Video - Analysts in Nigeria call for increased new foreign investments

Nigeria faces forex shortage due to reduced capital investments, with capital importation dropping to 650 million U.S. dollars in the third quarter of 2023, prompting analysts to call for increased foreign investment efforts.

CGTN

Nigeria central bank pays nearly $2 billion towards Foreign Exchange backlog

Nigeria's central bank has paid nearly $2 billion in outstanding foreign exchange forwards in the last three months in a bid to clear a backlog of dollars, a spokesperson has said, but forex shortages continue to hobble the country's naira currency.

Africa's biggest economy has nearly $7 billion in forex forwards that have matured, a major concern for investors, but the Central Bank of Nigeria (CBN) has promised to pay up to boost confidence in the foreign exchange market.

"In the past three months, the CBN has also redeemed outstanding forward liabilities amounting to almost USD 2 billion," acting spokesperson Hakama Sadi Ali said in a statement late on Sunday.

"This underscores the Bank's commitment to the resolution of pending obligations and a functional foreign exchange market."

Nigeria's foreign currency shortages have been worsened by declining oil production, which is the country's largest export, accounting for more than 90% of dollar inflows.

Ali said the CBN had recently paid $61.64 million to foreign airlines, who sold tickets in the local naira currency but have not been able to get their money out of the country.

Foreign airlines were owed more than $700 million at the end of November.

"These payments signify the CBN's ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country's exchange rate," Ali said.

President Bola Tinubu has promised to boost foreign currency inflows into Nigeria by attracting new investment, ramping up oil production and reforming the foreign exchange market. 

By Camillus Eboh, Reuters

Video - Consumers affected by high import costs in Nigeria

Nigerians love their cars-- but it’s hard to keep them on the road these days. The loss of their currency's value and expensive import tariffs have led to high inflation. That's forcing some Nigerians to wean themselves off imported goods. Al Jazeera’s Ahmed Idris reports from Nigeria's business capital, Lagos.

Al Jazeera

Related stories: Video - Nigerians cut Christmas spending as high inflation persists

Video - Inflation, shortage of foreign exchange causing multinational firms to leave Nigeria

 

 

Video - Nigerians cut Christmas spending as high inflation persists

Rising inflation has forced many people across Nigeria to slash their spending. Experts have warned that the reduced spending could affect the country's economy.

CGTN

Video - Inflation, shortage of foreign exchange causing multinational firms to leave Nigeria

Nigeria is urging multinational companies to remain in the country despite the tough economic conditions that exist there. Some of the companies say inflation and a shortage of foreign exchange have made operating in the country more difficult.

CGTN

World Bank says Nigeria needs to curb inflation, stabilize forex to boost growth

Nigeria still needs to control inflation and stabilise its foreign exchange market to boost growth in Africa's largest economy following currency reforms and the removal of a petrol subsidy, the World Bank said on Wednesday.

Nigerian President Bola Tinubu has embarked on the country's biggest reforms in decades, unifying the country's multiple exchange rates and scrapping a popular but expensive petrol subsidy, which the World Bank and International Monetary Fund had for years called on Nigeria to do.

The impact has been record inflation, which has risen for 10 straight months, reaching 27.33% in October, the highest in almost two decades.

World Bank lead economist for Nigeria Alex Sienaert said during a presentation in the capital Abuja that "several complementary reforms are needed to support Nigeria's structural agenda and overall gain in competitiveness and economic diversification".

He said that, with the reforms, Nigeria's economy was expected to grow at an average annual rate of 3.5% in 2023-2026, or 0.5% points higher than without the reforms.

The government still needed to remove remaining import restrictions, despite lifting a forex ban on 43 items, improve infrastructure and pursue clear, consistent trade policies, Siernaert said.

Nigeria's central bank should tighten monetary policy, build market confidence around free foreign exchange pricing, phase out "ways and means" advances to the government and discontinue its development finance initiatives, part of a series of unorthodox policies used by former central bank Governor Godwin Emefiele.

