OPINION: 2026 Budget: Implementation Is Key

The signing of the 2026 Appropriation Act by Bola Ahmed Tinubu, with a total expenditure of N68.32tn, represents a significant fiscal milestone and, in many respects, a more deliberate attempt to align public spending with the country’s long-term development priorities.

At the outset, it is important to commend the clear prioritization of critical sectors such as security, infrastructure, education, and health. Allocations of N5.41tn to defense and security, N3.56tn to infrastructure, N3.52tn to education, and N2.48tn to health signal a recognition of the foundational role these sectors play in stabilizing the economy and improving citizens’ welfare.

In a country where insecurity, infrastructure deficits, and human capital challenges have long constrained growth, this focus is both necessary and timely.

Perhaps the most notable structural shift in the 2026 budget is the allocation of N32.2tn, nearly 50 per cent of total expenditure, to capital projects. This marks a welcome departure from previous fiscal cycles where recurrent expenditure dominated, often at the expense of investments that drive productivity and growth.

A capital-heavy budget, if effectively implemented, has the potential to stimulate economic activity, crowd in private investment, and lay the groundwork for sustainable development.

In this context, the decision to extend the implementation of the capital component of the 2025 budget to June 2026 is both pragmatic and justified. Given that many projects are already at advanced stages of completion, this extension provides Ministries, Departments, and Agencies the opportunity to consolidate ongoing works, avoid waste, and maximize value for public expenditure.

Abruptly terminating funding in March 2026 would have risked leaving critical infrastructure projects stranded, thereby undermining both fiscal efficiency and public confidence.

On the revenue side, I am cautiously optimistic that the targets set out in the budget may be realized. Global oil prices have remained above the budget’s reference benchmark, largely influenced by geopolitical tensions, including developments in the Middle East and the continued strategic importance- and recent stability- of the Strait of Hormuz.

For an oil-dependent economy like Nigeria, this presents a potential upside in terms of revenue inflows. However, it also underscores the need for prudence, as such external factors remain inherently volatile.

That said, the fiscal outlook is not without its concerns. The allocation of about N15.8tn to debt servicing is substantial and continues to crowd out resources that could otherwise be deployed to development priorities.

Coupled with a budget deficit in excess of N31tn, this raises legitimate questions about fiscal sustainability and the growing burden of public debt. It is imperative that deliberate steps are taken to reduce both the size of the deficit and the overall debt stock over the medium term.

In this regard, I recommend that any windfall gains from higher-than-expected oil revenues should be judiciously applied toward deficit reduction and lowering borrowing requirements, rather than expanding expenditure. This would not only ease pressure on public finances but also send a strong signal of fiscal discipline to investors and credit rating agencies.

Equally important is the need to ensure that the ambitious capital allocations translate into tangible outcomes. Prioritization will be key. The FG should focus on high-impact, economically viable projects and ensure that funds are released in a timely manner to avoid implementation delays. One of the persistent weaknesses in Nigeria’s budget cycle has been the rollover of capital projects from one fiscal year to another. Breaking this cycle requires not just improved planning, but disciplined execution.

Finally, strong monitoring and evaluation mechanisms must be put in place to track budget performance across MDAs. Transparency, accountability, and value-for-money must be the guiding principles. The President’s directive for disciplined and efficient utilization of resources is commendable, but it must be matched with robust oversight and consequences for non-performance.

In sum, the 2026 budget reflects a more reform-oriented and investment-driven fiscal stance. While the macro-fiscal risks, particularly around debt and deficits, remain significant, the emphasis on capital expenditure and critical sectors provides a solid foundation. The real test, however, will lie in execution. If implemented with discipline and focus, this budget could mark a turning point in Nigeria’s journey toward economic stability and shared prosperity.

Professor Uche Uwaleke is the President of the Association of Capital Market Academics of Nigeria.