2025 Budget Concerns: A Political Gesture Bound for Implementation Challenges

“Behind the facts of economics are the facts of psychology… The emotions of fear and confidence, the judgments of doubt and certainty constitute a very important medium through which we see economic values,” remarked Arthur S. Dewing in the Harvard Business Review in 1923. These words remain profoundly relevant as Nigeria grapples with recurring budgetary failures, where promises rarely translate into tangible outcomes.

Why Nigerian Budgets Often Fail

Ivan Turgenev once stated, “Whatever a man prays for, he prays for a miracle; every prayer reduces itself to this.” This sentiment mirrors the state of Nigerian federal and state budgets since 1999, which often resemble wishful prayers rather than actionable blueprints. These budgets, approved by legislative bodies, are rarely monitored for execution and frequently result in the abandonment of numerous projects. Over 70,000 abandoned projects litter the nation, symbolizing the failure of governance to prioritize accountability and execution.

Budget preparation and implementation often devolve into political posturing. Successive administrations have sidestepped critical reviews of past performances, opting instead to present new budgets that ignore unfulfilled promises. This cycle of self-deception perpetuates failures year after year.

Recurrent Budget Failures Since 1999

Albert Einstein defined insanity as doing the same thing repeatedly while expecting different results. This aptly describes Nigeria’s approach to budgeting. After Obasanjo’s early years in office, subsequent administrations failed to treat budgets as frameworks for economic growth and social progress. Instead, they have relied on inflated projections and ignored past lessons.

For instance, federal budgets since 2009 have consistently assumed crude oil production and export at 2.3 million barrels per day (mbpd), despite historical data proving production averages closer to 1.4mbpd. This unrealistic projection has led to predictable revenue shortfalls, currency devaluation, higher inflation, and economic instability.

The ongoing assumption that the exchange rate will stabilize at N1400/$ in 2025 or that inflation will drop to 15.8% defies current realities. As of November 2024, exchange rates hover around N1690/–N1740/$, with inflation surging toward 33.5%. Such wishful thinking undermines the credibility of economic planning.

The unrealistic assumptions embedded in these budgets have had severe economic consequences, further exacerbating poverty and reducing the nation’s market attractiveness.

Population Growth and Economic Realities

Nigeria’s inability to align economic growth with its rapidly increasing population further complicates its economic outlook. Since 2014, Gross Domestic Product (GDP) growth has consistently lagged behind population growth, with dire implications for poverty alleviation and investment potential. The 2025 budget projects a 4.6% GDP growth rate—a target that seems unachievable given current fiscal constraints and economic uncertainties.

Key Questions for Effective Budgeting

For Nigeria to break free from this cycle, policymakers must address fundamental questions:

1. What lessons can be learned from past budgetary failures?

2. How can realistic projections replace optimistic assumptions?

3. What steps must be taken to ensure transparency and accountability in budget execution?

4. How can Nigeria diversify its economy to reduce dependence on oil revenues?

Addressing these questions is essential to chart a sustainable path forward.

Conclusion

The 2025 budget, much like its predecessors, appears more symbolic than strategic. Without significant reforms and a commitment to addressing underlying issues, it is unlikely to deliver meaningful economic progress.