2023 Budget Newsletter and Macroeconomic Outlook

2023 Federal Government of Nigeria Budget: What do businesses need to know about the Budget and the macroeconomic outlook for 2023?

Nigeria continued on the path of economic recovery in 2022 with an overall real Gross Domestic Product (GDP) growth of 3.1%. This came on the heels of the country’s recovery from a pandemic-induced recession in 2020 with a GDP growth of 3.4% in 2021. However, indices show that the growth recorded in 2022 was not broad-based, as the country’s economic expansion was solely driven by the non-oil sector, which contributed 94.33% to the nation’s real GDP and grew by roughly 5%.

The oil sector continued to underperform in 2022, as it contributed only 5.67% to real GDP during the period and contracted by almost 20%. The sector’s dismal performance, despite the surge in crude oil prices in 2022, was largely due to the high incidence of crude oil theft and pipeline vandalism in the country during the year. These issues resulted in the country recording an average crude oil production of 1.2 million barrels per day (mbpd), 25% lower than the budgeted crude oil production target of 1.6 mbpd.

Expectedly, the decline in crude oil production volumes had negative budgetary implications, as the Federal Government of Nigeria (FGN) fell 64.3% short of its prorated 2022 oil revenue projection of ₦1.643 trillion for the period ended November 2022.

It was against this backdrop that the National Assembly passed the Appropriation Bill, 2023 (aka 2023 FGN Budget) for presidential assent. The Bill, which seeks to appropriate a total expenditure of ₦21.83 trillion, was signed into law on 3 January 2023, thereby sustaining the restoration of a predictable January to December budget cycle.

This publication reviews Nigeria’s economic performance in 2022 and the FGN’s 2023 Budget of Fiscal Consolidation and Transition, and discusses the potential impact of the budget allocations, policy changes and other relevant developments on various sectors of the Nigerian economy.