State governors across Nigeria have unveiled ambitious capital expenditure plans, aiming to tackle the nation’s pervasive infrastructure deficit. A combined N17.51 trillion has been earmarked for capital projects in their 2025 budgets, a significant increase from the N11.34 trillion allocated in 2024. This substantial investment reflects a commitment to infrastructure upgrades, aiming to stimulate economic development and improve public services. However, securing adequate funding remains a challenge, as states faced a N3.98 trillion deficit in 2024, hindering the full implementation of their infrastructure goals. This ambitious two-year plan, totaling N28.85 trillion, comes on the heels of increased revenue allocations from the Federal Government, providing a crucial boost to state finances. The increased allocations, totaling N15.12 trillion in 2024, represent a substantial 49.24% rise from the previous year. Of this, state governments received the lion’s share, amounting to N5.22 trillion, or 34.5% of the total disbursement. Despite this influx of funds, many states still face a shortfall, leading to delays and disruptions in critical infrastructure projects in sectors like transportation, healthcare, and education.
A comprehensive analysis of 32 states’ 2024 budget implementation reports and the approved 2025 budgets for 35 states reveals a complex financial landscape. While some states demonstrated commendable implementation rates, with nine exceeding 80% of their planned capital spending, others lagged significantly. Fifteen states achieved between 50% and 76% implementation, while eight states fell below the 50% mark, indicating a significant gap between planned investments and actual spending. This disparity highlights the challenges facing several states in effectively deploying their allocated resources for infrastructure development. The analysis further reveals a concerning trend towards prioritizing recurrent expenditures and debt servicing over capital investments. This shift raises concerns about the long-term impact on economic development, as inadequate infrastructure hinders growth and limits access to essential services. Experts emphasize the importance of capital spending for long-term economic prosperity, highlighting its role in creating lasting benefits through investments in roads, bridges, schools, hospitals, and public transport systems.
Despite the financial constraints, some states have emerged as leaders in planned capital expenditure. Lagos, Niger, and Enugu have earmarked substantial portions of their budgets for infrastructure development, demonstrating a commitment to upgrading their infrastructure despite the prevailing financial challenges. Lagos State, for instance, achieved an 85.5% implementation rate in 2024, spending N1.31 trillion of its N1.53 trillion capital budget. Other states, while demonstrating commitment, faced varying degrees of implementation success. Akwa Ibom achieved an 84.4% implementation rate, while Adamawa achieved a 75.2% rate. These variations underscore the diverse economic realities and management capacities across different states.
The planned capital expenditure for 2025 shows a further commitment to infrastructure development, with a total allocation of N17.51 trillion, a substantial 54.39% increase from the 2024 allocation. This increase signifies the states’ recognition of the urgent need for infrastructure improvements to drive economic growth and improve citizens’ quality of life. However, concerns remain about the states’ capacity to execute these ambitious plans effectively. Given the substantial deficits carried over from previous years and the delays experienced in implementing past projects, stakeholders worry that the 2025 budgets may encounter similar implementation challenges unless appropriate measures are taken to address funding gaps and streamline project execution.
A closer examination of the 2025 budget allocations reveals a varied picture across the states. Abia State has allocated N611.67 billion, Akwa Ibom N655 billion, Adamawa N348.96 billion, and Anambra N467 billion. Bauchi State plans to spend N284.02 billion, Bayelsa N433.26 billion, and Lagos State has set an ambitious target of N2.07 trillion. Delta State has allocated N630.46 billion. These figures illustrate the diverse priorities and financial capacities of different states and the scale of investment envisioned for 2025. The success of these plans will depend on effectively addressing the underlying financial challenges and ensuring efficient project implementation.
Several key challenges impede the states’ efforts to achieve their infrastructure goals. Internally Generated Revenue (IGR) growth remains subdued due to socioeconomic constraints and inefficiencies in tax collection. Most states heavily rely on allocations from the Federal Accounts Allocation Committee (FAAC), with Lagos being a notable exception given its stronger IGR base. Rising recurrent spending, fueled by high inflation and recent minimum wage increases, further strains state finances, leaving less room for capital investments. Additionally, many states rely on subsidized facilities from the Federal Government to finance their projects, further compounding the financial complexity. Despite significant capital expenditure needs, states struggle to fully utilize their budgeted allocations due to funding and implementation constraints. On average, only about 60% of budgeted capital expenditure is executed, highlighting a significant gap between planned investments and actual spending. This underutilization stems from a combination of factors, including funding shortages, implementation bottlenecks, and the sheer scale of investment required to meet the growing demands of the population and the economy. The ability of states to meet their ambitious 2025 targets will depend heavily on their ability to overcome these challenges and effectively deploy the allocated resources.