New central bank Governor Olawale Cardoso has already begun rolling back Emefiele's policies.

He adopted an inflation-targeting policy, ended all direct interventionist programmes, which he said blurred the lines with monetary policy, and begun clearing foreign exchange backlogs, estimated at $7 billion, that were owed to banks.

"We will be using inflation-targeting and we will ensure that the use of monetary policy actually cascades down and has an impact," Cardoso said in response to Siernaet's call.

The central bank, under Cardoso, has also restarted its Open Market Operations (OMO) to rein in money supply.

Despite unifying its multiple exchange rates, Nigeria has struggled with low oil revenue and foreign exchange shortages, which has dampened investor sentiment and hindered growth.

Finance Minister Wale Edun said the government would scrutinize revenue from oil, its main export and source of foreign currency earnings, and aim to boost output of the commodity ahead of plans "to spend even more".

"What is spent as a proportion of GDP is much lower than in some African countries where government spending as a portion of GDP goes as far as 50% to 60%," Edun said. "If you are willing to do that, you need revenues and the first source of revenue is oil revenue."

By Camillus Eboh, Reuters

Video - Nigeria sees nearly 80 percent increase in oil revenues

Nigeria's recent crude oil revenue boom is making headlines, and experts attribute it to bold moves like subsidy removal and the devaluation of the local currency. The West African nation has witnessed an extraordinary 80 percent surge in oil earnings, fueled by enhanced production and a crackdown on oil theft. 

CGTN

Video - West African leaders meet in Nigerian capital Abuja for ECOWAS Summit

Heads of State from the West African Economic Block, ECOWAS, have congregated in Abuja, Nigeria's capital, for a crucial summit aimed at tackling pressing regional issues, security threats and breached sanctions.

CGTN

President Tinubu says Nigeri budget offers 'renewed hope'

Nigeria's president has delivered his first budget since taking office, as the country faces a deepening cost of living crisis.

He announced government plans to spend 27.5 trillion naira ($34.85bn; £27bn) in the new financial year.

Bola Ahmed Tinubu said the plans would attract investment, offering "renewed hope" during tough economic times.

Mr Tinubu had called for patience after inflation skyrocketed following an ambitious set of reform policies.

After winning disputed elections with 37% of the vote back in May, he shocked many Nigerians in his inaugural address when, in an off-the-cuff remark, he scrapped a decades-old fuel subsidy.

The move led to a sharp rise in the price of fuel and other goods, worsening the cost of living crisis for many.

Mr Tinubu also scrapped foreign exchange controls, which also contributed to pushing up inflation to its highest levels in nearly two decades, at 25%.

The value of the naira fell, increasing the cost of imports and making it more difficult to pay off international loans.

But Mr Tinubu stood by his decision, saying the fuel subsidy had proven to be "harmful" to the economy.

He insisted the budget's impact on the cost of living crisis would be temporary and has repeated calls for patience, saying the moves would benefit the country in the long term and attract more foreign investment.

Mr Tinubu said his "Budget of Renewed Hope" would guarantee macro-economic stability, lead to "job-rich" growth and reduce the budget deficit.

The government's spending priorities included improving security and infrastructure, as well as taking measures to ease the cost of living crisis, he added.

Mr Tinubu projected higher oil production and tax collection would boost government revenues and allow his administration to borrow less.

He added that the economy was expected to grow by at least 3.76% in 2024, and inflation would be at around 21.4%.

It stood at 27.3% in October, up from 26.72% in September, according to official statistics.

The economic crisis in Nigeria has led to a huge exodus of young professionals who have struggled to find jobs.

The budget will have to be approved by lawmakers before it comes into effect.

By Danai Nesta Kupemba, BBC

Cabinet of Nigeria approves $1 billion African Development Bank loan

Nigeria's cabinet has approved a $1 billion concessionary loan from the African Development Bank (AfDB) to support financing the budget and improve foreign exchange supply, Finance Minister Olawale Edun said on Monday.

