The proposed budget is a 41.91% increase from the ₦35.05 trillion allocated in 2024 (₦28.7 trillion initial budget plus ₦6.2 trillion supplementary budget).

Prioritising defence and security (9.87%), followed by infrastructure (8.16%), education (7.08%), and health (4.99%), the 2025 budget reiterates the government’s economic vision, particularly in tackling insecurity, which has negatively impacted business operations, investor confidence, and agricultural productivity, leading to rising food prices and high poverty rate.

The government has projected ₦36.35 trillion in revenue (up from ₦25.9 trillion in 2024) while budgeting an aggregate expenditure of ₦49.74 trillion, resulting in a deficit of ₦13.39 trillion. Revenue is expected to come from both oil and non-oil sources.

An important component of the budget is tax reform, which includes nearly doubling VAT from 7.5% to 12.5% by 2026, although essential goods like food and medicine will remain exempt.

The government also aims to boost revenue through tax administration improvements and agency restructuring, with the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS) playing key roles.

However, these revenue targets could have huge implications for businesses and consumers.

Impact on Businesses

The budget’s increased focus on defence and security (9.87%) points to a commitment in addressing insecurity, which could improve the business climate, reduce operational risks, and boost investor confidence.

Again, higher capital expenditure on infrastructure may lower logistics and production costs in the long term.

However, several challenges remain:

• Higher Taxes on Businesses: A VAT increase (to 12.5% as proposed) will raise costs for businesses dealing in non-exempt goods and services. Companies will either absorb these costs or pass them on to consumers, potentially reducing demand.
• Increased Compliance Costs: Businesses will need to adjust tax reporting systems to comply with new tax rules, leading to additional operational expenses.
• Rising Borrowing Costs: The CBN’s monetary tightening policies have resulted in higher interest rates, making it more expensive for businesses to finance expansion. This could slow investment and economic growth.
• Telecom Sector Impact: The 50% increase in telecommunications tariffs will also raise operational costs for businesses dependent on digital services, affecting sectors such as fintech, e-commerce, and tech startups.

Impact on Consumers

1. Increased Cost of Living:

• While VAT exemptions cover essential goods, prices for non-exempt items (about 18% of goods and services) will rise, reducing disposable income and increasing poverty risks.

2. High Inflation Concerns:

• The budget targets an inflation drop from 34.6% to 15%, but given existing economic pressures, achieving this may be difficult in the short term. Until inflation is contained, consumers will continue facing rising costs for essential goods and services.

3. Rising Telecom Costs:

• A 50% increase in telecom tariffs will impact mobile users, businesses, and digital services, making internet access more expensive and reducing affordability for low-income consumers.

2025 Budget: Broader Economic Consequences

The 2025-2027 Medium-Term Expenditure Framework (MTEF) projects that 56.3% of revenue will come from oil, while 43.7% will be generated from non-oil sources, primarily taxation.

Key economic assumptions include:

• GDP growth rate increase
• Inflation decrease to 15%
• Exchange rate at ₦1,500/$1
• Oil price at $75 per barrel
• Crude oil production at 2.06 million barrels per day

However, oil revenue targets are vulnerable to pipeline vandalism, oil theft, and refinery inefficiencies. Addressing these issues is essential for meeting the revenue projections.

Similarly, foreign exchange pressures, high energy costs, and increased interest rates remain major challenges for businesses and consumers.

Improving energy infrastructure and forex stability will be essential to reducing the cost of living and enhancing Nigeria’s economic resilience.

While the 2025 budget seeks to stabilise Nigeria’s economy through higher revenue generation and increased security spending, its impact on businesses and consumers will largely depend on effective policy implementation, tax efficiency, and inflation control.

Without these, high costs, regulatory burdens, and economic uncertainty may overshadow the intended benefits.

The Nigerian Communications Commission (NCC) recently reported that Nigeria’s internet consumption reached 973,455 terabytes in December 2024, a 36.5% increase from the previous year. 

That’s 998.79 million gigabytes of data used in just one month. Despite this surge in demand, the country’s broadband penetration stood at 44.43%, far below the 70% target set in the National Broadband Plan (2020–2025). 

Even more concerning, Nigeria ended 2024 with 164.9 million active telecom subscribers—down from 224.7 million the year before.

Imagine streaming a movie now costing as much as a meal, and staying online feels like a privilege reserved for the wealthy. 

This sharp decline in active subscribers, even with the growing need for internet services, is leading to talks of Nigerians being unable to afford staying connected.

