Nigeria battled its way out of the grip of the recession in Q2-17, no thanks to the slow budget passage. Much in line with recent history, Nigeria 2017, the budget for recovery and growth was not passed into law until June-17 (6 months after submission to the National Assembly).
Set in the foreground of the nation’s exit from recession, the 2018 budget was prepared with the baseline assumption to consolidate on the gradual recovery in the broader economy. Oil prices have since steadied around $60/b, better than the benchmarked $45/b and other keys macroeconomic variables have been characterized by tailwinds. Although the budget was submitted to the National Assembly late in Nov-17, the authorities had hinted at the determination to pass the budget earlier than before
However, 4 months since the presentation of the budget not much has been heard with a tone of certainty as to when the budget will be passed into law. Sadly, the narrative remains the same old story. While the economy is on track to consolidate on 2017 recovery, we believe the usual slow passage and poor implementation of budgets, which have marred budget performance in Nigeria over the years are likely to remain a bottleneck. In line with the historical trend, the late passage of the budget implies that much of the CAPEX would be pushed to next year, setting the tone for another abysmal budget performance in 2018.
UNITED CAPITAL NIGERIA