ACIOE Associates is an advisory services firm providing solutions in Strategy, Government Relations, Regulatory Affairs, Economic Development...


Budget Review

According to the International Monetary Fund (IMF), the global economy is expected to grow by 5.4% in 2021 from a projected decline of 4.9% in 2020 following the hard hit of the COVID-19 pandemic. On a regional base the following projections were made:

The Middle East & Central Asia – 4.7% 3.3%
Sub-Saharan Africa – 3.2% 3.4%
South Africa – 8.0% 3.0
North Africa 2.0% 2.0%

The IMF projected that Nigeria would contract by -5.4% in 2020 and grow by +2.6% in 2021. However, the Nigerian Bureau of Statistics projected a decline of- 4.2% for 2020 and a growth of +3.0% for 2021. Nigeria’s Q2 GDP growth contracted by -6.1% in the second quarter of 2020.  This ended the 3-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017. The N13trillion Appropriation Bill of Economic Recovery and Resilience submitted by President Buhari on the 8th of October 2020 to the joint session of the National Assembly is designed to deliver on the government’s Economic Sustainability Plan goals, accelerate the pace of Nigeria’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.

Key assumptions behind the proposed fiscal parameters between the revised 2020 and 2021 budgets:

Budget Assumption/ Fiscal Parameter 2020 Revised Budget 2021 Proposed Budget Percentage Change
Benchmark oil price US$28 per barrel US$40 per barrel 43%
Oil production volume (bpd) 1.80 million 1.86 million 3%
Average exchange rate ₦360/ US$1 ₦379/ US$1 5%
GDP Growth rate (%) -4.42 3 168%
Capital expenditure ₦2.49 trillion ₦3.60 trillion 46%
Statutory transfer ₦0.43 trillion ₦0.48 trillion 13%
Debt service (inclusive of sinking fund) ₦2.95 trillion ₦3.34 trillion 13%
Recurrent expenditure (non-debt) ₦4.94 trillion ₦5.65 trillion 14%
Total revenue ₦5.84 trillion ₦7.89 trillion 35%
Total expenditure ₦10.81 trillion ₦13.08 trillion 21%
Fiscal deficit ₦4.98 trillion ₦5.20 trillion 4%


Overview of the proposed 2021 budget revenue, expenditure, and deficit financing
The aggregate revenue available to fund the 2021 budget is projected at N7.89 trillion (35% more than the 2020 revised budget of N5.84 trillion). In aggregate, 31% of projected revenues are from oil-related sources while 69% will come from non-oil sources. The FGN 2021 aggregate expenditure (inclusive of GOEs and project-tied Loans) is projected to be N13.08tn, which is 21% higher than the revised-2020 Budget. Recurrent (non-debt) spending, estimated to amount to N5.93tn (43.19% of total expenditure) which is 14.32% higher than 2020 revised estimates (reflecting increases in salaries & pensions). The aggregate Capital Expenditure of N3.85tn (29.43% of total expenditure) is 43.4% higher than the 2020 Revised Budget (inclusive of Capital component of Statutory Transfers, GOEs Capital & Project-tied loans expenditures). At N3.12tn, debt service is 23.88% of total expenditure and is 16.63% higher than the 2020 revised Budget.

The overall budget deficit is N5.196tn for 2021. This represents 3.64 of Nigeria’s GDP. The budget deficit will be financed by privatization proceeds of N205.15bn and mainly by borrowing:

  • Domestic sources: N2.14tn
  • Foreign sources: N2.14tn
  • Multi-lateral /bi-lateral loan drawdowns: N709.69bn

Top 10 Capital Allocations in the 2021 Budget.

  • Ministry of Works and Housing – N404.64bn
  • Ministry of Finance, Budget, and National Planning – N382.63bn
  • Ministry of Transport – N256.09bn
  • Ministry of Health – N211.96bn
  • Ministry of Power – N198.28bn
  • Ministry of Education – N197.411bn
  • Ministry of Water Resources – N152.77bn
  • Ministry of Defence – N121.24bn
  • Ministry of Agriculture and Rural Development – N110.24bn
  • Ministry of Aviation – N89.97bn

Top 10 Recurrent Allocations in the 2021 Budget

  • Ministry of Defence – N840.55bn
  • Ministry of Education – N545.1bn
  • Ministry of Police Affairs – N441.39bn
  • Ministry of Health – N380.21bn
  • Ministry of Interior – N227.02bn
  • Ministry of Youths and Sports Development – N170.63
  • Office of the National Security Adviser – N134.1bn
  • Ministry of Foreign Affairs – N75.6bn
  • Ministry of Agriculture and Rural Development – N69.22bn
  • Office of the Government of the Federation – N59.36bn


English English French French Spanish Spanish