NASS passes N68trn 2026 budget, boosts RMAFC allocation

Nigeria's National Assembly has approved a N68.323 trillion (approximately €36.5 billion) budget for 2026, marking a significant 15.4% increase over President Bola Tinubu's initial N58.47 trillion proposal. This expansion reflects a deliberate policy shift toward infrastructure investment and regional redistribution, with substantial implications for foreign investors evaluating exposure to Africa's largest economy.

The upward revision of nearly N10 trillion signals legislative determination to address infrastructure deficits that have constrained economic growth. Key among these adjustments is a notable boost to the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) allocation—the mechanism through which federal revenue is distributed to state and local governments. This reallocation underscores a strategic pivot toward decentralised development, aimed at reducing regional inequality and stimulating consumption in secondary and tertiary markets beyond Lagos and Abuja.

For European investors, this budget trajectory presents both opportunities and risks. On the positive side, the infrastructure focus aligns with Nigeria's medium-term development agenda: improved roads, power generation, and telecommunications networks create demand for European engineering, construction, and technology services. Companies in renewable energy, logistics, and financial technology stand to benefit from improved public investment frameworks. The expanded budget also signals government commitment to debt servicing and macroeconomic stability—critical reassurances for foreign capital.

However, the scale of the increase raises legitimate concerns about fiscal sustainability. Nigeria's debt-to-revenue ratio remains precarious, and larger budgets without proportionate revenue growth increase inflation risk and currency pressure on the naira. European investors should monitor whether the government can fund this expansion through genuine tax revenue improvements or whether monetary financing will reappear, eroding purchasing power and investment returns.

The RMAFC boost deserves particular attention. Historically, states have struggled with capital project execution; enhanced allocations only yield returns if governance improves simultaneously. European firms bidding for state-level contracts should scrutinise local counterpart capacity and payment track records. Delayed state disbursements have previously frustrated project timelines across sectors from healthcare to agro-processing.

The budget also reflects evolving political dynamics within the National Assembly. The legislative willingness to revise executive proposals upward—rather than merely rubber-stamping them—indicates a more assertive parliament. This is positive for institutional checks and balances, but introduces uncertainty into policy implementation timelines. European investors accustomed to predictable regulatory environments should factor in longer approval cycles for project permits and sectoral policies.

Sectoral analysts should watch the budget's sector-by-sector allocation closely. Oil and gas, agriculture, and manufacturing typically receive substantial allocations; their specific funding levels will signal government priorities for foreign direct investment targeting. Similarly, the treatment of education and healthcare budgets reveals social stability priorities relevant to labour-intensive ventures.

The timing of this budget—approved months before execution—provides a narrow window for investors to position themselves ahead of capital deployment. Early engagement with state governments on infrastructure tenders and local partnership frameworks could yield first-mover advantages as projects move from approval to mobilisation.

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