- Over N5.6trn spent on recurrent, capital projects
- Expert seeks reforms to boost revenue, curtail excessive spending
- Trump’s tariff hike threatens Nigeria’s exports to United States – FG
The Federal Government spent a shocking N2.19 trillion on debt servicing in the fourth quarter of 2024, heightening concerns over Nigeria’s growing fiscal deficit, despite efforts to boost revenue through higher crude oil prices and aggressive tax collection.
Figures obtained from the Central Bank of Nigeria showed that government spending continued to outpace earnings, resulting in a fiscal deficit of N3.08 trillion during the period under review.
A fiscal deficit arises when a government’s total expenditure exceeds its revenue within a specific timeframe. This imbalance often stems from increased spending on infrastructure, social programmes, or economic interventions.
The CBN’s Economic Report for Q4 2024 revealed that while the primary deficit narrowed by 22.62 per cent compared to the preceding quarter, the overall fiscal deficit only slightly reduced by 3.61 per cent, reaching N3.08 trillion. This marginal improvement was attributed to a more substantial increase in revenue relative to expenditure.
According to the report, the Federal Government’s retained revenue stood at N2.52 trillion in Q4 2024, while total expenditure was N5.6 trillion. The breakdown showed recurrent expenditure at N4.26 trillion, capital expenditure at N958.16 billion, and transfers amounting to N435.7 billion.
“Of the recurrent expenditure, N2.19 trillion was spent on debt servicing, slightly surpassing non-debt recurrent spending, which totaled N2.01 trillion.”
Of the recurrent expenditure, N2.19 trillion was spent on debt servicing, slightly surpassing non-debt recurrent spending, which totaled N2.01 trillion.
Recurrent expenditure dominated government spending, accounting for 75.13 per cent of total outlay, while capital expenditure and transfers made up 17.10 per cent and 7.77 per cent, respectively.
Revenue allocation during the quarter saw the federal, state, and local governments receiving N1.44 trillion, N1.49 trillion, and N1.09 trillion, respectively, while oil-producing states received allocations through the 13 per cent derivation fund.
The CBN further noted, “FGN retained revenue rose in the review period due to higher net receipts from the federation account, non-oil excess, and FGN independent revenue. At N2.52 trillion, provisional FGN retained revenue was 10.40 per cent higher than the level in Q3 2024 but 48.57 per cent below the benchmark.”
Nigeria’s fiscal challenges have deepened over the years, driven by a combination of high public spending, underperforming revenue streams, and economic inefficiencies. The country’s fiscal deficit consistently exceeds the three per cent of Gross Domestic Product threshold set by the Fiscal Responsibility Act of 2007.
Borrowing remains the government’s primary tool for financing the deficit, causing the country’s debt stock to balloon and intensifying concerns over debt sustainability.
Currently, more than 70 per cent of the government’s revenue is spent on servicing debts, leaving little fiscal space for investments in critical sectors.
Despite efforts to diversify its revenue base, Nigeria continues to rely heavily on oil earnings.
The Registrar of the Chartered Institute of Finance and Control, Godwin Eohoi, warned that the rising cost of debt servicing, coupled with a widening fiscal deficit and shrinking fiscal space, poses a serious threat to Nigeria’s long-term fiscal stability.
Without urgent reforms to boost revenue and curtail excessive spending, he cautioned, Nigeria risks falling into a vicious cycle of borrowing and debt repayment, with dire consequences for national development.
Trump’s tariff hike threatens Nigeria’s exports to United States – FG
Meanwhile, the Federal Government has expressed concern that the new tariff regime announced by the United States, which includes a 14% levy on Nigerian exports, could undermine the competitiveness of Nigerian products in the American market.
In a statement released on Sunday, the Minister of Trade and Investments, Jumoke Oduwole, highlighted the potential negative impact of the new trade measures on global commerce.
However, she assured that under President Bola Tinubu’s Renewed Hope Agenda, Nigeria remains committed to building economic resilience and accelerating export diversification.
“The Federal Government considers the United States a valued trade and investment partner, bound by shared values and mutual economic interests,” Oduwole stated, referencing the U.S. Ambassador’s March 26, 2025 visit to her office, which reaffirmed both nations’ commitment to strengthening economic ties.
“In response to the recent tariff announcements, Nigeria remains actively engaged in consultations with U.S. counterparts and the WTO, approaching evolving trade dynamics with pragmatism and a commitment to mutually beneficial solutions,” she added.
According to the Minister, President Tinubu has, since May 2023, remained firmly committed to attracting and retaining investment from both longstanding and new international partners.
She noted that the government is deploying a wide range of interventions including in policy, finance, infrastructure, and diplomacy to ensure Nigerian businesses stay competitive in the face of rising global and regional tariffs.