The AfDB loan will fetch an interest rate of 4.2% for 25 years with eight-year moratorium, Edun told reporters after a cabinet meeting in the capital city, Abuja.

Nigeria's cabinet on Monday revised the country's 2024 budget upwards by 1.5 trillion naira to 27.5 trillion naira ($32.76 billion), after increasing the oil price benchmark and lowering the naira exchange rate assumption.

"(Federal Executive Council) approved a $1 billion concessionary loan for general budget support and to be used to improve forex availability in the country," Edun said.

"The $1 billion loan from AfDB is a budget support fund for ongoing economic reforms. It is to support government programs ... in power sector, social inclusion and the fiscal policy reforms as a whole sector policy initiative."

The cabinet approved a limit of 2 trillion naira for use to refinance expensive government debt and save on debt servicing cost, Edun said. Nigeria has been spending the bulk of its revenue on debt service due to low tax collection.

"The view is that there will be an opportunity to save about 50 billion naira or more in debt servicing over time by giving back expensive debt, refinancing it with cheaper funding," Edun said.

President Bola Tinubu has embarked on Nigeria's boldest reforms in decades by scrapping a popular but costly subsidy on petrol and a system of multiple exchange rates that had kept the currency artificially strong, curbing trade and growth.

Tinubu is trying to rebuild Nigeria's economy and attract investors to revive growth, which has been sluggish for almost a decade, tackle a high debt burden, and lower double-digit inflation. 

By Felix Onuah, Reuters

Video - FAO says at least 27 million people in Nigeria likely to experience hunger in 2024

The Food and Agricultural Organization projects that nearly 26.5 million Nigerians will experience hunger by next year. This is linked to challenges, including security issues like insurgency and banditry in northern Nigeria, which have adversely impacted food production.

CGTN

Wages in Nigeria diminish as inflation rises and government revenue dips

When Yusuf Mogaji joined Nigeria’s federal civil service as a non-teaching staff member at the University of Ilorin in 2015, he had dreams of building his own house. His monthly salary of 46,000 naira (then worth $236) was enough to cater for himself and his family and even buy a half-plot of land (300 square metres) later that year.

Eight years and four civil service appointments later, the land has remained untouched and Mogaji’s aspirations are no longer a priority as he is finding it difficult to feed himself and his family of three.

The value of the naira has plummeted such that even though his net salary has increased to 57,000 naira, the dollar equivalent in 2023 is $68.06 – $167.94 lower than what he earned in 2015. Almost half of the new earnings now go into transporting himself to and from work.

“Is it the money that is not even enough for me to feed that I will use to invest? There was a time when government work was great, but now there is nothing like that again,” Mogaji said.

Since 2015, Nigeria has experienced two recessions and its economy has been ravaged by the vagaries of global oil prices, the COVID-19 pandemic and Russia’s continuing war in Ukraine. In June, the country’s Debt Management Office said the government is servicing debts with at least 73.5 percent of its revenue, making it struggle to meet basic responsibilities.

Inflation is currently at an 18-year high – at 26 percent – in Nigeria as the naira continues to plunge in value against the dollar. The economic realities became grimmer when Bola Tinubu, elected president in February, devalued the naira and removed a decades-long fuel subsidy which had helped lower living costs. Mogaji has cut back on the amount of regular food and household items he purchases, including rice, semolina and even nappies because their prices have tripled.

The Nigeria Labour Congress, a major trade union coalition in the country, has repeatedly threatened to shut down the economy in protest against the government’s refusal to increase workers’ salaries despite the enormous spike in the cost of living. Nigeria’s minimum wage currently stands at 33,000 naira ($39.40).

During the independence speech, the government compromised by opting for an additional 35,000 naira ($41.79) wage award for six months. Al Jazeera spoke with Mogaji and three other workers who said this is barely enough.

“Even the salary is just for food and the remaining to transport yourself to work, there is nothing left. And they [the government] said the palliative is for six months. After the six months, will things go back to the way it was before? We will be back to square one,” he said.
 

