By Alexander Ekemenah 

The recent release of the 2025 Third Quarter Budget Implementation Report by the Federal Government of Nigeria has come under close scrutiny by the Alliance for Economic Research and Ethics.

AERE’s assessment of the Q3 2025 Budget performance titled “Nigeria’s Q3 2025 Budget Report: A Glass Half-full, but Leaking – A Profound Economic Assessment” was released to the public early June.

AERE praised the courage of the FGN in releasing the Implementation Report in May even though it was long overdue since October 2025.

AERE praised the transparency involved in the preparation of the Implementation Report for its multiple advantages. This includes signalling the global investment community that Nigeria remains committed to the rules-based order of public financial management; providing a forensic baseline for FDI attraction and retention; and serving as a diagnostic tool for domestic investors to know where to invest their resources.

AERE’s assessment report took the Implementation Report item-by-item for focus analysis of the facts behind the figures.

On GDP growth rate, AERE noted that while the Federal Government’s Implementation Report proclaimed 5.84% for the oil sector and non-oil sector by 3.91%, and services sector by 53.02%, it shows clearly that Nigeria’s services growth is increasingly concentrated in telecommunications, financial services, and digital platforms.

“These are sectors with high capital intensity but relatively low labour absorption. They enrich the few who own the towers and the licences, while the many who till the soil and hawk the wares remain tethered to subsistence.

According to AERE, the manufacturing sector, the true engine of mass employment and inclusive prosperity, is barely visible in this growth matrix, while the agricultural sector was barely able to capture 3.79%.

“This is not inclusive growth; it is enclave growth, growth that builds gleaming towers in Lagos and Abuja while the rural hinterlands sink deeper into quagmire of poverty.”

On inflation, AERE pointed to what it called statistical mirage and base year deception. While commending the reduction of inflation from the height of 20.12% in August 2025 to 18.02% in September 2025, including the year-on-year lower average of 14.68 percentage points from 32.70% recorded in September 2024.

AERE captures the confession of the Federal Government itself that admitted that “the significant decline in the food inflation figure is technically due to the change in the base year.”

AERE noted that this is not a footnote by the Federal Government but “a fiscal earthquake”

“When a government trumpets a 14.68 percentage point decline in inflation that is largely an artifact of statistical methodology rather than a reflection of lived economic reality, it risks what economists call “base year illusion”.

“The month-on-month inflation rate in September 2025 was 0.72% still positive, [but] still eroding purchasing power. The food inflation rate, at 26.87% remains punishingly high for a population where over 63% are classified as multidimensionally poor.

“The inflation numbers are genuine in the sense that the NBS calculated them correctly. But they are misleading as a narrative of economic relief. The government must resist the temptation to weaponise statistical rebasing for political applause.”

On oil production, the FG’s Implementation Report says that average daily oil production was 1.64 million barrel per day (mbpd) in Q3 2025, which is below the budget benchmark of 2.12mnpd but above the 1.47 mbpd recorded in Q3 2024.

But AERE asserts that “for years, the Nigerian National Petroleum Company Limited (NNPCL), and the Ministry of Petroleum Resources have made bold claims about “targeting” 2 million barrel per day, about “resolving” pipeline vandalism, about “curbing” crude oil theft.

“The 2025 Budget itself was built on the optimistic assumption of 2.12 mbpd.

“Yet the reality, quarter after quarter, is a production level that languishes between 1.4 and 1.7 mbpd.

“The gap between benchmark and actual 0.48 mbpd, or roughly 22.6% below target represents not merely a statistical deviation but a fiscal hemorrhage.

“At an average oil price of USD68.50 per barrel (below USD75 benchmark), the revenue shortfall from oil alone in Q3 2025 was a staggering N7.88 trillion, or 61.80% below the quarterly projection.”

AERE asks the fundamental question: If the government has been “addressing” crude oil theft and pipeline vandalism for years, why does production remain structurally below benchmark?

The FG’s Implementation Report admitted that “Nigeria’s oil sector faces significant challenges including persistent crude oil theft, pipeline vandalism, security challenges leading to production decline and supply disruptions”

According to AERE, this is not a new diagnosis; it is a chronic condition. The government’s repeated claims of progress are beginning to resemble the placebo prescriptions of a physician who has run out of cures.”

On non-oil revenue, AERE praised the FG’s Implementation Report for an encouraging narrative.

