Red flags in Nigeria’s 2018 budget

Nigeria's 2018 budget has been a topic of discussion due to the proposed total expenditure of N8.612 trillion, which is 16% higher than the 2017 budget. Price Waterhouse Coopers has raised concerns about Nigeria’s 2018 non-oil revenue projection of N4.2 trillion, highlighting potential challenges in achieving this target. To shed light on the red flags in Nigeria’s budget, Seun Onigbinde, Co-Founder of Budgit, joined CNBC Africa for a detailed analysis. One of the key issues Onigbinde pointed out was the optimistic revenue projections in the budget. He highlighted concerns about the non-oil revenue sources, such as Joint Ventures (JVs), signature bonuses, and Company Income Tax (CIT). Onigbinde expressed skepticism about the feasibility of these revenue projections, particularly in light of past underperformance in revenue collection. Furthermore, Onigbinde discussed the government's initiatives to boost tax revenue, including the Voluntary Assets and Income Declaration Scheme (VAIDS) and efforts to widen the tax bracket. While these initiatives aim to increase tax revenue, Onigbinde questioned the sustainability of such measures and emphasized the need for a comprehensive strategy to increase tax collection from the informal sector. Debt service was another major concern raised by Onigbinde, noting that over 60% of revenue is allocated to servicing debt. The recent $5.5 billion US dollar loan raised questions about the country's strategy to refinance domestic debt and manage currency risks associated with foreign loans. Onigbinde emphasized the importance of considering alternative approaches to infrastructure financing, including greater involvement of the private sector. Onigbinde highlighted the lack of clarity on how borrowed funds would be utilized, calling for greater transparency in project-specific allocations. He emphasized the need for projects to be clearly defined and linked to specific objectives, rather than being used for general purposes. Onigbinde stressed the importance of ensuring that borrowed funds are channeled towards productive and self-liquidating projects that contribute to long-term sustainable development. Overall, Onigbinde underscored the need for a coherent and transparent approach to budget planning and revenue generation in Nigeria. He called for a reevaluation of the government's fiscal strategy and a shift towards sustainable revenue sources and effective debt management. As Nigeria navigates the challenges posed by its budget, the insights provided by Onigbinde offer valuable recommendations for addressing the red flags and achieving financial stability and growth.