Inflation and currency devaluation have shot the industry’s costs of operations really high, leading to the Nigerian Communications Commission’s (NCC) recent approval of a 50% increase in telecommunications tariffs—the first such hike in over a decade—to help operators manage the high expenses. 

The Need for Inclusive Resilience in the Telecom Sector

This tariff increase has struck conversations across various bodies. The Nigeria Labour Congress (NLC) has labelled the hike as “insensitive” and “unjustifiable,” especially given the current cost-of-living issue. 

While telecom operators argue that the challenges leave them with no choice, consumers are wondering if affordable connectivity is becoming a thing of the past.

Inflation is wearing out disposable income, forcing consumers to prioritise essentials over data and call plans. Businesses, especially SMEs, rely heavily on telecom services, but higher costs threaten their ability to stay competitive.

The rural-urban gap in connectivity may expand, as rural consumers—who already struggle with access—may be priced out of the market.

In the midst of these challenges, the telecom sector must find ways to remain profitable without sidelining lower-income consumers. The key lies in resilient and inclusive strategies that balance affordability, sustainability, and growth.

Strategy 1: Tiered and Flexible Pricing Models

1. The Power of Segmentation in Telecom

To effectively serve a diverse customer base, telecom operators should segment their users into low-income, middle-income, and high-income categories. This segmentation allows for targeted services that meet the specific needs and financial capabilities of each group.

2. Implementing Flexible Pricing Structures

• Pay-as-you-go options: Ideal for price-sensitive users who prefer to control their spending without committing to fixed plans.
• Subscription models: Offer middle-income consumers affordable packages with predictable billing cycles.
• Premium services: Provide high-income users with enhanced features such as high-speed internet and exclusive customer support.

3. Strategy 2: Infrastructure Cost Optimisation Through Public-Private Partnerships (PPP)

1. The High Cost of Expanding Telecom Network Infrastructure

Building and maintaining telecom infrastructure, such as towers and broadband cables, require huge capital investment. Inflation further increases these costs, making it challenging for operators to expand and upgrade their networks.

2. Leveraging PPP to Reduce Financial Stress

Collaborating with government entities and development banks can help telecom operators share the financial risks associated with infrastructure projects. For example, partnerships can be formed to extend network coverage to underserved rural areas, with shared investment and benefits.

In Kenya, the government and private telecom operators have partnered to expand rural connectivity, resulting in increased access to communication services in previously underserved regions.

Initiatives like the National Optic Fibre Backbone Project and partnerships with telecom providers such as Safaricom, Telkom Kenya, and Airtel have helped boost this.

Strategy 3: Digital Transformation and AI-Driven Efficiency

1. How Digital Transformation Can Lower Costs

Leveraging digital tools and automation can simplify operations, reducing the need for manual intervention and lowering operational expenses. For instance, AI-powered network management systems can optimise bandwidth usage and predict maintenance needs, thereby reducing downtime and associated costs.

2. The Impact on End-Users

Customers benefit from faster and more efficient services, such as AI-driven customer support that can handle inquiries promptly. These efficiencies can lead to cost savings for operators, which can be passed on to consumers in the form of more affordable services.

Strategy 4: Expanding Alternative Revenue Streams

1. Moving Beyond Traditional Revenue Models

Relying solely on voice and data services is becoming more and more unsustainable. Diversifying into areas like financial technology (fintech), cloud services, and the Internet of Things (IoT) can open new revenue streams. This is seen in MTN’s transition to a Techco.

2. Monetising Digital Services

• Mobile money and payment solutions: Offer financial services to unbanked populations, generating transaction fees.
• Entertainment bundles: Partner with streaming services to provide bundled offerings, enhancing value for consumers.

MTN’s MoMo, Airtel Money and Safaricom’s M-Pesa are prime examples of telecom operators successfully launching into mobile financial services, greatly contributing to revenue growth.

Strategy 5: Strengthening Local Supply Chains to Mitigate FX Risks

1. The Problem of Foreign Exchange Dependency

Heavy reliance on imported equipment makes telecom operators vulnerable to currency fluctuations, increasing costs unpredictably.

2. Investing in Local Manufacturing and Partnerships

Developing local production capabilities for items like SIM cards and network components can reduce foreign exchange exposure. Partnering with local tech firms can also promote innovation and cost-effective solutions tailored to the local market.

Strategy 6: Data-Driven Decision Making for Telecom Customer Retention

1. The Cost of Customer Churn in an Economic Downturn

Losing customers can be more expensive than retaining existing ones, especially when inflation reduces consumers’ disposable income. High churn rates force telecom companies to spend more on marketing and customer acquisition, which can negatively impact already tight budgets.

