure without first addressing structural weaknesses in budget implementation could compound existing fiscal pressures without delivering commensurate economic gains.

For instance, Nigeria’s 2026 budget has an aggregate expenditure of N68.32 trillion and N15.8 trillion for debt service. The government also allocated N15.4 trillion to recurrent expenditure, N32.2 trillion to the Development Fund for Capital Expenditure, while statutory transfers increased from N4.1 trillion to N4.79 trillion. The approved budget also showed a broader increase in recurrent non-debt spending to N15.4 trillion, up from N15.25 trillion. The government’s borrowing plan equally rose sharply from N11.31 trillion to N29.20 trillion.

On the other hand, the country’s debt reached another significant milestone, with total obligations rising to approximately N166 trillion as (of)AT June 2026, an increase of about N7 trillion in three months. The latest figures, reported by the Debt Management Office (DMO) renewed attention to the country’s borrowing trajectory and the fiscal pressures confronting the government.
These show that Nigeria is already spending substantially more than it gets in terms of revenue generation. Therefore, increasing the budget further without a credible financing plan would worsen fiscal imbalances and leave future administrations with larger debt obligations.

Another danger is that if increased spending is not matched by sustainable revenue, Nigeria would have to borrow more, increase taxes or introduce other forms of financing for citizens who are already facing cost of living crisis. The proposal by Bagudu will definitely heighten inflationary pressures.

The more useful question here is not whether Nigeria spends as much as Brazil as the minister highlighted, or any other country, but whether Nigeria collects and deploys its resources effectively relative to its own development needs.

The Senate recently extended the implementation period of the capital component of the 2025 Appropriation Act from September 30 to December 31, 2026, citing the need to prevent the abandonment of ongoing projects and ensure effective utilisation of funds already appropriated and released. Developments like this should worry Bagudu more. He should be more concerned about why budget implementation in the country routinely falls behind schedule.

Also, the minister’s energy should be seen canvasing for a deliberate shift towards innovative revenue generation, improved efficiency in public asset management, and the elimination of waste.

The diversification of the economy away from its over-reliance on oil remains paramount. Investing strategically in sectors such as agriculture, manufacturing, and technology can create new avenues for growth, employment, and export earnings, reducing vulnerability to global oil price fluctuations.

Strengthening domestic production capacity is equally crucial. By fostering a conducive business environment and improving infrastructure, Nigeria can reduce its dependence on imports and build a more self-reliant economy.  Nigeria certainly needs to broaden its revenue base, improve tax administration, reduce leakages and ensure that profitable economic activities contribute fairly.

The government should prioritise compliance, reduce unnecessary waivers and improve collection from high-income and high-value economic activities. The government must demonstrate not only that it can approve a bigger budget, but also that it can finance, execute and account for it.