Highlights of Nigeria’s 2022 Economic Growth and Sustainability Budget

Tuesday, Jan 4, 2022 / 9:26 AM / by PwC Nigeria / Header image credit: Aso Rock Villa

Nigeria’s President Muhammadu Buhari presented the 2022 budget on October 7, 2021, to the joint session of the National Assembly.

Strong points

  • The 2022 budget has a deficit of about 6.25 billion naira, or about 3.39% of GDP. This is slightly above the 3% cap set by the 2007 Fiscal Responsibility Act (FRA). However, the president alluded to the fact that the level of spending was necessary to help overcome current security challenges and accelerate post-recession growth. The president insists that Nigeria only has an income problem and not a debt sustainability problem.
  • The deficit is expected to be financed by new borrowing, the proceeds of privatizations and drawdowns on loans guaranteed for specific projects.
  • Recurrent non-debt expenditure of 6.83 billion naira is the largest expenditure item, with 60% related to personnel costs at 4.11 billion naira.
  • The capital expenditure budget of 4.89 billion naira represents an increase of 18% from 2021, and about 30% of total expenditure in 2022.
  • Debt service expenditure is estimated at 3.61 billion naira, which represents about 35.6% of expected revenue for the year.
  • The president stressed that the loans would be used to finance essential development projects and programs, and highlighted plans to increase the income-to-GDP ratio from around 8 percent currently to 15 percent by 2025.
  • The president announced his intention to strengthen the frameworks for concessions and public-private partnerships (PPP). He also referred to exploring innovative approaches to mobilize infrastructure finance in a sustainable manner, such as the implementation of the sovereign green bond program and debt-for-climate swaps.

Revenue mobilization

  • The president highlighted 4 strategies to improve income, including:
  • increase tax and excise revenue;
  • review the effectiveness of tax exemption and relief policies;
  • increase customs revenue through technology; and
  • preserve revenues from the oil and gas sector.

Petroleum Industry Act

The President congratulated the National Assembly on the adoption of the Petroleum Industry Law (PIA), stressing its hopes to attract investment in the sector.

2021 finance bill

The 2021 finance bill would then be sent to the National Assembly after the consultations. The bill aims to support the achievement of the 2022 financial projections.


To take with

Nigeria’s growing debt profile has raised concerns, particularly the debt service-to-income ratio as well as foreign currency liquidity constraints, both of which have been exacerbated by the COVID-19 pandemic.

While some of the income-generating initiatives in the budget are laudable, a key area of ​​focus may be exploring ways to diversify sources of export income away from crude oil, which currently accounts for over 80% of revenue. total in foreign currencies.

It is also important to close gaps in government spending, such as revising the current oil subsidy regime for complete removal or to ensure it only targets the most vulnerable Nigerians. In addition, concerted and coordinated efforts are needed to improve the political environment and combat insecurity in order to stimulate domestic investment and attract foreign direct investment.

The government must also ensure the swift ratification and strategic implementation of the African Continental Free Trade Agreement (AfCFTA) to position Nigeria as a premier investment destination in Africa.

A strong implementation of the PIA is expected to foster significant investment in the oil and gas sector, boost economic growth and sustainable development.

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