Capital spending as a share of Nigeria’s total government revenue has dropped sharply — from 96% in 2023 to just 53% in 2024. This means that even as the government collects more money than before, it is investing far less in critical sectors needed for national development and citizens’ wellbeing.
Instead, much of the growing revenue is used for recurrent expenses like salaries, pensions, administrative costs, and debt servicing. Nigeria’s debt service-to-revenue ratio remains dangerously high; Fitch Ratings projects debt repayments could swallow up to 62% of federally retained revenue by year-end 2024.
Economists, civil society groups, and international lenders have all raised alarms, warning that Nigeria risks sacrificing future growth if it continues to prioritise overheads and debt payments over productive investment. The impact is already evident nationwide: poor road networks frustrate commuters, the power supply remains unreliable with frequent grid collapses, hospitals and clinics deteriorate, and many Nigerians are pushed deeper into medical poverty. Unemployment also persists, with the National Bureau of Statistics putting the official jobless rate at 5% — though experts believe the real figure is much higher when underemployment is included.
Essentially, Nigerians are paying more, government revenue is rising, yet everyday life for most people keeps getting harder. Government officials argue that painful fiscal consolidation is necessary to set the economy on a sustainable path, but for millions enduring daily hardship, promises of future projects offer little comfort.
Experts Warn of Mounting Social Costs
Across different expert analyses, one key message stands out: while revenue reforms were needed in principle, the way they have been designed and rolled out has failed to consider the human cost. Unless immediate steps are taken to cushion households and businesses, the drive for more revenue could worsen inequality, weaken social cohesion, and undermine the country’s stability.
Dr. Aliyu Ilias, a development economist in Abuja, said the aggressive revenue push has strained citizens and the economy alike. He pointed to the removal of fuel subsidies and higher electricity tariffs as examples of policies that take more money from people without offering relief. “The government is aggressively collecting more but not cushioning the impact,” he said. He added that the Federal Inland Revenue Service’s celebration of higher tax collection, following a larger national budget, raised questions about true fiscal discipline.
Ilias noted that the immediate outcome has been a decline in purchasing power. “Before now, many Nigerians had relatively stable living standards. Today, survival is a daily struggle. The fuel subsidy removal alone has driven up transport costs, which then ripple through food prices and other living expenses,” he said. Without addressing inflation or supporting businesses, he warned, the economy could face long-term harm, including worsening malnutrition as families cut food spending to cope.
He stressed that while higher revenues could fund infrastructure projects, the government risks losing public trust if citizens do not see improvements in their lives. “People are paying more, suffering more, and not seeing direct benefits. Promises must be matched with action — affordable energy alternatives, food security, and better services,” he said.
Professor Adeola Adenikinju, President of the Nigerian Economic Society, agreed that revenue growth must go hand in hand with economic expansion and supportive policies for businesses. “It’s not just about filling government coffers. It’s about creating an environment where businesses thrive, employment grows, and people’s incomes increase,” he said. Without a focus on productivity, human capital, and infrastructure, he warned, any gains will be short-lived.
Call for Creative Solutions
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, offered a stark assessment. He said the social fallout from the current reforms has been devastating and must be addressed urgently. “It’s not enough to chase orthodox economic targets like deregulation and inflation control while ignoring social realities,” he said.
Yusuf argued that Nigeria’s unique context demands tailored solutions, not borrowed templates. He called for direct government intervention in crucial sectors like agriculture, energy, transport, and healthcare — even if that means strategic subsidies. He specifically proposed investing in affordable public transport, such as buses and trains, to soften the blow of fuel price deregulation. “You can’t leave transport costs entirely to the private sector after removing petrol subsidies. Public systems must offer poor people alternatives,” he said.
He also recommended smart agricultural subsidies to curb food inflation and investments to keep health and education affordable. “The goal must be to balance economic goals with social protection. Otherwise, the majority will keep suffering while the numbers look good only on paper,” he said.
Sequencing Matters
Adewale Abimbola, a Lagos-based economist, acknowledged that some reforms were unavoidable to restore stability. “When this administration came in, a lot was abnormal — unchecked borrowing, the subsidy crisis, and more. Fixing these distortions was necessary,” he said. But he noted that the timing and sequence were poorly handled. “If proper social support had come alongside the reforms, the impact on poverty would have been less severe,” he added.
Abimbola pointed to slight improvements in Nigeria’s external reserves and hints of easing inflation but said these gains mean little to ordinary Nigerians struggling daily. “We can only hope these pains lead to sustainable gains,” he said.
As the Tinubu administration enters a critical phase, experts agree on the need for balance: between fiscal discipline and social welfare, revenue expansion and economic growth, and macro targets and human dignity. Without this, Nigeria’s path to economic self-sufficiency may continue to leave millions behind.
ADEOLA KUNLE