2. Leveraging Big Data and Analytics for Personalised Offers

Telecom operators can use customer data analytics to identify usage patterns, predict churn risk, and design personalised retention strategies.

• Usage-based incentives: Offering discounts or data bonuses to customers who frequently recharge can encourage continued engagement.
• Loyalty rewards: Retaining long-term customers through perks such as discounted family plans or exclusive streaming deals.

MTN and Airtel have successfully used data analytics to provide dynamic pricing models, such as location-based discounts and time-sensitive data plans, reducing churn and boosting customer satisfaction.

Strategy 7: Strengthening Regulatory and Industry Collaboration in Telecom

1. The Impact of Government Policies on Telecom Viability

Government policies on taxation, spectrum licensing, and price regulations are important in determining telecom sector stability. The recent 50% tariff hike approved by the Nigerian Communications Commission (NCC) is an example of how policy decisions directly affect consumers and telecom operators.

2. Advocacy for Fair and Sustainable Policies in the Telecom Sector

Telecom companies must engage policymakers and industry regulators in constructive dialogue to ensure that tariff adjustments, tax structures, and regulatory frameworks balance profitability with affordability for consumers.

3. Encouraging Investment-Friendly Policies in the Telecom Sector

• Reducing multiple taxation: Telecom firms should advocate for streamlined tax policies to prevent excessive levies that inflate operational costs.
• Incentives for rural expansion: Government support, such as tax breaks for rural infrastructure projects, can make connectivity more accessible in underserved areas.

Regulatory frameworks can encourage competitive pricing while ensuring telecom operators remain profitable.

Summary of Key Points

Though there are economic pressures like inflation, telecom operators can thrive and ensure inclusive connectivity by implementing seven key strategies:

1. Tiered and flexible pricing models to serve all income groups.
2. Public-private partnerships (PPP) to reduce infrastructure costs.
3. Digital transformation and AI for cost efficiency.
4. Diversifying revenue streams beyond data and voice services.
5. Strengthening local supply chains to reduce foreign exchange risks.
6. Using data-driven strategies to retain customers.
7. Collaborating with regulators to ensure fair pricing policies.

The Lot of Resilient Connectivity

With smart, adaptive strategies, telecom operators can continue to deliver quality services across all economic segments while mitigating the impact of inflation.

The telecom sector must act assertively by adopting innovative pricing, infrastructure investment, and customer-centric solutions. 

Regulators, industry leaders, and consumers must collaborate to ensure that connectivity remains affordable, sustainable, and inclusive—regardless of economic conditions.

This Series 11 and 12 issuance, officially announced to the Nigerian Exchange Limited and the investing public, aims to bolster MTN Nigeria’s short-term working capital, offering a simplified approach to meet the company’s immediate financial needs.

Issuing commercial papers aligns with the telecom giant’s goal of tapping into the debt market as a more flexible funding source. This allows MTN to manage short-term financial obligations without fully relying on long-term loans, balancing its capital structure. 

The funds raised are intended to drive MTN’s operational goals, including expanding its infrastructure and meeting the growing demand for telecommunications and digital services across Nigeria.

According to MTN Nigeria’s latest financial disclosures as of September 2024, the company faces negative working capital estimated at around N1.49 trillion. With its N250 billion CP programme, MTN has the flexibility to issue commercial papers in series, which provides a cost-effective means of addressing its working capital requirements. 

This method allows MTN Nigeria to manage its cash flow efficiently, helping to offset interest costs while catering to short-term debt needs. For MTN, which has some external loans, this approach provides greater agility to withstand Nigeria’s economic fluctuations and high inflation rates.

Currently, MTN holds an external loan portfolio of approximately N1 trillion, with over half of this, around N522.3 billion, in short-term loans. In issuing the Series 11 and 12 commercial papers, MTN intends to address these short-term liabilities more effectively, thereby reducing its reliance on traditional bank loans. 

This diversification in funding channels will support MTN’s liquidity and also strengthen its financial footing in a challenging economic environment.

Previous CP issuances by MTN highlight a consistent strategy to shore up working capital. In December 2023, MTN raised N72.1 billion through a commercial paper issuance, which followed a N52.9 billion issuance the previous month. 

These underline MTN’s reliance on commercial papers to secure liquidity for operational costs while addressing its short-term debt obligations.

Further details on the terms and conditions of the Series 11 and 12 commercial papers are expected soon, but MTN’s recent financial focus provides insight into the company’s performance. After a series of losses over three quarters, MTN reported a profit after tax of N4.13 billion in Q3 2024. 

