Akwa Ibom’s budget of consolidation and expansion for 2025 presents an ambitious plan. Experts say its success will depend on the state’s ability to navigate a challenging economic environment.
Governor Umo Eno’s ₦955 billion budget for 2025, termed the “Budget of Consolidation and Expansion,” marks a 3% increase from 2024’s ₦923.462 billion. This raises concerns about the state’s capacity to sustain such an increase amidst economic challenges.
The 2025 budget reflects a slight increase of ₦31 billion from the 2024 fiscal year. Given the current state of Nigeria’s economy—where inflation has jumped to 33.88% and the GDP growth rate is a modest 3.68%—this increment seems insufficient to address the deepening economic difficulties.
In 2024, despite a larger budget size of ₦923 billion, Akwa Ibom faced significant hurdles in revenue generation. Oil revenue fluctuations and limited internally generated revenue (IGR) reportedly affected the state’s ability to meet its budgetary goals. Even with the recent reactivation of the Port Harcourt Refinery, there is no certainty when it comes to global oil pricing.
Akwa Ibom’s Budget of Consolidation: Between 2025 and previous years
In 2023, the state’s budget was pegged at ₦715 billion, a significant jump from the ₦633 billion budget of 2022. Despite the rise, 2023 faced challenges with revenue shortfalls, particularly in the oil sector, where production fell below projections.
The state’s IGR, which was set at ₦80 billion for 2023, only reached ₦67 billion. In comparison, 2025’s budget of ₦955 billion seems more ambitious, but whether Akwa Ibom can effectively increase its IGR or overcome oil revenue volatility is still uncertain.
The 2025 budget assumes oil prices will remain stable at $75 per barrel and that production will average 2.12 million barrels per day. However, these assumptions are optimistic, given the volatility of global oil markets. In 2023, despite a similar oil price projection of $70 per barrel, actual oil prices fluctuated, and Nigeria’s oil production remained below target due to pipeline vandalism and other operational issues.
An economist, Dominic Udom says, “The state’s heavy reliance on oil revenue makes these projections risky. Oil prices are unpredictable, and a drop could significantly impact the budget.” A major dip in oil prices, for example, could lead to a major shortfall, undermining the state’s fiscal targets.
Recurrent expenditure: The weight of bureaucracy
The allocation for recurrent expenditure in the 2025 budget is ₦300 billion—approximately 31% of the total budget. This figure is higher than the ₦270 billion set aside for recurrent expenditure in 2024, highlighting an increasing trend of bureaucratic spending. While such spending is essential for the state’s daily operations, it often limits the resources available for capital projects, which are key for long-term development.
Looking back, the recurrent expenditure in 2023 was ₦240 billion, which also accounted for a significant portion of the budget. The increased allocation in 2025 could raise concerns that funds intended for infrastructure and welfare might be diverted toward salaries, allowances, and operational costs.
As local political analyst Idongesit Essien points out, “A high recurrent budget may stifle the development of critical sectors like health and education, which require more targeted funding.”
Is Akwa Ibom’s Budget of Consolidation implementable?
The 2025 budget allocates ₦655 billion for capital expenditure, which represents a substantial 69% of the total outlay. This is a marked increase from the ₦603 billion, which government allocated for capital expenditure in 2024. However, while this is a positive shift towards development, Akwa Ibom has struggled in the past to meet its capital expenditure targets.
In 2024, government fully utilised only about 60% of the capital expenditure, with several infrastructure projects experiencing delays or cost overruns. These challenges highlight concerns about whether the government can meet the ambitious capital expenditure targets for 2025. Mrs Ogechi Etim, a project management expert, notes, “The budget for capital projects is encouraging, but the state must focus on effective implementation to avoid underperformance as seen in previous years.”
The need for non-oil sources
A critical issue with Akwa Ibom’s budget of consolidation is its continued reliance on oil revenue. In 2024, oil revenue contributed approximately 70% of the state’s total revenue, a figure that has remained relatively unchanged for several years. Despite attempts to improve internal revenue generation (IGR), Akwa Ibom’s efforts have been limited by inefficiencies in tax collection and weak economic diversification.
For instance, in 2023, Akwa Ibom set an IGR target of ₦80 billion, but only ₦67 billion was achieved. Similarly, in 2022, the state was only able to meet 80% of its IGR goal. If this trend continues, the state may struggle to meet its revenue projections for 2025. Revenue analyst, Ayodele Jibuno argues, “Akwa Ibom must focus on expanding its IGR base through improved tax collection, investment in agriculture, and partnerships with private sectors. The state’s dependency on oil revenue is unsustainable.”
Debt management: A rising concern
Governor Eno’s 2025 budget suggests that the state may need to borrow to finance its capital projects. This raises the question of debt sustainability. Akwa Ibom’s debt profile has been rising steadily over the years. In 2023, the state’s debt stood at about ₦400 billion, an increase from ₦350 billion in 2022. While borrowing can stimulate growth by financing infrastructure projects, it also has the potential to create long-term financial challenges.
Udo Essien, a fiscal analyst, cautions, “Excessive borrowing can hurt future budgets, particularly if the state’s revenue doesn’t grow as projected. Debt repayment could become a significant burden on subsequent budgets.”
If Akwa Ibom borrows more in 2025, there is a risk of over-leveraging its finances, especially with unstable oil revenue and weak IGR performance.
Can Akwa Ibom achieve expansion?
Akwa Ibom’s budget of consolidation and expansion for 2025 presents an ambitious plan, but its success will depend on the state’s ability to navigate a challenging economic environment. While the budget shows growth compared to previous years, concerns over high recurrent expenditure, the risks associated with oil price dependency, and the state’s ability to diversify revenue remain significant.
Comparing the 2025 budget to past years, the overall growth in budget size is modest, and the challenges of project execution and revenue generation are ongoing. For Akwa Ibom to truly consolidate and expand, the government must focus on improving capital project execution, diversifying its revenue base, and ensuring effective debt management. According to experts, only with these strategic adjustments will the budget of consolidation move beyond mere numbers and result in tangible benefits for the people of Akwa Ibom.
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