Nigeria’s state revenues rise 93% in real terms as capital spending expands — World Bank
State government revenues in Nigeria rose by 93% in real terms between 2023 and 2025, while expenditure increased by 92%, as higher public receipts supported an expansion in capital spending, according to the World Bank.
The findings are contained in the bank’s latest Nigeria Development Update (NDU), which examined how increased revenues have reshaped spending priorities across states.
The report, under the special topic “Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities,” said the share of state expenditure allocated to capital projects increased from 46% to 61% over the period.
State revenues and capital spending increase
The World Bank said improved federation revenues, foreign exchange reforms, the removal of the petrol subsidy and stronger revenue administration contributed to the increase in public resources available to governments.
The lender noted, “States used additional fiscal space to expand spending on economic infrastructure and strengthen their fiscal positions. Aggregate state revenues rose by about 93% in real terms between 2023 and 2025 (2019 constant prices), while expenditures rose by about 92% over the same period.”
The World Bank added, “Capital spending increased, with its share in total expenditure rising from 46% to 61%. Transport infrastructure accounted for the largest increase, alongside substantial increases in spending on housing, agriculture, and other growth-enhancing investments. Spending on health, education, and social protection also rose substantially but grew more slowly than spending on economic infrastructure. Education’s share of total expenditure declined from 14.9% in 2021 to 12.1% in 2025, while health spending remained broadly stable at around 7%. Social protection’s share increased from 1.4% to 4.4% over the same period.”
The figures indicate that states directed a larger proportion of their budgets towards capital projects as their revenues increased, although the decline in education’s spending share raises questions about how governments are balancing infrastructure investment with social services.
World Bank urges states to improve service delivery
The World Bank said higher revenues provide an opportunity for state governments to address infrastructure gaps and improve access to essential public services.
“The bold macroeconomic reforms have substantially increased fiscal revenues at the state level, providing a unique opportunity to improve infrastructure, education, healthcare, and water services, which are critical to creating more and better jobs,” said Mathew Verghis, the World Bank’s Country Director for Nigeria.
He added that strengthening spending efficiency, accountability and service delivery would be essential to ensuring that public resources improve Nigerians’ lives.
The report also noted progress in fiscal reporting, transparency and internally generated revenue among states, while identifying more efficient spending and stronger revenue mobilisation as priorities for the next phase of reforms.
Nigeria’s economic growth strengthens
The findings come amid an improvement in Nigeria’s broader economic performance, although inflationary pressures remain a concern.
The World Bank said Nigeria’s real GDP grew by 4.2% in the first half of 2026, compared with 3.9% in the corresponding period of 2025 and 3.5% in the first half of 2024.
Growth was supported by services and a stronger contribution from agriculture. The bank also said the improvement in economic activity had helped stabilise the poverty rate for the first time since 2019.
Nigeria’s external position also improved during the period. The country recorded a current account surplus of $12 billion, equivalent to 7.1% of GDP, in the first half of 2026, compared with $8.6 billion, or 6.7% of GDP, a year earlier.
Gross external reserves exceeded $54 billion in September, supported largely by portfolio inflows, while improvements in foreign exchange market functioning followed recent reforms.
However, the report noted that higher fuel prices and seasonal food pressures had slowed the pace of disinflation after inflation declined from 27.6% in January 2025 to 15.2% in December 2025.
The World Bank projects Nigeria’s economy will grow by an average of 4.4% between 2026 and 2028, with inflation expected to ease to around 12% by 2028 and poverty gradually declining.
The report’s findings suggest that sustaining these gains will require states to improve spending efficiency, strengthen accountability and ensure that higher revenues deliver measurable improvements in living standards.
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