Nigeria to present 2024 Supplementary Budget

Nigeria is set to present a supplementary budget for the 2024 fiscal year, according to President Bola Tinubu. This move comes amidst rising debt levels, capital expenditure challenges, and escalating overhead costs. The Chamberlain Peterside, CEO of Xcellon Capital, joined CNBC Africa to provide insights on the potential impact of this development and to evaluate the performance of the Tinubu administration over the past year. Peterside highlighted the need for augmenting budget revenue due to the prevailing economic trends and emphasized the importance of proper allocation of funds to address critical expenditure areas. The impending supplementary budget raises questions about the funding sources - whether it will entail additional borrowing or leverage domestic revenue streams like tax revenue. The depth of Nigeria's financial market has come under scrutiny, particularly in relation to its capacity to absorb large sums of money raised through bonds and treasuries. Despite concerns about investor apathy leading to capital flight in recent years, Peterside is optimistic about the market's resilience. He pointed out that government treasuries have consistently been oversubscribed, signaling investor interest in federal instruments. With liquidity flowing from the stock market to debt instruments, Peterside believes that the government's offering is likely to attract significant subscriptions, if not oversubscriptions. Tax revenue remains a crucial component of Nigeria's fiscal strategy, representing the main revenue source for the government. The country's tax-to-GDP ratio stands at a modest 10%, below the continental average. Efforts to boost tax collection have been hindered by institutional challenges and ineffective monitoring mechanisms. Peterside acknowledged the government's initiatives to enhance tax mobilization through policy reforms and technology-driven solutions. He stressed the importance of leveraging technology and implementing better monitoring and audit processes to improve tax compliance. The aim is to gradually increase the tax-to-GDP ratio and surpass the 15% target by 2027, as outlined by the tax authorities. In concluding his assessment, Peterside commended the government's focus on technology deployment, tax harmonization, and revenue collection reform. By shifting the revenue collection responsibility from multiple ministries and agencies to the tax authorities, the government aims to enhance efficiency and transparency in tax administration. Despite the challenges posed by economic uncertainties and budgetary constraints, proactive measures are being taken to strengthen Nigeria's fiscal landscape and ensure sustainable revenue generation in the years ahead.