“Non-oil revenue of N5.25 trillion in Q3 2025 exceeded projections, driven by improved VAT, Company Income Tax, Electronic Money Transfer Levy, and Independent Revenue.

“The FGN’s share of Company Income Tax was N1.31 trillion (23.34% above target), VAT was N298.55 billion (22.74% above target), and Independent Revenue reached N1.52 trillion, a staggering 147.24% above the quarterly estimate.

“This is not merely good news; it is a structural validation. It confirms that the administrative reforms in tax compliance, customs automation, and independent revenue collection are bearing fruit. The Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) deserve commendation for this performance.”

However, AERE cautions that economic analysis should be separated from public relations. “The Aggregate FGN revenue of N7.70 trillion was still 24.64% below the quarterly projection of N10.22 trillion.

“The oil revenue shortfall of N2.80 trillion (53.26% below target) was the primary culprit.

“The government is running a fiscal engine where one cylinder (non-oil) is firing robustly while the other (oil) is misfiring chronically.”

AERE asserts that the debt service-to-revenue ratio is the elephant in the room.

“Total debt service in Q3 2025 was N3.41 trillion. Against total FGN revenue of N7.70 trillion, this implies that 44.3% of every Naira the government collected went to servicing dents.

“This is not sustainable. It is not even borderline. It is a fiscal strait jacket that constrains the government’s ability to invest in the very infrastructure and human capital that could generate the inclusive growth Nigeria desperately needs.”

The Excess Crude Account was the most damning aspect of the Implementation Report as well as a source of national embarrassment, according to AERE assessment.

“The account had an opening balance of USD0.473 million as of July 1, 2025. There was no accrued interest, no inflow, and no outflow. The closing balance remained USD0.473 million.

“For a nation that once boasted an ECA balance of over USD120 billion in the mid-2000s, this is not merely depletion; it is fiscal extinction.

“The ECA was designed as a stabilisation fund, a rainy-day reserve to cushion against oil price volatility.

“Today, it is an empty vault, a symbol of a nation that has consumed its seed corn and now faces famine with bare cupboards.”

AERE assessment notes that the total capital budget for 2025 is N23.44 trillion.

“By Q3 2025, the prorated expectation would be roughly N5.86 trillion. The actual release of N780.28 billion represents approximately 13.3% of the prorated capital expectation.

“This is not prioritising; it is capital starvation.”

The FG’s Implementation Report admitted that “cash management bottlenecks including bottom-up cash planning delays continue to slow project execution and raise project costs.”

This, according to AERE,  is a self-inflicted wound. “When a government acknowledges that its own cash planning mechanism is a bottleneck, it is confessing to a self-inflicted wound.

“The “bottom-up” approach, in theory, ensures that MDAs request funds only when they are ready to execute. In practice, it appears to have become a bureaucratic quagmire where projects die of financial asphyxiation before they reach the construction stage.”

AERE submits that the government of Nigeria, under the leadership of President Bola Ahmed Tinubu, “must recognise that budget implementation is not arithmetic; it is governance. And governance, at its core, is about translating fiscal allocations into human flourishing.

“The government must move beyond the “strategic revenue growth initiatives”, a worthy but insufficient framework and build a revenue architecture that includes:

• Property Taxation: Nigeria’s property tax collection is among the lowest in the world. The digitalisation of land registries and the deployment of geographic information system (GIS) for property valuation could unlock billions in untapped revenue
• Digital Economy Taxation: The booming fintech, e-commerce, and gig economy sectors operate in a tax net that resembles a fishing trawler with gaping holes. A comprehensive digital services tax, aligned with OECD guidelines, is long overdue
• Solid Minerals: The [Implementation] report shows FGN’s share of Minerals and Mining revenue of N8.14 billion in Q3 2025, 110.33% above the quarterly projection of N3.87 billion. But this is a drop in the ocean. Nigeria’s solid minerals sector is estimated to hold trillions of Naira in value. The Ministry of Solid Minerals Development is grossly under-resourced to perform its mandate.

On recurrent expenditure and capital spending, AERE admonishes government to confront the uncomfortable truth about this.

“Nigeria’s budget is structurally misaligned with its development needs. The recurrent expenditure such as salaries, overheads, administrative costs consume resources that should be building roads, powering factories and educating children. The IPPIS system, while useful for controlling personnel costs, is not a substitute for right-sizing the federal workforce.”

