Nigeria’s N31trn deficit fix may lie in listing state assets

Nigeria’s plan to finance its widening budget deficit is facing growing scrutiny, as analysts argue the government is relying on the wrong playbook when a deeper, more sustainable solution lies in listing its vast state-owned assets on the stock market.

Africa’s biggest oil producer plans to spend N68.3 trillion this year, but muted oil income is expected to keep revenues at N36.84 trillion, resulting in a budget deficit of N31.46 trillion that would be plugged largely through debt issuance. But that strategy is increasingly being challenged by a surge in equity market activity that has already generated more value than the deficit itself.

Since President Bola Tinubu presented the budget in December, Africa’s third-largest stock market has expanded from about N99 trillion to N156 trillion as of the close of trading on Thursday, April 30, 2026.

“The stock exchange is one of the valid options to raise capital and plug a portion of the budget gap,” said Samuel Sule, chief executive officer of Lagos-based Renaissance Capital Africa.

For Ayo Teriba, CEO of Economic Associates, the implication is clear: the government is looking in the wrong place.

“If the stock market has already created more than the deficit in a few months, it is clear where the government should be looking,” Teriba said.

But at the heart of Teriba’s argument is a shift from debt to equity, specifically, listing government-owned enterprises to unlock capital and deepen market participation.

Nigeria holds significant stakes in commercially viable assets, from oil and gas ventures to power distribution companies. Yet many of these remain outside the capital market, limiting their ability to attract investment and support public finances. “The equity market is like rainfall,” Teriba said. “Only those who put their assets out will benefit.”

He pointed to missed opportunities, including the delayed listing of the national oil company, Nigerian National Petroleum Corporation Limited, following the Petroleum Industry Act. Had that listing occurred earlier, he argued, the government would already be benefiting from the market’s rapid expansion. “If key public assets were listed, the government would be sharing in the growth we are seeing today,” he said.

Nigeria’s own history supports the case for equity-led financing. The liberalisation of the telecoms sector and the development of the Nigeria LNG project both drew substantial private capital once investors were offered ownership stakes rather than debt instruments.

Tilewa Adebajo-led CFG Advisory noted that privatisation, concessions, and asset sales could unlock capital, reduce debt, and accelerate the transition to a private sector-led growth model.

“Restructuring the federal government’s balance sheet is essential, with a focus on optimising equity within its capital structure,” Adebajo said.

“This can be achieved through the sale of oil and gas joint venture assets, as well as through privatisation and concessions. Such measures are necessary to raise capital for reducing debt to sustainable levels.”

Wale Edun, the former finance minister, had announced earlier that the country aims to start selling state-owned assets to private investors this year, stepping up efforts to attract capital to finance its widening budget deficit, even as decisions on which assets will be offered and when the sales will take place are yet to be concluded.

The asset sales would form part of a broader push to deepen private sector participation in Africa’s most populous nation, where the state still controls large swathes of the economy.

Nigeria is already in talks with a Chinese company and other investors to operate some of its ageing refineries that gulped N13 trillion while idle.

The discussions, according to the authorities, include an option for investors to take equity stakes in the plants, which have barely functioned for decades despite billions of dollars spent on rehabilitation.

After nearly three years of reforms, the government now wants to channel private capital into infrastructure and productive assets to lift growth that’s estimated to settle at 4.4 percent, its fastest growth in more than a decade, according to the World Bank.

The urgency of that shift is underscored by Nigeria’s fiscal position. Public debt has exceeded $100 billion, while about 60 percent of government revenue is spent on servicing obligations, according to CFG Advisory.

That burden has constrained spending on infrastructure and other growth-driving sectors, with capital expenditure often falling short.

At the same time, about N40 trillion remains tied up in banking system liquidity controls, limiting the flow of funds into productive investment.

Despite these constraints, the government continues to prioritise borrowing both domestically and externally to finance its deficit.

Teriba sees this as a structural misstep. “You are looking for debt; you are not looking for equity,” he said. “That is why foreign direct investment does not arrive.”

Other economies offer a contrasting model. Saudi Arabia’s listing of its national oil assets (Saudi Aramco) with about $2 trillion in valuation has transformed its fiscal capacity, allowing it to raise funds at a lower cost and link government wealth directly to market performance.

“If you have such assets in the market, when the market grows, your government balance sheet grows with it,” Teriba said.

Listing state assets also opens the door to more sophisticated financing tools, including asset-backed instruments that are cheaper and less burdensome than traditional sovereign debt.

With the World Bank and IMF warning that Nigeria’s 56 percent year-on-year budget expansion is unsustainable, pressure is mounting for a rethink.

Analysts say the issue is no longer just the size of the deficit but the structure of financing it.

Listing state assets would not only raise capital but also improve transparency, corporate governance, and investor confidence, key ingredients for attracting both domestic and foreign investment.