Published
6 months agoon
Nigeria’s President, Muhammadu Buhari presented the 2022 Budget on 7 October 2021, to the Joint Session of the National Assembly.
Highlights
Revenue mobilisation
The President underscored 4 strategies to improve revenues, including:
Petroleum Industry Act
The President commended the National Assembly for the passage of the Petroleum Industry Act (PIA), highlighting his hopes of attracting investments in the sector.
2021 Finance Bill
The 2021 Finance Bill would subsequently be forwarded to the National Assembly after completion of consultations. The Bill is intended to support the realisation of the 2022 fiscal projections.
Takeaway
There have been concerns about Nigeria’s rising debt profile especially debt service to revenue ratio as well as foreign exchange liquidity constraints, both of which have been exacerbated by the COVID-19 pandemic.
While some of the revenue-generating initiatives in the budget are commendable, a key focus area may be to explore avenues to diversify export revenue sources away from crude oil, which currently accounts for more than 80% of total foreign exchange receipt.
It is also important to plug loopholes in government spending, such as reviewing the current petroleum subsidy regime for total removal or to ensure that it is targeted only at the most vulnerable Nigerians. In addition, concerted and coordinated efforts are required to improve the policy environment and address insecurity in order to boost domestic investment and attract foreign direct investments.
The government also needs to ensure speedy ratification and strategic implementation of the Africa Continental Free Trade Agreement (AfCFTA) to position Nigeria as a choice investment destination in Africa.
It is expected that a robust implementation of the PIA would promote significant investment in the oil and gas sector, stimulate economic growth and sustainable development.