KEY POINTS

• Nigeria’s revenue grew 100%, reaching 9.1 trillion naira in mid-2024.
• The World Bank stresses that fiscal reforms are essential to avoid crises.
• The government will engage one million farmers to boost food production.

Due to a recent rise in government revenue, the World Bank projects that Nigeria’s revenue-to-GDP ratio could exceed 10.5% by the end of 2024.

Revenue rise drives improvement in Nigeria’s fiscal outlook

The Nigerian government reported a 100% increase in revenue, reaching 9.1 trillion naira in the first half of 2024, compared to the same period last year.

Speaking at the 30th Nigerian Economic Summit during a session titled “Fiscal Reforms for a More Secure Future,” Ndiamé Diop, the World Bank’s country director for Nigeria, urged the government to sustain reforms such as eliminating fuel subsidies and unifying exchange rates.

“We’ve seen significant revenue growth,” Diop said. “This increase now surpasses the fuel subsidy cost, and digital reforms aimed at improving tax compliance are paying off.”

According to a report by Businessday, Diop highlighted that Nigeria previously ranked among the lowest globally in terms of revenue-to-GDP ratio.

He noted that before President Bola Tinubu’s reforms, debt servicing consumed 100% of revenue in 2022, while public spending amounted to 12.9% of GDP. Only 7.6% of that spending was covered by revenue, underscoring Nigeria’s fiscal challenges.

“There was a persistent fiscal deficit, which meant more debt,” Diop explained. “You cannot sustain this year after year without facing a crisis. That’s why fiscal reforms are essential.”

He cautioned that relying on debt for public spending is unsustainable, especially with low revenue and expensive commercial loans driving up debt servicing costs. Without major reforms, Diop warned, fiscal deficits could destabilize the economy

Government boosts agriculture to combat inflation and reduce costs

Finance Minister and Coordinating Minister of the Economy Wale Edun said the government plans to boost food production to address inflation.

“Our goal is to reduce inflation by increasing food production,” Edun said. “We want to make food more affordable and accessible to ease the cost of living.”

Edun announced plans to engage one million smallholder farmers during the dry season, providing them with seeds, fertilizers, and herbicides.

“This initiative should yield around five million tonnes of grains, with an average output of five tonnes per hectare,” he said. “It will help reduce inflation, especially in the short term.”

Edun also highlighted a partnership with the African Development Bank to establish agricultural processing zones, aimed at supporting local industries with a steady supply of raw materials.