Viewpoint: 2026 appropriation bill: Catalyst for a red hot economy?

by Eyitayo Ande

In Nigeria, budget presentations, which strike at the heart of the nation’s economy, are a yearly constitutional ‘ritual’. Even though the presentation for Budget 2026 came a little later than usual, in comparison to fiscal years 2024 and 2025, it still was not without that usual ritualistic component of the government trying to explain away, with superfluous rhetoric, the gaps in performance – obvious failure to deliver on the promises made to citizens.

The 2026 budget was anticipated to gain plenty of momentum as far as the total annual spending of the government relative to that of 2025 was concerned. However, the optimism, which was super high in the air, expecting the nation to be up on a fast start in 2026, with the new tax laws coming into effect and expecting that the exponential increases in tax revenues to spur government receipts would be a slam dunk, was crushed upon seeing the national budget presented by President Bola Tinubu. To many, it was just more of the same, especially when you look at certain key parameters.

As part of his address to the joint national assembly during the budget presentation, President Tinubu said: “We expect improved revenue performance through the new National Tax Acts and the ongoing reforms in the oil and gas sector – reforms designed not merely to raise revenue, but to drive transparency, efficiency and fairness, and long-term value in our fiscal architecture.

Beautiful remark by the president, which reassures and generates a level of confidence, but Nigerians cannot see this reflected in the budget forecasts presented by him to the national assembly, especially with the projected revenues. Carrying out a summary review of the details of the 2025 budget vis-à-vis the projected figures in the 2026 appropriation bill tells a worrying story as to whether our economic handlers ever have plans on doing anything dramatically different in 2026 from what was done or purportedly done in 2025 in order to build a sizzling economy. Beyond the tantalising address of claiming to be fully sold on improving the lives of Nigerians in 2026, there is no indication from these figures to showcase that, because those numbers do not match the president’s enthusiasm and speech — figures that are pretty much one and the same as those of 2025.

The reality of the situation is that the total revenue expectation of the 2025 budget – N36.35 trillion, is in fact higher by N2.0 trillion than in the 2026 budget even when the tax laws, with a main focus that would essentially be: improving efficiency and expanding coverage for high income-earners and certain corporates, enforcing the correct payment of tax amounts by all payers in a timely fashion, and the creation of the Nigerian Revenue Service which is expected to be that central authority for all federally collectible taxes and in addition, extend its tentacles to all non-oil revenues and select non-tax revenues, are expected to have kicked in fully from January 2026.

To say the foregoing defies logic and is viewed in many quarters as very concerning is not an exaggeration. In addition, the total revenue as a percentage of the total expenditure of the 2025 Appropriation Act was even better at 66 percent (for every 100 naira spent by the government, 66 naira was revenue contribution) compared to what we have in the 2026 Appropriation bill, at 59 percent. This is equally true for the deficit as a percentage of the budget – the 2025 budget at 34 percent was lower and better than the 41 percent in the 2026 appropriation bill.

Needless to say that this scenario limits fiscal flexibility by crowding out spending. The question and, perhaps, raging confusion in the minds of so many people is: of what essence then, are these tax laws that are expected to bolster support for improved revenue raisers, strengthen transparency and accountability of our tax administration, and grow at a decent pace, our nation’s tax to GDP ratio put currently at 13.50 percent by the government, if the 2026 projected revenues are going to be smaller by almost 10 percent in comparison to 2025? Nigerians expect better than the projected servings. Simply put, the expectation is for this budget to ride on the momentum of the tax laws’ passage, and be way ahead of the pack as far as curbing the nation’s year after year deficit financing to enhance the quality of lives of struggling Nigerians.

While our federal government is seeking the approval of the legislative arm to spend N58.47 trillion or N58.18 trillion (different figures are being bandied about) – equivalent of about $40 billion in 2026 on a population estimated to be about 230 million, South Africa, whose 2026/27 fiscal year starts in April 2026, is projecting around 2.9 trillion Rand ($175 billion) in total expenditure on a population of 64 million, up from 2.77 trillion Rand ($167 billion) in this current fiscal year 2025/26. The pressing question remains: how can Nigeria expect to compete favourably with a country like South Africa when its total spending in 2026 is just going to be about 22 percent of South Africa’s, while its population is about four times that of South Africa? Painfully, this is why there are massive infrastructural gaps between both countries, which would continue to widen at a breakneck speed until Nigeria reverses the disturbing trend.