These efforts include expanding alternative market access and off-take diversification to mitigate risks, she explained.
Nigeria’s exports to the U.S. have consistently ranged from $5 billion to $6 billion annually over the past two years. Over 90% of these exports are crude petroleum, mineral fuels, oils, and gas products.
Fertilizers and urea make up the second-largest category at 2–3%, followed by lead at about 1% (valued at approximately $82 million). Agricultural products such as live plants, flour, and nuts constitute less than 2% of total exports.
While oil remains dominant, the minister warned that non-oil products—many of which previously enjoyed duty-free status under the Africa Growth and Opportunity Act (AGOA)—now face potential setbacks.
“A new 10 per cent tariff on key categories may impact the competitiveness of Nigerian goods in the U.S.,” she said.
“For businesses in the non-oil sector, these measures present destabilizing challenges to price competitiveness and market access, especially in emerging and value-added sectors vital to our diversification agenda.
“SMEs building their business models around AGOA exemptions will face the pressures of rising costs and uncertain buyer commitments.”
Oduwole said these developments underscore the need for Nigeria to reinforce its non-oil export strategy, including improving quality assurance and traceability standards to enhance market acceptance globally.
She further emphasized the need to strengthen intra-African trade, especially through the African Continental Free Trade Area (AfCFTA), saying, “It also signals for Africa and Nigeria in particular the urgent need to enhance intra-African trade through the African Continental Free Trade Area (AfCFTA), reinforcing the case for Nigeria’s accelerated implementation of the AfCFTA, deepening regional integration, and leveraging frameworks like the Pan-African Payment and Settlement System (PAPSS) to lower trade costs and promote intra-African trade.”
The Minister concluded by affirming that the government will meet these global trade challenges with pragmatism and purpose: “Turning global and regional trade policy challenges into opportunities to grow Nigeria’s non-oil export footprint and build a more resilient economy.”
In the same vein, experts have assured Nigeria to worry less about the American President, Donald Trump’s new tariff policy, as the action is likely not going to have a significant impact on the country’s economy.
An analytic document released by the Renaissance Capital Africa urged Nigerians to stay calm, estimating that the policy could only impact less than 0.1 per cent of the nation’s Gross Domestic Product.
Also, the Centre for the Promotion of Private Enterprise stated the current tariff war would have limited impact on Nigeria’s economy. President Donald Trump of the United States had announced a major trade policy shift, imposing a 10 per cent baseline tariff on all imports and introducing country-specific reciprocal tariffs.
Under this new policy, Nigerian exports to the U.S. will now attract a 14 per cent tariff, in response to what the U.S. government claims is a 27 per cent duty imposed by Nigeria on American goods.
“In response to the recent tariff announcements, Nigeria remains actively engaged in consultations with U.S. counterparts and the WTO, approaching evolving trade dynamics with pragmatism and a commitment to mutually beneficial solutions.”
Between 2015 and 2024, Nigeria’s total trade with the U.S. amounted to N31.1 trillion, with imports accounting for N16.4 trillion (8.7 per cent) of Nigeria’s global exports, according to data from the National Bureau of Statistics.
Renaissance Capital’s analytic document said Nigeria’s major export to the U.S is oil, which “could be diverted to any other country.”
For other African countries, it stated there was no need to worry because the level of trade is low, unlike what obtains with South Africa, Nigeria, Algeria and Angola.
It stated: “Does it really matter to an oil exporter if the U.S. imposes tariffs? Not much. Exporters can divert their oil to any other country. The same will be true of most commodities.
“The US does not trade much with Africa. It imported $39 billion of goods in 2024, which is roughly what it imports from Mexico or Canada in just over a month. The US imports more in 24 hours from either of them (over $1 billion a day), than it imports in a year from about 40 African countries. The biggest exceptions are South Africa, and to some extent Nigeria, which account for over half of everything the U.S. imports from the continent.
“For Nigeria, the impact would cut 0.1 per cent of GDP. But this is surely an exaggeration, because Nigerian oil can be sold elsewhere.
“Nonetheless, some small indirect impact on Africa is likely to come from Trump’s tariffs.
Global trade is likely to be hit, cutting demand for energy, and pushing oil prices down.
Even here, we should be cautious,” it stated.
It remained optimistic that the policy might help global trade in the long run. “In the end, tariff threats today may lower global tariffs, and therefore, boost global trade,” it stated.
The Chief Executive Officer of CPPE, Muda Yusuf, in a statement, said averagely, Nigeria’s external trade exposure to the United States is about 10 percent.
“In 2024, Nigeria’s total merchandise export was valued at 50.4 billion dollars, and Nigeria’s export to the United States that same year was $5.7 billion, which was 11.3 per cent. A tariff effect on about 10 per cent of total exports is unlikely to cause a major upset in the Nigerian economy.