However, high inflation and the ongoing depreciation of the naira have impacted its operational expenses, underlining the importance of this commercial paper issuance in sustaining the company’s stability amid an unpredictable business climate.

In the 90-minute session, the experts analysed the current prevailing macroeconomic challenges in the country and emphasised the importance of adopting a digital mindset for entrepreneurial success.

The webinar titled, ‘Keeping Your Cash Flowing: Simple Tips for Small Business Owners’, was attended by more than 140 business owners from across Nigeria keen to gain insights to navigating their businesses.

In a 20-minute presentation that preceded the panel discussion and Q & A session, Rewane provided an overview of Nigeria’s evolving economic landscape.

He highlighted the impacts of currency devaluation, FX losses, minimum wage reviews, high inflation, interest rates and borrowing costs, squeezed margins, and the declining consumption, on businesses in general.

He said,

“In 2014, Nigeria was Africa’s largest economy; about 23% of Africa’s GDP was in Nigeria and we were the sixth largest oil producer in the world. 10 years later, things have changed. By 2017 we had gone into recession, followed by Covid-19 and another recession in 2020…these factors all have a significant impact on small businesses today.’’

Despite these challenges, he stressed that small businesses can still succeed by adopting a digital mindset, building efficient operating models, and tapping into high growth sectors such as agriculture, healthcare, telecommunications, media, renewable energy, real estate, and tourism. Rewane also encouraged small business owners to persevere, noting that many mega-corporations, including Amazon, started as small businesses.

He cited Amazon‘s journey from a garage-based online bookstore in 1994 to a $2 trillion enterprise.

Speaking at the webinar, Uzoma Dozie highlighted that adopting a digital mindset can enhance small business operations, reduce costs, and enable data-driven decision-making.

He shared that Sparkle supports this transition by providing tools for expense tracking, invoicing, payments, performance monitoring, payroll, savings, and investments, all through a mobile app.

Omon Anenih shared her entrepreneurial journey, advising small business owners to manage cash flow effectively by planning, tracking expenses, cutting costs without sacrificing value, staying lean, making data-driven decisions, and diversifying revenue streams.

She underscored the importance of digital tools in boosting productivity and profitability, saying, “Cash flow is the lifeblood… digital is your friend.”

Sparkle Business simplifies business management for small and medium enterprises, allowing them to monitor activities, manage products and customers, identify top-selling products and high-patronage customers, and track business metrics, all from a mobile device.

The webinar was moderated by Nneka Okekearu, director of the Enterprise Development Centre at Pan-Atlantic University.

The IMF forecasts a slight increase in Nigeria’s government debt-to-GDP ratio to 46.6% in 2024, up from 46.3% in 2023.

This was revealed in the IMF’s fiscal monitor report released during its spring meetings with the World Bank in Washington, D.C.

According to the IMF’s World Economic Outlook, here are the top 10 largest Economies in Africa in 2024.

1. South Africa

South Africa leads with a GDP of $373 bn, solidifying its status as Africa’s most industrialized economy. Renowned for its diverse economic profile, South Africa embraces sectors such as mining, agriculture, manufacturing, and services, shaping a multifaceted economic landscape.

2. Egypt

Egypt commands a GDP of $347 bn, leveraging its strategic geographical position as a bridge between Africa and the Middle East.

Historically, Egypt has served as a pivotal hub for trade and commerce.

Its economy thrives on a robust tourism sector, agriculture, manufacturing, and a burgeoning ICT industry, cementing its significance in the regional and global economic arena.

3. Algeria

Algeria has a GDP of $266 bn, primarily fuelled by its abundant natural resources, notably oil and gas, which drive its economy through hydrocarbon exports.

Nevertheless, recent government initiatives prioritize economic diversification, aiming to diminish reliance on oil revenues and promote sustainable growth across diverse sectors.

4. Nigeria

Nigeria often hailed as the “Giant of Africa,” holds the fourth position on the list, and has a GDP of $252 billion. With its expansive population and rich endowment of natural resources, particularly oil, Nigeria harbours the potential to ascend as one of the globe’s foremost economies.

5. Ethiopia

Ethiopia commands a GDP totalling $205 bn. Acknowledged for its impressive economic metamorphosis of late, Ethiopia has drawn substantial foreign investment, notably in sectors like agriculture, manufacturing, and infrastructure.

Given its strides, Ethiopia’s economic advancement bears profound significance for the broader growth trajectory of the continent.

