Nigeria's budget passed: what's next?

Nigeria's 2017 budget has finally been passed five months into the fiscal year, sparking optimism about the country's economic recovery. The passing of the budget, although delayed, is seen as a step in the right direction by many economists and experts. Iomede Mejabi, an economist at Stanbic IBTC Bank, recently joined CNBC Africa to discuss the implications of the budget approval and what lies ahead for Nigeria's economy. While the National Assembly has approved the budget, it still awaits the president's signature. However, with the president currently in London for medical treatment, questions linger about the timeline for the budget to be officially signed into law. Despite this potential delay, Mejabi remains hopeful that the recurrent part of the budget will not be significantly impacted. The real challenge, he notes, lies in the implementation of the capital expenditure. This has been a persistent issue for previous budgets and will require close attention moving forward. One key point of concern is whether the absence of the president will hinder the smooth signing of the budget into law. However, Mejabi underscores the importance of focusing on the capital implementation to drive economic growth. While the budget is seen as a positive step, Mejabi cautions that its impact on GDP may be limited given its size relative to the country's total expenditure. At 7 trillion naira, the budget represents only a small fraction of Nigeria's GDP. Nevertheless, the budget can have a multiplier effect on expenditure and boost confidence in the economy. To maximize the budget's potential, Mejabi emphasizes the need for comprehensive implementation and structural reforms to attract foreign investment. A significant portion of the budget is allocated to capital expenditure, indicating the government's commitment to infrastructure development. However, the budget's reliance on optimistic revenue assumptions, particularly in the oil sector, raises concerns. The assumption of 2.2 million barrels per day for oil production and an oil price of $44.50 may be overly ambitious given current market conditions. While the budget accounts for potential upside in oil revenue and exchange rate differentials, the non-oil revenue targets appear optimistic, especially in the aftermath of a recession. Mejabi warns that achieving these revenue targets may prove challenging for the government. Overall, the passage of Nigeria's 2017 budget marks a crucial milestone for the country's economic recovery efforts. Though challenges remain, particularly in implementation and revenue generation, the budget presents an opportunity for Nigeria to reinvigorate its economy and attract much-needed investment. As the government navigates the complexities of budget execution, all eyes will be on the impact of this fiscal plan on Nigeria's future growth prospects.