Nigeria Fiscal Policy , Cash Crunch & the NNPCL Order

punchng.com · Feb 23, 2026 · Collected from GDELT

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Nigeria is witnessing a cash squeeze in budget implementation. The Central Bank of Nigeria is reporting too much cash in the economy; the ministers in charge of key sectors are claiming low release of funds to meet the execution of capital projects; and many contractors, at the national and state levels, are lamenting non-payment for their services. One wonders why that should be happening now when lots of money is being saved from the removal of subsidy on fuel, massive reduction in importation of fuel due to commendable operations of the Dangote Refinery and some smaller ones, as well as money from the massive devaluation of the naira by over 300 per cent. In addition is the massive borrowing from both the domestic and external markets. How did we get here? What are we not doing right? Reports in The PUNCH of February 18, 2026, showed that ministries, departments, and agencies of government received less than N1tn for meeting the items in their capital project between January and July 2025! The figure was obtained by The PUNCH, directly from the Budget Office, and the issue of authenticity cannot be disputed. If that happens at the federal level, we can imagine the situation at the state level, when most of them depend on the federal allocations for meeting budget expenses. This kind of situation cannot promote economic growth and development. Capital expenditure in the budget has higher multiplier effects than recurrent expenditure. Unfortunately, there have been massive borrowings, even at the state level, despite the glaring triple improvements in allocations from the federation account and from internally generated revenue sources. Another PUNCH report last week, quoting the commissioner for finance, put Ogun State’s debt profile as of December 2025 at N494bn, with external debt amounting to N300bn, even when the IGR has risen to above N420bn from about N50bn in 2020. One can imagine the irony. The more the IGR, the greater the gulf for debt. But where are all these monies? They are kept in safe places for the end of this year’s campaigns and the subsequent elections. Watch out. A table of debt profiles of the states will likely show the same trend. That is an assignment for some researchers and NGOs in the areas of finance and development. Since the Federal Government is preoccupied with borrowing, it cannot stop the state from doing so. Even when the Federal Government was not implementing the 2025 annual budget, reports indicated that it was borrowing to fund the budget! As we are paying for the debts of Jonathan’s presidency today, by spending over 70 per cent of current earnings to meet debt obligations, future generations are likely going to suffer more, as more funds will be committed to meeting this current humongous debt accumulation at all levels. When other countries are building savings, investments, and consequently, capital accumulation for their future generation, the Nigerian government is engaging in debt accumulation or building a pyramid of debt. There is no development to show for it, as there is a report that the number of poor citizens will grow to 141 million at the end of this year. That is, approximately 62 per cent of the country’s population! The poverty growth will be driven by weak income growth, high inflation, and rising cost of living. The North is projected to account for 65 per cent of the poor, i.e. 86 million, while the remaining 35 per cent or 47 million belongs to the South. Related News Senate downplays ‘broke’ narrative over committee allocations NNPC, NUPRC fear financial squeeze after Tinubu’s order Foreign investment in manufacturing plunges 54% These figures are from research and are supposed to gear up the governors and even the Federal Government to prevent their occurrence, but they do not care! But the Nigerians who know they will be affected do not also care. They’d better bury their heads in prayers to the almighty to save them. Remember, God is not your servant to fight for you. In the quest for more money to spend or to hoard for the elections, the Federal Government “touchlight” the accounts of the NNPCL. It found that the company is taking too much money for itself in its operations. I agree that taking 50 per cent of the revenue generated by any department or agency of government constitutes a breach of fiscal responsibility. But NNPCL is said to be a private company, for which the modality for sharing its resources or revenue should be based on shareholders’ contributions. Let us leave that for another day. The President, is it through the doctrine of necessity or any other non-legal language, latched on to the provisions of the Executive Order, otherwise EO, to act on the accounts of the NNPCL. Since the President signed the E.O., hell has been let loose by different groups, including the oil industry unions. Some of the claims include the balkanisation of the PIA Act. Some argued that the President should have presented his case to the NASS for legal amendment to the Act instead of using the EO. The union, particularly the Petroleum and Natural Gas Senior Staff Association of Nigeria, protested the President’s action of tampering with financial arrangements or the PIA itself. They have been part of the beneficiaries of the free money. For many years, the refineries have not been working, but they were getting their wages and salaries as due. They did not protest that the refineries were not working, and that something should be done. My take is that anyone who feels aggrieved should go to court for redress. I like the way a policy analyst, Ayinde O. Ayinde, explained the President’s action. He said, “It is a paradigmatic calibration of Nigeria’s fiscal architecture. It signals a doctrinal shift from discretionary retention to compulsory remittance, from opacity to traceability, and from institutional convenience to constitutional supremacy. In a petroleum-dependent federation where hydrocarbon rents constitute the fiscal bloodstream of the state, the mechanism of revenue custody is not a technicality – it is a destiny…” I agree and share his sentiment. The days of the petroleum or oil mafia are numbered.