9 November 2017
Global Tax Alert
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Nigeria presents
2018 Budget
Executive summary
On 7 November 2017, Nigerian President Muhammadu Buhari formally
presented the 2018 Budget proposal (the budget) to the joint session of the
National Assembly for approval. The NGN8.6 trillion budget, titled The Budget
of Consolidation is anticipated to be higher than the 2017 budget by about 16%,
with the President stating that the budget is expected to consolidate on the
gains of the 2017 budget, noting that it will help to implement the economic
recovery and growth plan of this administration aimed at progressively reducing
deficit and borrowings.
The budget is projected at a crude oil benchmark price of US$45 per barrel at
an exchange rate of NGN305 to a dollar and an estimated 2.3 million barrels
per day as against US$44 per barrel under the 2017 budget.
This Alert summarizes the key budget provisions.
2 Global Tax Alert

Detailed discussion The Government intends to continue to pursue its goal of

revenue diversification by allocating a larger share of the
Highlights total revenue to non-oil revenue.

Budget parameters 2018 2017 Variance Infrastructural development

Oil production (mbpd) 2.3 2.2 5% Capital expenditures are expected to be financed by a budget
of NGN2.43 trillion in 2018. This reflects an 8% increase over
Price per barrel (US$) 45 44 2% the 2017 figure. The Government intends to continue its
focus on the rapid development of infrastructure especially
Projected GDP growth (%) 3.5 2.5 40%
rail, roads and power.
Average exchange rate 305 305 0%
The Government has also planned to increase investments in
(NGN/US$)
agriculture to attain food security and reduce importation.
Revenue (NGN Trillion)
Road and Rail
Aggregate revenue 6.61 5.08 30% Work is scheduled to continue on key strategic roads with
Oil revenue 2.44 1.99 23% the Federal Government able to construct or rehabilitate
about 776-kilometer roads in 2017. The construction of the
Non-oil revenue 3.32 1.37 142% Abuja metro line had attained 98% completion and work has
commenced on the Ajaouta-Itakpe rail line which is expected
Independent revenue 0.85 0.81 5%
to be concluded by September 2018.
Expenditure (NGN Trillion)
Key projects to be implemented in the sector in 2018 include:
Aggregate expenditure 8.61 7.44 16% a. NGN10 billion for the second Niger Bridge
Capital expenditure 2.43 2.24 8% b. NGN300 billion for the construction and rehabilitation of
Non-debt recurrent 3.49 2.98 17% strategic roads
expenditure
Power
Budget deficit 2.00 2.36 15% The country’s power sector is expected to witness several
Fiscal deficit (% of GDP) 1.77 2.14 17% reforms targeted at improving power generation, transmission
and distribution.
External borrowings 0.84 1.07 21%
Additional steps are being taken to reform the power sector
Internal borrowings 0.84 1.25 33% with the Federal Government sourcing for alternative means
of power. Agreements have been signed by the Government
Fiscal balance with solar companies in a bid to promote green energy.
The projected fiscal deficit for 2018 is put at 1.77% of Gross The first African Sovereign Green Bond, proposed by the
Domestic Product (GDP). This deficit, resulting in a proposed Government, is expected to be used to finance renewable
cumulative amount of NGN2.005 trillion, is expected to be energy projects.
financed by domestic borrowing of NGN8.49 billion and
Key projects to be implemented in the sector in 2018 include:
NGN8.49 billion from external sources.
a. NGN9.8 billion for the Mambilla hydro power project in
Tax revenue Taraba state, including NGN8.5 billion as counterpart
Tax revenue from non-oil is anticipated to increase from funding
NGN1.37 trillion in 2017 to NGN3.32 trillion in 2018. b. NGN12 billion counterpart funding for earmarked
However, tax revenue from oil is expected to increase from transmission lines and substations
NGN1.99 trillion in 2017 to NGN2.44 trillion in 2018.
 Global Tax Alert 3

Agriculture Implications
To develop infrastructure for the production and processing
Based on certain parameters in the proposals, it is evident
of crops in the agricultural sector, the Federal Government
that the 2018 budget is centered on the reinforcement of
plans to increase investment in agriculture by establishing
the gains of the 2017 budget which was aimed at reducing
six crop processing zones in 2018.
the country’s dependence on oil revenue and imports. It is
projected that by shifting the country’s dependence to non-oil
Consolidating on the Social Intervention Program
revenue, Nigeria’s economy will be steered to the path of
A NGN500 billion allocation for the Social Intervention steady growth.
Program has been retained, with NGN100 billion from the
allocation set aside for the Social Housing Program. This is To achieve this, the Government has proposed its plans to
to demonstrate the Federal Government’s commitment to continue to:
pursue a gender-sensitive, pro-poor and inclusive growth • Develop infrastructure
catering to the most vulnerable. • Increase investments in agriculture to attain food security
and reduce importation
Regional spending priorities for Peace, Security
• Identify alternative means of funding new projects by
and Development
continuing to pursue public private partnership
To maintain peace and security in the Niger Delta, in order
• Increase power generation with the Government’s focus on
for economic and social activities to thrive, NGN65 billion
alternative sources of energy, thereby ending the nation’s
has been retained in the 2018 Budget for the Presidential
longstanding dependence on oil revenues
Amnesty Program. Furthermore, capital provision for
the Ministry of Niger Delta has been increased from the
NGN34.20 billion provided in 2017 to NGN53.89 billion.
4 Global Tax Alert

For additional information with respect to this Alert, please contact the following:

Ernst & Young Nigeria, Lagos

• Abass Adeniji abass.adeniji@ng.ey.com
• Akinbiyi Abudu akinbiyi.abudu@ng.ey.com
• Temitope Samagbeyi temitope.samagbeyi@ng.ey.com
• Chinyere Ike chinyere.ike@ng.ey.com
• Oluwatumininu Familusi oluwatumininu.familusi@ng.ey.com
• Louisa Abumere louisa.abumere@ng.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg
• Justin Liebenberg justin.liebenberg@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
• Rendani Neluvhalani rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York
• Silke Mattern silke.mattern@ey.com
• Dele A. Olaogun dele.olaogun@ey.com
• Jacob Shipalane jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

• Elvis Ngwa elvis.ngwa@ey.com
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