FG’s 52% non-debt expenditure in 2025 budget to boost economic growth, says Adelabu

Minister of Power, Mr. Bayo Adelabu has expressed that the Federal Government is determined to boost economic growth in 2025, with 52per cent of non-debt expenditure devoted to capital projects.

He noted that the FG’s approval of a 2025 budget totaling N47 trillion, with N16 trillion allocated to capital expenditure, is a significant economic policy decision.

The Former Deputy Governor, Operations, Central Bank of Nigeria (CBN) reacting to 2025 budget presented by President Bola Tinubu to joint national assembly stated that, “Capital expenditure accounts for 52per cent of non-debt expenditure (excluding debt servicing), indicating a strong focus on investment in physical and social infrastructure. Here’s a detailed analysis of the potential impact of this laudable step by the federal government.

“This will enhance infrastructure development. Capital expenditure is primarily used for long-term investments in infrastructure such as roads, railways, power supply, healthcare, and education. These investments will improve productivity as better infrastructure reduces transaction costs and enhances efficiency in the movement of goods, services, and people.

“It will also boost industrial growth as reliable infrastructure attracts investments in key sectors such as manufacturing, agriculture, and mining. Easy connectivity will also be enhanced through improved transportation networks promoting inter-regional trade and integration, boosting overall economic activity.”

He noted that the move by the Tinubu-led government would undoubtedly create more jobs in the economy as capital projects are labor-intensive, particularly in sectors such as construction.

“This will lead to immediate job creation in infrastructure projects and consequently provide increased incomes to households nationwide. Workers employed in these projects may acquire skills that enhance their employability in the long term,” he said.

He expressed further that a major potential advanced of increased capital expenditure is the stimulation of aggregate demand. As workers and contractors receive payments for capital projects, their spending stimulates consumption and boosts aggregate demand in the economy. This multiplier effect can lead to growth in industries such as retail, transportation, and services.

“We also expect this to attract foreign and domestic investments. Investors are more likely to invest in countries with reliable infrastructure. This automatically translates to increased private sector participation. Improved infrastructure reduces business costs and encourages private sector expansion.

“This will in addition enhance human capital development.

Allocating capital to social sectors such as healthcare and education has long-term benefits. Healthcare investments in hospitals and clinics improve population health, increasing workforce productivity. Enhanced spend on Education will include building schools and improving facilities to enhance access to quality education, fostering a skilled labor force.

This government has left no one in doubt on its commitment to promoting regional development. Focused capital expenditure can address regional disparities by building infrastructure in underdeveloped areas, encouraging businesses to set up in less developed regions, spreading economic activities more evenly.

The 2025 budget structure focuses on supporting economic diversification. Capital investments can be directed towards diversifying the economy away from oil dependence. For example, developing agricultural infrastructure, such as irrigation systems and storage facilities will boost productivity.

“Expanding industrial parks and export-processing zones to stimulate non-oil exports to achieve long-term economic growth. The emphasis on capital expenditure ensures that the economy builds a foundation for sustained growth. Key benefits include increased productivity across sectors. Higher returns on private investments will be assured due to improved public infrastructure. This will also strengthen resilience to economic shocks.”

He, however, said there are also potential challenges inherent on this emphasis on capital expenditure.

“While capital expenditure is a driver of economic growth, Corruption and inefficiency are potential threats to achieving these benefits. Mismanagement of funds or delays in project execution can undermine the expected benefits. The high level of debt servicing (N16 trillion) could limit the government’s capacity to fund these projects fully. Massive spending could lead to inflation if not managed carefully.

“In conclusion, the allocation of 52per cent of non-debt expenditure to capital projects demonstrates a commitment to addressing Nigeria’s infrastructure gap. If effectively implemented, these investments will stimulate economic growth, create jobs, and enhance the country’s global competitiveness. However, achieving these outcomes depends on transparent, efficient, and timely execution of projects,” Adelabu added.