Nigeria to borrow 5,62 trillion naira for 2022 budget deficit

Nigeria is set to borrow a staggering 5.62 trillion Naira to cover its budget deficit in 2022, according to Finance Minister Zainab Ahmad. The announcement comes as the government plans to cut down capital expenditure by 259.3 billion Naira, sparking concerns about the country's financial health and economic future. Kayode Akindele, a Partner at TIA Capital, shared his insights on the matter in an interview with CNBC Africa. Akindele highlighted the challenges Nigeria faces, particularly regarding revenue generation and the management of deficits. He pointed out that the government has struggled to meet revenue targets since 2015, leading to increased borrowing to fund deficits. Akindele also noted the burden of subsidy payments, with estimates suggesting that Nigeria could face billions of dollars in subsidy costs in the coming year. The country's reliance on borrowing and the strain it puts on the economy raise questions about sustainability and long-term financial stability. Moreover, the recent passage of the Petroleum Industry Act has added complexity to the situation. While the act is a significant step towards reforming the oil sector, the debate over subsidy removal remains contentious. Akindele expressed skepticism about the government's ability to phase out subsidies, especially given the looming election cycle and social concerns about inflation. The interview also touched on the Infrastructure Company set up by Nigeria's Investment Authority, the central bank, and the Africa Finance Corporation. The project aims to attract private investments to address the country's infrastructure deficit. Akindele emphasized the importance of public-private partnerships in funding infrastructure projects, highlighting the need for innovative financing models to stimulate investment. As Nigeria navigates its financial challenges and seeks to boost economic growth, the role of fiscal discipline, revenue diversification, and strategic investments will be critical in shaping its future prospects.