‘A rock and a hard place’

As Nigeria’s economy worsens, an increase in the minimum wage has been the core demand of various workers’ unions. According to experts, salary increases cannot materialise because Africa’s biggest economy is broke and can barely fund its expenditure. Temporary remedies, they add, will barely help beneficiaries.

“There is no other answer than the inflation to be brought down and for inflation to stay down. The honest truth is that for anybody earning in naira, a 26 percent inflation rate ensures you are going nowhere no matter who you are; your monthly salary more or less does not matter,” Joachim MacEbong, a senior analyst at Lagos-based economic insights firm Stears said.

“The money is just not there. Nigeria’s total revenue is five trillion naira and under; you cannot do anything with that amount of money for a country of 200 million people,” he said.

Workers say they are not to blame for the country’s situation amid decades of corruption and wasteful government spending during economic booms.

“Unfortunately, there is a cost to that kind of governance that does not look to avert long-term pain. There is nothing we can do,” Amara Nwankpa, director of public policy initiatives at the Shehu Musa Yar’Adua Foundation, told Al Jazeera. “We can postpone it one or two more years but at the end of the day, the chickens will still come home to roost and that is the reality – the Nigerian workers are between a rock and a hard place.”
 

‘Liveable wage’

Since Tinubu announced his raft of economic reforms, many workers, even at the state level, have been clamouring for comprehensive policies to cushion the associated shocks.

Nigeria’s food inflation hit 30.64 percent in September, according to the National Bureau of Statistics. According to SBM Intelligence, a geopolitical advisory based in Lagos, inflation has made even staple foods like jollof rice, a popular food, out of reach. Similarly, electricity tariffs have increased by 40 percent and fuel now costs 700 naira ($0.84) per litre (0.26 gallons). Transport and other amenities are increasingly out of reach for workers, too.

Tunde Taiwo* [name changed for fear of retribution], 31, is a sergeant at Lagos Neighbourhood Safety Corps, a security agency created by the state government to tackle urban crime. His work often puts him in danger. Last year, he was overpowered and brutalised by louts.

When his 50,000 naira ($59.70) pre-tax October salary came, three loan companies shared in it.

“It is not like I want the loans but when your family is suffering, what will you do? What is the essence of doing a government job when you cannot even feed your family?” Taiwo, who has been working for the government for five years, said. And this is why he is unfazed by temporary increments.

“They should give us a liveable wage that we can depend on, not minimum wage, the way we are living is not up to any standard of living,” he said.

Experts say the government may have missed the window for introducing safety nets as it has squandered years of booms. “The government needs to go for the low-hanging fruit that can target the vulnerable and the most affected in the country like food and other sources of energy that can have immediate impact,” Nwankpa said.

By Ope Adetayo, Al Jazeera

Experts Fear Food Inflation In Nigeria Could Worsen Hunger Crisis

Millions of people in Africa's most populous country, Nigeria, are struggling with economic problems analysts say were caused in part by government reform policies introduced earlier this year.

Nigeria scrapped fuel subsidies in May leading to price hikes in food, transportation and energy costs. Data released last week by the National Bureau of Statistics showed Nigeria's inflation hit an 18-year high of 27.3%. Analysts say the trend could exacerbate suffering in a country with an estimated 25 million food-insecure people.

Nigerian roadside food vendor Vivian Nwankwo started her business four years ago to support her family after her husband died.

But as the cost of food items continues to rise, she said her profit margin has dropped by more than half and forced her to withdraw two of her children from school to free up cash for food.

"Before we were managing, but now things are too expensive," Nwankwo said. "It's difficult to cope or make profits. People are complaining and sometimes at the end of the day, I'm at a loss. Even my two children who are in school do not go every day because I cannot provide for them always."

There are millions of people like Nwankwo in Nigeria struggling to meet basic needs.

The United Nations estimates 25 million people in Nigeria — or about 15% of the total population — are food insecure.

Analysts say regional instability, climate change and inflation are the major triggers of food insecurity in Nigeria. The situation worsened after the government stopped paying subsidies on fuel in May, sharply increasing costs for food, transportation and energy.

