By Chinwendu Obienyi
As Nigeria faces a projected N12.33 trillion fiscal deficit for 2025, growing concerns are being raised about the underperformance of Government-Owned Enterprises (GOEs), which are expected to drive national revenue.
With inefficiencies and mismanagement plaguing these enterprises, the government’s ability to meet its fiscal targets is increasingly in doubt.
This was highlighted in a report titled Nigeria in 2025: Road to Recovery: Navigating the Rebound by analysts at Cordros Securities.
Despite ambitious revenue targets, expenditure—especially on debt servicing, subsidies, and public projects—continues to rise, widening the fiscal deficit. This has resulted in economic analysts arguing that revenue projections are often overly optimistic, as the government’s ability to meet these targets, especially amid external economic pressures and domestic inefficiencies, remains doubtful.
Specifically, government expenditure settled at N16.98 trillion in the first 8 months of 2024, falling below the prorated budget (88.5 per cent) due to lower-than-budgeted capital (41.70 per cent) and recurrent (85.0 per cent) spending. However, debt service costs (134.4 per cent) exceeded the prorated budget due to higher interest rates and a costlier foreign debt service in naira terms, given the depreciation of the naira.
The report noted that, as a result, the fiscal deficit narrowed to N4.24 trillion, 30.7 per cent below the budget estimate.
Meanwhile, the National Assembly approved a N6.30 trillion supplementary budget in July 2024, raising the 2024 budget to N35.06 trillion after the adjustment of the minimum wage to N70,000.00 (previously N30,000). The budget was intended to fund both additional recurrent and capital expenditures.
The FG aimed to fund the supplementary budget with a retrospective 70.0 per cent windfall tax on FX revaluation gains recorded by the banks in the 2023 full year (FY). Adding the supplementary budget to the 2024 FY budget (N35.06 trillion), budget expenditure (72.6 per cent) and revenue (73.8 per cent) performance were reported lower. According to the report, this may be attributed to the fact that the supplementary budget, though approved in July, appears to have not yet been implemented.
The report thereafter said, “For the end of 2025, we expect the removal of the PMS subsidy to support a significant improvement in oil revenue, coupled with gains from the anticipated naira depreciation. At the same time, we expect non-oil revenue to settle higher than the budget estimate, albeit at a more moderate pace relative to 2024 performance. Meanwhile, revenue from GOEs is likely to remain unimpressive. Altogether, our baseline projection indicates total revenue (including GOEs and project-tied loans) could reach N28.91 trillion. With a budget implementation of 86.1 per cent (N41.23 trillion), we expect the fiscal deficit, including GOEs and project-tied loans, to settle at N12.33 trillion.”
In recent times, economic experts have stated that the implications of the sub-optimal performance of GOEs could translate to increased borrowing costs and economic risks. They, therefore, called on the FG to strengthen operational efficiency, ensure strict financial accountability, diversify revenue streams, and ensure funds are directed toward productive use.