“Nigeria’s major exports to the US are crude oil, petroleum gas, and nitrogenous fertiliser. While major US exports to Nigeria are mainly vehicles, wheat, and fuels.
“Other major export destinations for Nigerian products are Spain, France, the Netherlands, and Italy. Oil and gas products account for close to 90 per cent of Nigeria’s exports. This has been the position for about three decades.
“However, the Nigerian economy may be affected indirectly in some other ways. The Trump administration has practically brought closure to the AGOA trade window.
“Also, the trade war and the subsequent retaliatory tariffs would trigger inflationary pressures in the United States. This may result in elevated costs for imports into Nigeria from the United States.
“We are likely to witness some level of disruptions in global supply chains resulting from the tariff war. This could dampen the global growth outlook and affect crude oil prices. A decline in the oil price would impact Nigeria’s foreign reserves and revenue.
“The worsening inflation outlook for the US economy may trigger monetary tightening by the US Federal Reserve. This may lead to higher interest rates and trigger portfolio flow reversals in emerging economies.”
This could have implications for the naira exchange rate.
“But there are also opportunities for new trade partners, globally. Many countries that are victims of the current trade war would seek new bilateral trade relationships, which may create opportunities for Nigerian investors,” CPPE added.
Also, the National President of the Nigerian-American Chamber of Commerce, Sheriff Balogun, stated that since the inception of the African Growth and Opportunity Act in 2000, Nigeria had exported an estimated $277bn worth of goods to the United States, with crude taking the majority.
Balogun warned that the policy could impact trade volumes worth $277bn.
“Since the African Growth and Opportunity Act began in 2000, Nigeria has exported an estimated $277bn worth of goods to the United States under the programme. The vast majority of this trade value comes from crude oil shipments, with petroleum products overwhelmingly dominating Nigeria’s AGOA exports each year. In fact, oil alone accounts for nearly all of Nigeria’s exports under the initiative by value,” he stated.
According to Afreximbank research, the 14 per cent reciprocal tariff will reduce oil demand and lower forex earnings, while higher tariffs on wheat and vehicles may increase local prices; key exports include oil, cocoa, and rubber, while key imports include wheat, refined petroleum, and vehicles.
It added that these tariffs could reduce export revenues, increase production costs, and disrupt investment flows, particularly for nations heavily reliant on US trade.
The CEO, Cowry Asset Management Limited, Johnson Chukwu, explained that crude oil exports from Nigeria may remain unaffected by the tariff.
“Trump has already exempted tariffs on energy products, including crude oil, copper, and gold, so, it won’t directly impact our oil exports to the US. However, agricultural exports could take a hit,” he explained.
Chukwu added that while Nigeria was not a major non-oil exporting nation, the larger concern is that the US tariffs could lead to reduced global production.
“Once production declines, demand for crude will fall, bringing down oil prices and likely affecting Nigeria’s projected revenue for the year,” he warned.
The economist noted that as countries adjusted to the new trade landscape, the cost of goods and services would rise, leading to a lower standard of living and a slowdown in manufacturing and international trade.
“However, at the general level, what Trump has done would trigger a higher cost of goods and services globally because countries would add it to their economies and it will be borne by final consumers. So, prices will go up in almost all the jurisdictions, the standard of living will weaken, manufacturing activities will slow down, and international trade will slow down. Ultimately, where it will affect Nigeria is that the demand for crude will decline because production will go down, and once the demand reduces, it means the price will come down and likely affect the projected revenue from crude sales this year. We are not a strong non-oil exporting country, so it may not affect our agricultural products, but reduced demand will affect our crude revenue,” he added.
On his part, the Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Sola Obadimu, urged the Federal Government to focus on domestic economic growth rather than overreacting to U.S. policies.
He emphasised that every country, including the United States, implemented policies in its best interest, and Nigeria must do the same to protect its economy and create jobs.
Obadimu explained that the tariff aligned with former US President Donald Trump’s “America First” agenda, aimed at revitalising domestic industries and creating employment opportunities for American citizens.
“Trump’s goal has always been to make America great again, and one way to achieve that is to get factories running again,” he said. “Many factories in the U.S. have shut down due to outsourcing, and this policy is designed to discourage imports, boost local production, and generate jobs. It’s a valid argument.”
However, he stressed that the real concern for Nigeria should be its own economic strategy.
He pointed out that the country exports mostly crude oil and raw agricultural products with little value added, effectively outsourcing jobs instead of creating employment locally. To address this, he called for policies that prioritize industrialization and job creation.
“We cannot industrialise on generators. We should aim for 150,000 megawatts of electricity, add value to our products, and employ more people,” he urged.
While noting that Trump’s policies could be overturned by a future administration, Obadimu emphasised that Nigeria must take proactive steps to safeguard its economy from external shocks and long-term poverty.
