Budget delay affects businesses - experts say

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Challenges of Budget Delays and Economic Uncertainty

The delay in presenting the 2026 budget is causing significant difficulties for businesses across Nigeria. Stakeholders and experts have highlighted that many companies rely on the annual budget to make projections and plan their operations. The absence of a clear budget makes it challenging for businesses to prepare for the upcoming year, leading to uncertainty and potential economic setbacks.

President Bola Ahmed Tinubu has recently requested the Senate's approval of the 2026-2028 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). This framework projects that the federal government will generate N34.33 trillion in revenue in 2026. However, the MTEF must be approved by the National Assembly at least four months before the fiscal year begins, according to the Fiscal Responsibility Act of 2007. Despite this requirement, the MTEF is being presented less than three weeks before the end of 2025, raising concerns about the timeline and process.

Business leaders and experts have criticized the current budgetary system, urging the president to return to the January-to-December budget cycle. Professor Adebayo Adams, immediate past Chairman of the National Association of Small and Medium Enterprises (NASME) in Lagos State, emphasized that the haphazard implementation of previous budgets is detrimental to the economy. He warned that the lack of clarity and timely budget presentation could lead to increased uncertainty and fear among investors.

Adams also pointed out that 2026 will be a year of intense political activities, which could further complicate the economic landscape. He stressed that without a clear budget, small businesses would struggle with inflation and other economic challenges. "The economy is going to face a lot of challenges," he said, adding that the current system is not sustainable and needs urgent reform.

Another business leader, who spoke anonymously, highlighted that many small businesses anchor their annual planning on the budget. He expressed concern that the lack of a clear budget is creating a major issue for businesses, as they rely on it for projections and opportunities.

Economic analyst Samuel Caulcrick, however, expressed optimism about the new tax laws and their potential to increase government revenue. He argued that the new tax reform would allow the government to borrow less while providing more credit to the private sector. "The greatest thing the government has done is that tax reform and I believe it would open up opportunities for the private sector," he said.

Despite these positive outlooks, there are still concerns about the state of the 2025 budget. The federal government had urged all Ministries, Departments, and Agencies (MDAs) to roll over 70% of their 2025 capital budget to 2026. However, there have been no records of capital allocation released to MDAs for the 2025 budget, raising fears of multiple budgets operating simultaneously.

Professor Gbolahan Bello, an economic expert from the University of Ilorin, warned that Nigeria's recurring problem with public finance extends beyond late budget passage. He noted that the failure to release funds on time leads to low implementation and weak outcomes across key sectors. "Many sectors end up receiving below fifty percent of their allocation," he said, emphasizing that delayed execution affects investors, producers, and service providers.

Bello also pointed out that the rise in revenue has not translated to relief for citizens or businesses. He stressed that the economy lacks the level of certainty required for long-term decisions, making it difficult for stakeholders to plan effectively.

On the recently approved MTEF by the Federal Executive Council, Bello explained that the three-year fiscal plan provides guidance on revenue assumptions, expenditure limits, and borrowing ahead of the detailed budget. However, he noted that several indirect subsidies still exist within the system, complicating the government's fiscal outlook.

In conclusion, the challenges of budget delays and economic uncertainty continue to affect businesses and the overall economy. While there are efforts to improve the budgetary process, the need for timely and transparent execution remains critical for sustainable economic growth. Until the budget is backed by disciplined releases and timely execution, Nigeria will continue to face low performance regardless of when the document is passed.