Frank Talk on Nigeria’s 2026 Budget Proposal

This Sunday, I got the chance to watch the Nigerian 2026 budget presentation by the President and I’m worried about what would unfold in 2026 and also can’t wait to see the allocation and projects for agriculture in the appropriation bill and final budget with the present financial and economic realities.

The budget only grew by 5% to ₦58.18 trillion. Unlike for 2026, the national budget had increased year-on-year in 2024 and 2025 by 31% and 57%.

But size does not necessarily translate to impact, however, it could allow for more resources for project executions.

Yet, revenue expectation saw a 15.8% revision to ₦34.33 trillion. Also, while debt servicing increased modestly by 8.3% to ₦15.52 trillion, the budget deficit soared by 68.7% to ₦23.85 trillion.

The financial realities present themselves.

The Nigerian oil benchmarked at $75/barrel recorded lower proceeds and still struggles to find buyers with glut and a below market price.

Non-oil revenue (₦15.69 trillion between January and August) came to the rescue, constituting 75% of total revenue for the year.

And even when it surpassed the government’s target of it to account for 43.7% of expected revenue and realized a 40.5% increase from 2024, without commensurate oil revenue contributions a revenue target shortfall emerged.

In spite of the FG announcing in September its achievement of revenue target for 2025, the finance minister reported a ₦30 trillion revenue shortfall. People were befuddled.

Total revenue for the nation reached ₦20.59 trillion in August . The FG has a 52.68% share of this, amounting to ₦10.8 trillion. Subtracting this from a ₦40.8 million revenue target then gives ₦30 trillion.

But in the same September the FG revenue was ₦18.9 trillion earnings (derived from the ₦10.8 trillion share, additional revenue share in September, and other independent earnings), and when the revenue target is calculated for the 9 months against the full year, ₦30.5 trillion is derived. ₦18.9 trillion of this gives 61%. This percentage is what the President would later inform the house during budget presentation, and without scrutiny, gives the view that most of the revenue target has been met and will be met by the end of year.

All this explains the confusion and also the 2026 budget deficit.

It also makes clear the present administration’s aggressive taxation. Federal revenue does not equal FG revenue, the latter only has a share of the former, although huge. Hence, a tighter squeeze and more pockets could get the FG a little more revenue.

With these realities, the proposed 2026 budget is to be anchored on fiscal discipline, and focus on important and productive sectors, strict meeting of revenue and project targets, creating an enabling operating and investment environment, and non-oil diversification.

For instance, oil production bpd was revised to 1.84 million bpd from 2.06 trillion last year and oil price/barrel to $64.85.

Largest allocations thus went to these sectors: Defense and Security (₦5.41 trillion), Infrastructure (₦3.56 trillion), Education (₦3.52 trillion), Health and Social services (₦2.48 trillion).

These sectors are truly important and as the President explained in his budget presentation: security will enable investment to thrive, educated and healthy citizens will drive productivity, and infrastructure will promote opportunities and enterprises at scale.

However, despite the reality-informed actions, there are reasons to believe things could be contrary and especially in the matters of diversification and leading drivers of non-oil revenues.

While the proposed budget’s oil proportion reduced to ₦12.23 trillion compared to ₦21 trillion in 2025, the commodity still constitutes 35% of projected revenue and which exemplifies oil’s traditional large share of revenue and budget.

Even when the President addressed agriculture and communicated the focus on reforms that would encompass inputs, energy, transport, mechanization, irrigation, storage, market, value chain and industrialization, and unlocking financing, and which projects require huge financing for their actualization. However, unlike the key sectors of focus, there is likelihood that agricultural allocation could fall under the traditional range below 1 trillion.

In the FGN 2026 Abridged Budget Call Circular a total of ₦18.3 trillion (recurrent and capital expenditures) was the proposed budget for MDAs (Ministries, Departments, and Agencies; they form and receive allocations of sectors), 15% lower than previous year.

When the total allocation of the key sectors of the 2026 budget ₦14.97 trillion are removed from the ₦18.3 trillion, there is a ₦3.33 trillion remainder, and which the remaining many sectors -Agriculture inclusive -must share.

However, agriculture has been one of the leading drivers of and contributor to Nigeria’s non-oil revenues, and especially via exports. For Q1-Q3 2025 it realized ₦3.75 trillion earnings which constituted 40% of total non-oil exports (₦9.2 trillion) and ~8% of total exports (₦46.93 trillion). This earnings is 4.5 times the ₦826.5 billion allocation to agriculture of the 2025 budget.

In Q3 2025 agriculture formed 32.3% of non-oil GDP. Non oil-GDP represented about 96% of total GDP throughout 2025. In the same quarter agriculture contribution to GDP reached 31.21%, equivalent to about $90 billion.

The sector’s contribution (to non-oil revenue) could even be higher but is impeded by infrastructure, low value addition, production cost and productivity challenges, seasonal disruptions, poor quality standards and competitiveness, which decimate the possibility for huge and consistent high quality value-added products for exports and higher proceeds.

These factors and others -informal and subsistence farming, multiple local levies, tax exemptions and incentives (contestable especially important to support production and food security), climate vulnerabilities and insecurity also limit agricultural contributions (below 5%) to non-oil tax revenues that occupy largest portion of the non-oil revenues.

The proposed budget’s special consideration for infrastructure to support agriculture and the intent to support ventures to scale and be productive and profitable is timely but would require necessary financing as has been previously mentioned but which looks gloomy, looking at the drop in infrastructural allocation against previous year, the percentage of infrastructural allocation that would benefit agriculture, and what percentage of agricultural allocation would go to infrastructure.

Availability of the required budgetary allocations is a challenge to sectors to attain expected performance.

Despite the special attention to infrastructure in the 2026 budget, its allocation declined to ₦3.56 trillion from ₦4.06 trillion. Even for the other sectors in the special focus category, except for Defense and Security which saw a 10% increase to ₦5.41 trillion, education and health maintained ₦3.52 trillion and ₦2.48 trillion respectively, the same as in 2025.

Nonetheless, the percentage allocations of every of these sectors have been failing and still fails currently to meet the official and/or unofficial recommended percentage of budget or GDP as applicable to respective sectors, country or region-specific, for expected performance.

Revenue must then increase to provide the necessary allocations.

The government needs to expand its revenue base by ensuring an enabling environment that supports business operation, growth, and formalization, promoting wealth creation that supports government revenue. Provisions must also be made to attract private capitals, FDI and FPI, and remittances and channeled into economic activities and critical infrastructure to drive diversification, production (than consumption), manufacturing of high quality value-added products for better and higher earnings. Also crucial, to complement this, is prudent spending and debt management, and productive allocation.

It is my hope that these thoughts would be considered and necessary amendment would be made in the finalized and approved budget.