AERE recommends that a “Zero-based Recurrent Review”, a radical audit of every recurrent line item, from the dirigisme of “how much did we spend last year” to a more cost-effective paradigm of “what is the minimum necessary to deliver this service”. The differential in savings, potentially hundreds of billions, should be ploughed into a permanent “Nigerian Inclusive Growth Fund” scheme dedicated to labour-intensive infrastructures: rural roads, solar electrification, irrigation schemes, and primary healthcare centres.

On debt trap, AERE counsels a three-pronged strategic approach:

• Concessional Funding: The government should maximise concessional funding from the World Bank, African Development Bank, and bilateral partners, even if it means accepting stricter conditionality
• Debt-for-Development Sawps: Government should begin to operationalise this method, converting commercial debt obligations into climate adaptation and renewable energy investments
• Domestic Debt Restructuring: The N61.99 trillion in FGN Bonds (79.67% of domestic debt as of June 2025) offers an opportunity for maturity extension and interest rate reduction. The CBN, as the primary holder of domestic debt, should engage in a transparent restructuring dialogue that reduces the debt service burden without triggering market panic.

AERE also recommends to the Federal Government to move away from mere extraction of crude oil to value addition, noting that a situation where “the chronic underperformance of oil production or 1.64 mbpd against a 2.12 mbpd benchmark is not merely a revenue problem; it is a sovereignty problem.

AERE notes that “a nation that cannot secure its primary source of foreign exchange is a nation that has ceded economic control to vandals, thieves, and systemic neglect.”

AERE urges that “government must move beyond the rhetoric of “addressing” oil theft and deploy military-civilian joint task forces with aerial surveillance, drone technology, and real-time pipeline monitoring.

“More importantly, Nigeria must pivot from crude oil export to domestic refining and petrochemical value addition.”

AERE notes that Dangote Refinery represents a template that should be adopted by the Federal Government.

“The government should incetivise through tax holidays, guaranteed off-take agreements, and infrastructure support for the establishment of modular refineries across the Niger Delta. This creates jobs, reduce import dependency, and captures value that currently leaks to foreign refineries.”

On poverty reduction, moving from programmes to pathways, AERE rejects the incremental approach where the 2025 budget allocation of pittance whereas over 84 million people still live in poverty and where 63% are multidimensionally poor.

“Nigeria needs a “Universal Basic Infrastructure” guarantee: every Nigerian citizen, regardless of geography, is entitled to a minimum package of clean water, primary health care, basic education, and all-weather road access within 5 kilometres of their homes. This is not charity; it is human capital investment.

“The government should consolidate the fragmented poverty programmes into a single “Nigerian Social Investment Corporation” with transparent governance, biometric beneficiary tracking, and independent audit.”

AERE notes that the current duplication and leakage are not merely inefficient; they are immoral.

Finally,  AERE recommends  a movement away from delay to discipline regime for a new transparency covenant, noting that the eight month delay in releasing the FG’s Q3 2025 Budget Implementation Report is not a bureaucratic hiccup but a breach of statutory trust: Section 50 of the Fiscal Responsibility Act mandates publication within 30 days of each quarter’s end; noting further that the government’s failure to comply repeatedly, across multiple quarters erodes the very credibility that the report seeks to establish.

AERE therefore calls upon the government to adopt a “Fiscal Transparency Charter” with the following explicit non-negotiable commitments:

• Quarterly budget implementation within 30 days, with automatic sanctions for delay
• Real-time publication of daily Federation Account allocations
• Citizen-accessible dashboards for capital projects tracking, with geotagged photographs and expenditure data
• Annual independent audit of the Excess Crude Account and Sovereign Wealth Fund.

In conclusion, AERE notes that the Q3 2025 Budget Implementation Report is a document of contradictions that reveals an economy that is growing in aggregate but fragmented in distribution; showing non-oil revenue triumphing while oil revenue is withering; celebrating inflation moderation while at the same time confessing statistical artifice; and finally, promising capital prioritisation while delivering capital starvation.

“Nigeria’s path to inclusive growth requires a fiscal revolution not merely in the size of the budget, but in the purpose of public expenditure.

Every Naira spent must be interrogated: Does it reduce poverty? Does it create jobs? Does it build the human capital of the next generation? Does it strengthen the institutions that make accountability possible?

“The budget is not a document of numbers. It is a covenant of hope, a promise that the State will deploy the collective resources of its people toward their collective flourishing.

“When that covenant is honoured, growth is not merely a statistic; it becomes a lived reality in every home, every farm, every factory, and every classroom across this great nation.”