Nigeria’s State Revenues Surge 93% as Infrastructure Spending Rises

Nigeria’s state governments increased capital spending as revenues rose sharply between 2023 and 2025, directing a larger share of public expenditure towards infrastructure, according to a World Bank report.

State revenues grew by 93 percent in real terms over the period, while expenditure increased by 92 percent. Capital spending accounted for 61 percent of total state expenditure in 2025, up from 46 percent in 2021, reflecting a shift towards infrastructure and other investment projects.

Transport infrastructure recorded the largest increase in capital spending, while allocations to housing, agriculture and other growth-enhancing investments also rose, the report, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, found.

The spending shift has not been uniform across public services. Education’s share of state expenditure declined from 14.9 percent in 2021 to 12.1 percent in 2025, while health spending remained at about seven percent. Social protection’s share increased from 1.4 percent to 4.4 percent over the same period.

The changes come as Nigeria’s fiscal reforms have increased the resources available to federal and state governments. Gross federation revenues rose by 69 percent in real terms between 2023 and 2025, supported by exchange-rate reforms, the removal of the petrol subsidy and improvements in revenue administration.

States benefited from higher statutory allocations, refunds and settlements of federal obligations, intervention funds and value-added tax receipts. The additional resources have given state governments greater room to increase investment, although the changing composition of expenditure raises questions about how revenue gains are distributed across infrastructure and essential public services.

Nigeria’s wider economic indicators have also improved. Gross domestic product grew by 4.2 percent in the first half of 2026, compared with 3.9 percent in the same period a year earlier and 3.5 percent in 2024.

The country recorded a current account surplus of 12 billion US dollars, equivalent to 7.1 percent of gross domestic product, in the first half of 2026, up from 8.6 billion US dollars, or 6.7 percent of GDP, a year earlier. External reserves exceeded 54 billion US dollars in September, supported largely by portfolio inflows.

Inflation eased from 27.6 percent in January 2025 to 15.2 percent in December, although higher oil prices linked to conflict in the Middle East and seasonal increases in food prices have slowed the pace of disinflation.

The World Bank projects that Nigeria’s economy will grow by an average of 4.4 percent annually between 2026 and 2028. Inflation is expected to fall to about 12 percent by 2028, with poverty projected to begin declining gradually.

Source: FSX Business News