Nigeria's currency devaluation is also impacting commodity prices and contributing to overall inflation.

Nigerian Humanitarian Affairs Minister Betta Edu said authorities are responding to the challenges, in part by declaring a state of emergency on food security.

"We have lots of interventions that we're putting on the table and the payments of this conditional cash transfer is ongoing," Edu said. "The conditions attached to it is that they invest in their businesses, ensure that their children go to school. These are all targeted at improving the lives of people and alleviating poverty. The third part is providing fertilizers for poor local farmers to be able to produce food that we'll buy off from them and sell as food rations."

According to the World in Data analysis, Nigeria is among countries with the highest food expenditure with an estimated 60% of total personal income spent on food.

Experts say the situation will worsen if food inflation continues to rise, and that vulnerable people will be most adversely affected.

The Nigerian Central Bank on Monday indefinitely postponed a crucial meeting on interest rates even as inflation worsens.

Analysts say unless something changes, many Nigerians like Nwankwo will struggle to get by from day to day.

By Timothy Obiezu, VOA

Video - Nigerian economists dismiss IMF concerns over China's economic slowdown affecting Africa

They insist that China has been instrumental to Africa's development, and say instead, the West African nation should prioritize solving its internal economic challenges.

CGTN

Naira briefly drops to record low on official market

Nigeria's naira briefly slumped to a record low against the dollar in thin trading on the official market on Thursday, bringing the official exchange rate within touching distance of the parallel market rate.

The currency of Africa's biggest economy fell as low as 1,105 naira to the dollar from 830 at Wednesday's close, LSEG data showed, before recovering to trade firmer on the day around 800 to the dollar.

A central bank spokesperson did not respond to a request for comment on the naira's fall or its plans for the currency when contacted by Reuters.

The naira's official exchange rate has been drifting towards the parallel market level for the past two weeks, traders said.

The naira was quoted at 1,135 to the dollar on the parallel market on Thursday, while lenders had been quoting the currency within a range of roughly 750 naira to 990 naira on the official market before Thursday's trade.

"We suspect this is an anomalous rate in a liquidity squeeze due to increased demand in the I&E window (official market), and don't expect this to be reflective of a true market rate going forward," said Kyle Chapman, FX markets analyst at London-based Ballinger & Co.

Olayemi Cardoso, the central bank governor who took office in September, has been silent about where he wants to see the trading band for the naira or when further liquidity might be injected into the market.

The central bank has not intervened on the official market since October, which has helped accelerate the naira's slide, traders said.

Last week the naira recovered from a record low of 1,300 on the parallel market after the central bank sold dollars to 14 lenders to clear outstanding currency forwards. Some other lenders are yet to get settlement.

The government has said it is expecting $10 billion in foreign currency inflows that will improve market liquidity, but it is not clear when those funds will arrive.

By Elisha Bala-Gbogbo and Chijioke Ohuocha, Reuters

Related story: Nigeria Inflation Hits 18-Year High

Workers in Nigeria Strike Over Attack on Union Leader, Unpopular Economic Reforms

Nigeria's labor unions have begun an indefinite strike to protest the beating of Nigerian Labour Congress (NLC) president Joe Ajaero on November 1. The labor leader was to lead workers in protest over unpaid salaries in Imo state when he was picked up by security agents, who allegedly beat him.

For a second day Wednesday, the nationwide strike called by the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) held firm.

Compliance is stricter in the capital, Abuja, the operational nerve center of the workers' unions.

Police have denied beating the NLC president, saying agents only took Ajaero into protective custody to save him from an angry mob.

Benson Upah, spokesperson of the Nigerian Labour Congress, said the NLC president is still recovering from the incident.

"He was in a bad shape, he lost his bearing, his right eye was popped and recognition was poor," Upah said. "Up till this moment, there has been no condemnation for what happened. No one has been arrested let alone prosecuted for this heinous act. It is about the right of every citizen to freedom and justice. The issues that led to the movement of NLC and TUC people to Imo, those issues have not been addressed.”