The country is steeped in history, this time, as far as coming out with such stifling deficit spending is concerned. Nevertheless, solely blaming our longstanding budget woes on this government would be tantamount to wanting to blame a firefighter for the fire that an arsonist started. Notwithstanding, the Tinubu administration, handed a historic chance to prove to Nigerians that it can completely turn the page, must show that it can find the key to unlock the full potential of this fiscal tool and act as a true ‘firefighter’ poised to arrest the decades-old ‘fires’ of skewed budgets which have caused serious imbalances and contributed in leaving the nation in an economic hellhole.

We can rightly say Nigeria’s economy reflects that popular statement by Benjamin Franklin, “We grow old too soon and wise too late” because it is clear we are not learning from the events of yesteryears that plunged us into this uncharted economic waters, for which Appropriation Acts, used by other countries to build blockbuster economies and stimulate aggregate demand, have not really played such historic roles in our country. Nonetheless, it is not all gloom as we saw some of the very concerning economic optics gradually being reversed and taking the back seat with strategic policy changes, which have in some ways, smiled warmly on our economy and confirmed the popular remark: policy dictates economics.

I will happily, without any hesitation, mention that there have been some positives observed in fiscal year 2025: the external reserves closed by as much as $45 billion in December 2025 (up by about $5 billion at the same time in 2024) which covers about a dozen months of the country’s imports and the consumer spending also grew, signalling a rebound, albeit, discretionarily as spending focused mainly on essentials due to the biting ‘inflation tax’ which, cheerfully, has been moderating consistently over the past months even though ordinary Nigerians are yet to feel the impact of the drop in their wallets.

On an issue that has generated so many headlines – the debt servicing to revenue ratio, which is a function of how much of our total revenues are used to service our public debts, this administration did a brilliant job of almost halving it from 97 percent in 2024 to about 50 percent. Intriguingly, a ratio of 46.34 percent is now being projected for 2026 – much more impressive than 162 percent recorded in the first half of 2024. We should also not forget to mention that there is an improvement in budget deficit as a percentage of the economy – earmarked at 4.28 percent in the 2026 estimates, though higher than the three percent threshold stipulated in the Fiscal Responsibility Act, is still way down from the about eight percent we saw in 2024.

The Appropriation Bill is a defining piece of fiscal policy meant to shape and establish the tone for our economy. Unfortunately, that expected bullish tone was nowhere to be found in the 2026 total expenditure, as it is way shy of what many people expected. Many had hoped that with the introduction of the new tax laws, which the government has described as the necessary tool in its toolkit for revenue mobilisation, the oil and gas reforms President Tinubu remarked in his address which is hoped to get rid of all the systemic leakages and theft in the oil space in order to significantly improve our production and provide Nigerians with accurate data, the sanitisation that we hope would occur in the mining sector to throw out all the illegalities and ‘infringement on our territory’ going on in that sector at levels never thought possible, etc, the country would begin to experience superfluity in revenues so much so that our heavy reliance on debts will begin to evaporate. Yet, this contradicts our observations.

Beyond the thoughts of this inadequacy in total spending for 2026, however, there are palpable fears from tons of folks, with good reason, I must emphasise, which amplifies the possibility of a bigger problem brewing. There are rising concerns that certain factors may strike a familiar blow to fracture the overall performance of this budget, just the same way the performances of previous budgets have been severely impaired, especially that of 2025, where available indicators suggest there are significant challenges making it difficult to declare its implementation as successful. This underscores underlying structural and systemic issues the country is battling, which run far deeper than our policymakers would let on and touch on the rule of law, corruption and governance.

Ande, a financial and political economy analyst, writes from Lagos and can be reached via eyitayoande@gmail.com