6. Morocco

Morocco with a GDP of $152 bn, is celebrated for its stability and strategic positioning as a crossroads between Africa, Europe, and the Middle East. Its economy flourishes across various sectors such as agriculture, tourism, manufacturing, and renewable energy. Government-led initiatives geared towards promoting entrepreneurship and innovation are propelling Morocco’s economic strength and global competitiveness.

7. Kenya

Kenya, boasting a GDP of $104 bn, holds the position of East Africa’s largest economy. Geared by a dynamic entrepreneurial culture and an expanding middle class, Kenya has established itself as a pivotal economic centre in the region.

Key sectors driving its GDP growth include agriculture, tourism, financial services, and technology, underpinning Kenya’s economic vibrancy and regional influence.

8. Angola

Angola has a GDP totalling $92 bn, endowed with extensive oil reserves that historically engineered its economy through exports.

Yet, in recent times, the government has initiated ambitious economic diversification endeavours, targeting a reduction in oil revenue dependence and the promotion of inclusive growth.

9. Cote D’Ivoire

Cote D’Ivoire has a GDP of $86 bn, marking a notable economic resurgence following years of political turmoil.

This turnaround is propelled by strategic investments in infrastructure, agriculture, and manufacturing.

With a youthful demographic dividend and an increasingly favorable business climate, Cote D’Ivoire stands poised for enduring economic expansion.

10. Tanzania

Tanzania concludes the list with a GDP totalling $79 bn. Endowed with plentiful natural resources and a varied agricultural sector, Tanzania offers extensive prospects for investment and growth.

Government-led initiatives focusing on infrastructure enhancement, industrialization promotion, and business climate improvement serve as pivotal drivers for Tanzania’s economic advancement agenda.

African countries, is blessed with abundant resources, growing populations, and increasing investments, have emerged as notable economic players.

The International Monetary Fund (IMF) report shows the continent’s economic progress and potential.

Despite facing individual challenges, concerted efforts in economic diversification, infrastructure development, and institutional reforms are essential to unlock Africa’s full economic potential and ensure a prosperous future.

The IMF forecasts South Africa, Africa’s most industrialized nation, to lead as the continent’s largest economy with a GDP of $373 billion, a position it’s expected to maintain until 2027.

Egypt, previously at the top in 2023, is projected to fall to second place, largely due to currency devaluations.

The removal of subsidies, coupled with high inflation and the devaluation of the Naira, has created an environment that demands adaptability and resilience. 

However, amidst these stormy waters, there lie opportunities for growth and prosperity. Some of the best strategies to not only survive but thrive in this new economic landscape are:

1. Diversify Your Income Streams

With the winds of change blowing strong, relying on a single source of income might leave you vulnerable. Embrace the spirit of diversification by exploring new avenues for generating revenue. 

Whether it’s starting a side hustle, investing in diverse assets, or exploring the digital landscape, creating multiple streams of income can provide stability and a sense of financial security.

2. Embrace Cost-Cutting Innovations

The high inflation and devaluation of the Naira has emphasized the importance of optimizing expenses. Don’t be afraid to think outside the box and uncover innovative cost-cutting measures. 

Renegotiating contracts, embracing eco-friendly and energy-efficient solutions, and leveraging automation can all contribute to reducing overheads and increasing operational efficiency.

3. Harness the Power of Digital Technologies

As the world embraces digital transformation, adopting technological advancements has become a necessity rather than a luxury. Investing in digital technologies can be a game-changer for Nigerian businesses. 

Whether it’s leveraging e-commerce platforms, embracing digital marketing strategies, or utilizing data analytics to make informed decisions, the digital realm offers immense potential for growth and expansion.

4. Forge Powerful Connections

In turbulent times, the strength of your network can prove to be a lifeline. Engage in networking activities that extend beyond traditional boundaries. Connect with fellow entrepreneurs, industry experts, and potential customers. 

These connections can offer valuable insights, collaborative opportunities, and emotional support during challenging times.

5. Knowledge is Power

Staying informed about the dynamic economic landscape is crucial. Monitor market trends, economic policies, and industry developments. 

By being proactive and adaptable, you can adjust your strategies to align with the changing economic currents and position yourself for success.

Conclusion

While the removal of subsidies, high inflation, and Naira devaluation have presented significant challenges for Nigerians and businesses, there is a silver lining amidst the storm. 

Implementing the above strategies can help transform challenges into opportunities and thrive in this new economic era. The key lies in embracing change, staying agile, and envisioning a future that transcends the obstacles of the present. 

Together, let’s navigate the uncharted waters and build a brighter and more prosperous future for all.