But Ajaero's beating is not the only reason for the strike. The unions also blame authorities for failing to honor agreements made to cushion the cost-of-living crisis triggered by the government's economic reforms, introduced in May.

Earlier this year, President Bola Tinubu scrapped expensive fuel subsidies and floated the Nigerian currency in a bid to unify a multiple exchange rate system. However, the decision has hurt the economy and millions of citizens.

In August, workers staged nationwide street protests against the reforms and in September embarked on a two-day warning strike.

Authorities promised to respond.

Last Friday, the National Industrial Court of Nigeria ordered the workers' unions to not go on another strike.

Eze Onyekpere, executive director of the Center for Social Justice, a pro-union NGO, said, "The regime came on board and removed fuel subsidy and floated the naira, which has led to a situation where the minimum wage virtually less than $30. Things the government was supposed to do to reduce the hardship in the land, they didn't do, so for people like me, this strike is long overdue."

On Monday, the presidency criticized the strike, calling it unwarranted, and said authorities have launched a probe into the attack of the union leader.

Onyekpere said the government must not make empty promises or there will be consequences.

"We're going to degenerate to a state where any riffraff simply because he's in power will simply be beating up everybody," he said. "The day Nigeria descends to that level and workers don't speak out or workers don't show their strength, then Nigeria is gone to the dogs."

The unions say authorities must prosecute those who beat Ajaero, offer an apology, and take steps to improve the welfare of workers and citizens. Without those measures, they say, the strike will continue

By Timothy Obiezu, VOA

Nigeria Inflation Hits 18-Year High

Nigerian inflation quickened to a new 18-year high in October as higher input costs and a weaker naira sent food and goods prices soaring, adding pressure on the central bank to raise interest rates.

Consumer prices rose 27.3% from the prior year, compared with 26.7% in September, according to data published on Wednesday on the National Bureau of Statistics’ website. The median of 10 estimates in a Bloomberg survey of economists was 27.7%. Prices rose 1.7% in the month.

Prices in the nation with the second-largest poor population in the world have surged after the easing of foreign-exchange restrictions in June led the naira to plunge 45% and the scrapping of a fuel subsidy a month earlier caused transport costs to almost triple.

Annual food inflation quickened to 31.5% in October from 30.6% and core price growth, which excludes farm-produce and energy costs, accelerated to 22.6% from 21.8%.

To restore price stability, the Abuja-based Central Bank of Nigeria, which is due to convene its first monetary policy committee meeting since July next week, is expected to lift interest rates for a ninth time in a row. It’s already raised rates by 725 basis points since May 2022 to 18.75%.

Read More: Nigeria Increases Bond Yields to Curb Liquidity, Halt Naira Rout

“We expect the MPC to raise the key policy rate further by at least 100 basis points,” said Abdulazeez Kuranga, analyst at Lagos-based Cordros Capital Ltd.

He sees inflation potentially reaching a 28.3% peak in December and said that a hike of that scale will send a strong message that the central bank “is not relenting in its inflation fight, particularly as near-term inflation expectations are tilted to the upside.”

The MPC meeting, expected to be held on Nov. 20-21, will be the first to be chaired by Olayemi Cardoso.

Since becoming governor in September, the central bank under his leadership has worked hard to eradicate financial market dysfunction, aid the slumping currency and mop up excess liquidity.

It’s cleared matured forward foreign-exchange contracts with an unspecified number of banks, lifted a ban on the purchase of dollars on the official market to import 43 specified items and started offering local bonds at higher yields.

The central bank is also working on a document that will set rules to ensure the foreign-exchange market is “predictable and without flip-flops,” Cardoso said last month.

By Emele Onu and Ruth Olurounbi, Bloomberg

Nigeria to Lure Foreign Investment With Tax Incentives

Nigeria will boost incentives for foreign investors in an attempt to address a decline in capital coming into the country as part of the government’s plans to revive the economy.

