2025 budget: Nigeria plans spending on critical infrastructure projects

Nigeria's government has recently passed a 54.9 trillion-naira budget for the 2025 fiscal year, with a significant focus on funding critical infrastructure projects. The move has been met with optimism, especially in the business community, as it is expected to spur economic activities and support local businesses. Segun Ajayi-Kadir, the Director-General of the Manufacturers Association of Nigeria, shared his insights on how this expansion in capital expenditure could benefit the productive sector. He emphasized the importance of striking a balance between recurrent and capital expenditure, with a priority on infrastructure development. Ajayi-Kadir highlighted the challenges faced by the manufacturing sector due to inadequate infrastructure and expressed relief at the government's increased focus on infrastructure spending. The announcement of a boost in government spending and a shift towards prioritizing capital expenditure has been welcomed by the manufacturing industry, as it addresses the longstanding issue of infrastructure deficits. The lack of optimism stemming from insufficient infrastructure support has been a significant barrier to the sector's growth, making the increased infrastructure spend a positive development. One key point raised by Ajayi-Kadir is the need for the government to ensure the efficient implementation of the allocated funds for infrastructure projects. He cautioned against any potential delays or impediments in project execution, emphasizing the importance of actualizing the planned infrastructure investments to reap the intended benefits. The successful execution of these projects is critical to driving economic growth and supporting business operations across various sectors. Another crucial aspect discussed in the interview is the source of funding for the expanded budget. With the National Assembly approving the increased budget allocation, questions arose regarding the additional revenue required to support the heightened spending. Ajayi-Kadir highlighted the government's engagement with revenue-generating agencies such as the Federal Inland Revenue Service and the Nigeria Customs Service to raise the necessary funds. While addressing the importance of expanding the tax base, he cautioned against relying solely on existing taxes, levies, and fees for revenue generation. The emphasis was placed on enhancing revenue collection efficiency and trade facilitation to increase government income without burdening businesses with excessive tariffs. The conversation also delved into recent tariff adjustments by the Nigeria Customs Service, which garnered mixed reactions from industry stakeholders. Ajayi-Kadir emphasized the need to improve port infrastructure and customs services to attract more trade and maximize revenue without resorting to tariff hikes. He advocated for trade-facilitating measures that promote efficiency and incentivize businesses to engage in import-export activities. The collaborative engagement between government agencies and private sector stakeholders was underscored as a critical strategy to optimize revenue generation and maintain a favorable business environment. As the discussion turned to the potential reinstatement of the 4% tariff increase on imported goods by the customs service, Ajayi-Kadir expressed optimism that ongoing dialogues would lead to alternative revenue generation solutions. He stressed the importance of efficiency enhancements, leakage reduction, and production incentives to support revenue growth without adversely affecting consumers. The focus remained on finding sustainable revenue sources and fostering a conducive business climate that supports economic expansion and consumer welfare. In conclusion, Nigeria's 2025 budget marks a significant milestone in prioritizing infrastructure development to drive economic growth and business prosperity. The government's commitment to infrastructure spending and revenue optimization reflects a proactive approach to addressing key challenges and unlocking growth opportunities. With constructive engagements between government authorities and industry stakeholders, the path towards sustainable development and enhanced business confidence is set to unfold.