Ben Akabueze, the Director-General of the Budget Office of the Federation, has expressed that the proposed N27.5 trillion budget for 2024, awaiting approval in the National Assembly, is considered “too small” to adequately address Nigeria’s economic needs.

While acknowledging the government’s commitment to fiscal responsibility in aligning expenses with available resources, Akabueze stated in an interview on Channels TV that the budgetary allocation is conservative compared to the economic obligations of the government.

“I’m always first to acknowledge that the budget of the Federal Government of Nigeria is way too small relative to our needs and our requirements but it is now a case of cutting out coats according to our cloth rather than our size,” noted Akabueze. He added that the budget’s size is constrained by the limited public revenues available.

Addressing the International Monetary Fund’s (IMF) projection of Nigeria’s economic growth rate, Akabueze stated that the IMF assessment is not entirely based on the economic facts of the country. He added that the government’s projection, as presented by President Bola Tinubu during the budget presentation, is more reasonable than that of the international financial institution.

President Tinubu projected a 3.76% growth rate in the 2024 fiscal year, with an N18.32 trillion revenue target for budget funding. In contrast, the IMF had projected a 3.1% economic growth for Nigeria in 2024. Akabueze defended the government’s projection, asserting that IMF predictions for the country have been inaccurate in the past four years.

“In the last four years, IMF has got it wrong about our projections. Organizations can’t get it right better than the people who have direct responsibility for managing their individual economies. Our actual growth has always beat their projections,” he added.

The N27.5 trillion 2024 budget proposal includes a total aggregate revenue projection of N18.32 trillion and a deficit of N9.18 trillion. It prioritizes capital expenditure at N8.7 trillion and recurrent expenditure at N18.51 trillion.

President Tinubu highlighted that the budget focuses on the well-being of the impoverished, emphasizing healthcare, security, education, and the economy.

However, analysts have voiced criticism toward the budget, despite its limited details. Based on the information released by the federal government, the budget appears to be characterized by lavish government spending, underscoring a lack of sensitivity to the struggles faced by the average Nigerian amidst ongoing economic challenges.

Notably, the projected expenditure for various items such as the Presidential Air Fleet, welfare packages, maintenance, renovations, and other expenses in the 2024 Budget is expected to gulp a staggering N346 billion.

The International Air Transport Association (IATA) has issued a warning to the Central Bank of Nigeria (CBN) about the potential withdrawal of foreign airlines from the Nigerian market if urgent action is not taken regarding the $790 million ticket revenue currently trapped in the country.

Kamil Alawadhi, IATA Regional Vice President, Africa & Middle East, conveyed this concern on Thursday during a media presentation at the IATA Global Media Day in Geneva, Switzerland.

Alawadhi stated that Nigeria currently holds the highest amount of airline-trapped funds globally, totaling $792 million. He said there is a need for engagement between relevant parties, including the CBN Governor and the aviation minister, to address the issue.

Despite the CBN’s intervention in 2022, releasing $265 million to affected airlines, the challenge, which is significantly influenced by Nigeria’s ongoing forex crisis, persists.

Last November, Emirates Airlines suspended its flight operations to Nigeria for the second time due to the failure to repatriate the company’s earnings trapped alongside other foreign airlines’ funds. Emirates’ trapped fund at that time was $85 million.

The IATA VP urged proactive measures to prevent further withdrawals by foreign carriers.

According to him, Nigeria tops the list of countries with the highest amount of airlines’ blocked funds, totaling $792 million. Following closely are Egypt with $348 million, Algeria with $199 million, the AFI zone with $183 million, and Ethiopia with $128 million.

The VP noted that while Ethiopia has devised a plan to settle the debt, Nigeria has not taken any action to address its blocked funds.

“Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising. The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward. I have not been able to engage with Nigeria’s CBN Governor.

“He said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter,” he said.

The IATA VP expressed concern that airlines in Africa are collectively owed $34 million, which is currently blocked. The delay in releasing these funds has led to depreciation, resulting in a loss of $10 million. This situation is deemed unfair by the airlines, as they have fulfilled all financial obligations to airport operators, including carrying Nigerian officials on their flights. He lamented that despite meeting their dues, the airlines find themselves unable to access the funds rightfully owed to them.

The IATA chief commented on Nigeria’s aviation sector, highlighting significant challenges faced by airlines in the country. He mentioned the burden of a 25 percent interest rate on loans, exorbitant airport taxes, and insurance premiums six times higher than global standards. These factors collectively hinder the profitability of Nigerian airlines.

Al-Awadhi disclosed that any airline operating beyond Nigeria’s borders operates with lower operating costs and offers more competitive prices compared to domestic Nigerian carriers.

Furthermore, he pointed out that despite Lagos and Abuja airports having infrastructure that falls short of optimal standards, they are ranked as the most expensive gateways in the region, exacerbating the difficulties faced by airlines operating within the country.

“… Nigeria has two most expensive airports; their fuel is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.

“The interest on loans is 25%. It is ridiculous. It is the highest interest I have ever seen. When you set up these airlines, you are already disadvantaged. Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines. You can see why it is difficult for African airlines to make profit,” he said.

Nevertheless, Al-Awadhi conveyed IATA’s unwavering commitment to pinpointing and mitigating the factors that contribute to the elevated operating costs in Nigeria. The organization aims to work collaboratively to create a more favorable and conducive environment that enables airlines to prosper within the country.

“We are expecting that the operating costs of the African airlines will be lowered and they can become profitable”, he said.