The administration in Abuja will introduce measures to eliminate double taxation and allow speedy remittances of foreign money, Doris Uzoka-Anite, the minister of industry, trade and investment, said in an interview late Saturday in Riyadh.

“We have the free-trade zones where they can situate their businesses, export and import their raw materials without any taxes,” she said. She called it a “strong incentive” for foreign direct investment, which plunged 52% to $698 million in the six years through 2021.

Since taking office in May, President Bola Tinubu has instituted reforms to revive Africa’s biggest economy from almost a decade of decline. They include scrapping a $10 billion annual fuel subsidy and liberalizing the foreign-exchange market, which led to a more than 40% devaluation in the naira.

Nigeria has also been reviewing its bilateral agreements with countries to drum up investment. In September, it entered into several agreements with India that could see companies set up auto and steel factories in Africa’s top oil producer. A number of investors from India have begun to make their commitments tangible, Uzoka-Anite said.

Key is to show investors their money will be protected, she said. The minister was in Saudi Arabia as part of a Nigerian delegation meeting officials in the Gulf country after the two established a business council and joint chamber of commerce, industry, mines and agriculture. “We’re very keen on making sure that the investments happen very quickly,” she said.

Ruth Olurounbi, Bloomberg

Video - Nigeria aims to boost revenues with shrimp

In an attempt to diversify Nigeria’s economy away from oil, the government wants to position the country to reap the gains from shrimp exports. However, local fishermen and experts say the country’s industry needs to overcome several challenges, including high fuel costs, technical issues, and a significant knowledge gap.

CGTN

House of Representatives in Nigeria reject plan to buy presidential yacht

Nigeria's lower chamber of parliament has rejected the government's plan to buy a presidential yacht for $6m (£5m), a senior lawmaker has said.

Nigerians had criticised the plan as a waste of money on luxuries during an economic crisis.

Lawmakers instead moved the $6m to the student loan budget, doubling its allocation, Abubakar Bichi said.

President Bola Tinubu took office in May with a promise to cut waste, and ease people's financial hardship.

But he triggered an outcry after he tabled a supplementary budget in the National Assembly for approval, with the planned purchase of the yacht listed under the Nigerian Navy's proposed capital expenditure of $53m.

Human rights activist and former lawmaker Shehu Sani reacted by saying that "the poor can't be struggling for survival in a canoe while their leader is yachting".

Mr Tinubu's spokesman Temitope Ajayi distanced the president from plans to buy the yacht.

"From what I know, the request for a yacht, however it is named or couched in the budget is from the navy and they must have operational reasons for why it is required," he said.

The budget was approved by the House of Representatives on Thursday.

But Mr Bichi, chairman of the influential House Committee on Appropriation and a member of Mr Tinubu's ruling party, told local journalists that lawmakers had declined to approve the allocation for a presidential yacht.

The budget also earmarks $36m for State House expenditure, including the purchase of luxury vehicles and the construction of a presidential office complex.

The government is also planning to spend $15m (£13m) on the presidential air fleet.

The controversy comes at a time when Mr Tinubu is under intense pressure over the cost-of-living crisis, and a massive fall in the value of Nigeria's currency, the naira, against the dollar.

Nigeria's annual inflation rose to 26.7% in September, according to official statistics.

A leading advocacy group in Nigeria, the Socio-Economic Rights and Accountability Project (Serap), said the purchase of a yacht could not be justified when "137 million Nigerians live in extreme poverty".

It added that their plight worsened after Mr Tinubu scrapped a fuel subsidy in his inaugural speech as president, causing the price of fuel and other basic commodities to rise.

Activist Omoyele Sowore accused the government of spending on luxuries while it "maintains the miseries of the Nigerian populace".

Mr Ajayi said the president and his vice-president were not planning to add new vehicles to their fleet, and were using "inherited vehicles" from the previous administration.

He said the budget for vehicles was for hundreds of civil servants and political aides working at State House.

By Farouk Chothia & Wycliffe Muia, BBC

Related story: SUVs and Yachts in Nigeria Budget During Economic Hardship