Public Sector Deficit Biggest Threat To $1trn Economy Goal – NACCIMA

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Organised Private Sector of Nigeria (OPSN) have warned that Nigeria’s growing public sector deficit poses the most significant threat to achieving the federal government’s $1 trillion economy target by 2030.

Recall that the 2025 budget deficit, estimated at over N13 trillion and recently increased by another N4.5 trillion, raises serious concerns about fiscal sustainability and the crowding out of private sector investment.

Already, the country’s public debt stock reached N144.67 trillion ($94.23 billion) as of December 31, 2024, according to the Debt Management Office (DMO). This represents a 48.58 per cent year-on-year increase from the N97.34 trillion recorded in December 2023.

NACCIMA president, Dele Oye, charged the federal government to adopt and implement a more rigorous public financial management strategy, emphasising the need to prioritise capital over recurrent spending, aggressively expanding the tax base rather than raising tax rates, improving expenditure efficiency, and plugging leakages across all levels of government.

According to him, “While structural reforms are essential, we must confront a hard truth: persistent public sector deficits and continual borrowing, much of it to finance recurrent expenditure, continue to crowd out private investment and exert inflationary pressures. We urge the Federal Government to implement rigorous public financial management by: prioritising capital over recurrent spending; aggressively expanding the tax base rather than raising tax rates; improving expenditure efficiency and plugging leakages, and accelerating the sale or concessioning of underperforming public assets.”

Oye, who is also the chairman of the Organised Private Sector of Nigeria noted, “These are critical steps not only for restoring macroeconomic stability, but for rebuilding investor and business confidence.”

He also commended the federal government, represented by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Central Bank of Nigeria Governor, Olayemi Cardoso, for their candor in acknowledging the formidable macroeconomic and social challenges currently confronting the nation, as reiterated at the just concluded IMF/World Bank Spring Meetings.

The NACCIMA boss further applauded the government’s willingness to collaborate with development partners on job creation and youth empowerment, describing it as timely and commendable.

According to him, “We recognise the government’s laudable commitment to single-digit inflation, job creation, digital infrastructure development, and the ambition to transition to a $1 trillion economy by 2030.”

He however noted that the recently released Africa Pulse report by the World Bank is a stark reminder of the urgent threat of deepening poverty in Nigeria, with the national poverty rate projected to surge to 56 per cent by 2027, adding, “The dramatic growth in the number of Nigerians living below the poverty line, surging inflation, youth migration, and the expanded fiscal deficit, underscore the need for even faster, targeted, and pragmatic policy action.”

On key Areas of Concern and Recommendations, Oye stated, “The Central Bank’s prevailing monetary stance, with commercial lending rates hovering at 30-40 percent, risks stifling entrepreneurship, industrial production, and agricultural expansion.

“This credit environment, while targeting inflation, paradoxically holds the productive sector hostage and suppresses the job creation and innovation capacity of the private sector. NACCIMA, therefore, calls for targeted intervention funding and special credit windows for MSMEs and strategic sectors at concessionary rates to unlock growth, employment, and food security.

On tackling youth migration and insecurity, the OPSN chairman noted that the exodus of skilled youths (Japa) is an ominous trend fueled by economic disenfranchisement and insecurity.

He further stated, “Immediate mass-scale public works, digital skills training, and security sector investments in the hardest-hit zones are non-negotiable. Government must ring-fence funds for youth-targeted entrepreneurship programs and rural enterprise stimulation—especially in agriculture and light manufacturing—to make staying in Nigeria a viable and attractive option.

“While monetary tightening may slow inflation, root causes—such as food supply chain disruptions, energy deficits, over regulations, inconsistent policies, forex volatility, and excessive fiscal injections—must be concurrently addressed. NACCIMA advocates for: – Fast-tracking strategic food importation and logistics support, – Ensuring farmers’ access to affordable input through targeted subsidies, – commitment to the continuous provision of Naira crude to existing local refineries, while accelerating modular refining projects to reduce fuel import dependency.

“We appeal for more structured dialogue with the organized private sector actors in policy design and execution, ensuring policy measures are evidence-based and context-sensitive.”

In concluding, Oye said, “Given the global shift in economic and geopolitical dynamics, with the dominance of the U.S. dollar gradually declining due to reduced U.S. global share, the overuse of dollar-based sanctions, and advancements in digital settlement systems beyond traditional mechanisms like SWIFT, it is crucial for Nigeria to recognize these changes and strategically realign its foreign policy.

“By exploring stronger partnerships and trade ties with emerging economic blocs such as China and the BRICS nations, Nigeria can position itself as a more attractive destination for foreign direct investment. Seizing this opportunity will help diversify our economy, stimulate industrial growth, create jobs, and ultimately reduce poverty, while making Nigeria a key player in the evolving global order.

“NACCIMA acknowledges the bold steps taken by the government under the current reforms, but the short-term socioeconomic pains—including increasing poverty, joblessness, and insecurity—demand urgent, deliberate, and inclusive interventions. Nigeria cannot bank on the patience of its citizens when livelihoods are eroded and aspirations are crushed by economic hardship.

“The time to recalibrate is now: prioritise the productive sector support, rationalise deficit spending, address insecurity, and restore affordable access to credit. With coordinated and courageous action, Nigeria can turn the tide and lay the foundations for shared prosperity, thereby fulfilling the very promise of our economic reforms.”

Oye added, “NACCIMA stands ready, as an indispensable partner, to work with all arms of government and the international community in realising this urgent national imperative.”