State governors have detailed ambitious plans to increase capital investment in order to overcome infrastructure deficits in their respective domains.
The governors have budgeted N17.51 trillion to fund capital projects in 2025.
The governor had earmarked N11.34 trillion to cover similar projects in 2024, but they were unable to get sufficient funding because the states had a deficit of N3.98 trillion last year.
This shows that sub-nationals want to spend N28.85 trillion on infrastructure renovations to support economic development in two years, following the federal government’s increased financial allocations.
Recall that the Federation Account Allocation Committee’s statutory allocations to the three levels of government increased by N4.994 trillion to N15.12 trillion in 2024.
The sum represents a 49.24 percent increase above the N10.143 trillion disbursed to pay their obligations in 2023.
According to an report of the committee’s monthly statement, the 36 state governors received the highest allocation of N5.22 trillion, accounting for 34.5 percent of the total N15.14 trillion allocated to the three levels of government.
Despite the windfall, states continue to fall short of their obligations to provide infrastructure projects for the benefit of their residents. This funding gap has slowed the construction of various infrastructure projects, jeopardising efforts to enhance essential sectors like roads, hospitals, and education.
An examination of the 2024 budget implementation reports for 32 states and the approved 2025 budgets for 35 states, retrieved from the various governments’ websites and assessed by our reporter, exposes the scope of the issues.
The analysis revealed a shift in spending priorities towards recurrent costs and debt payments, raising worries about the long-term impact on economic growth.
According to experts, capital spending is the money spent by the government on long-term investments to improve infrastructure, services, or the economy.
These funds are often used for long-term projects, such as the construction of roads, bridges, schools, hospitals, public transportation systems, and other critical infrastructure to promote economic growth, improve quality of life, and provide better public services to inhabitants.
The investigation revealed that nine states, including Delta, Ekiti, Edo, Lagos, Rivers, Yobe, Osun, Bauchi, and Akwa-Ibom, achieved more than an 80% implementation rate. 15 states met 50-76% of their spending targets, while eight states fell short.
Despite financial constraints, states such as Lagos, Niger, and Enugu have emerged as frontrunners in terms of planned capital investment, allocating the majority of their budgets to infrastructure development.
A state-by-state breakdown revealed that Lagos State, which planned the largest capital spending of N1.53 trillion, actually spent N1.31 trillion, resulting in an implementation rate of 85.5%. Abia State initially planned N474.29 billion for capital expenditures in 2024. However, the state is only able to spend N250.47 billion, resulting in a 52.8% implementation rate.
In the same line, Akwa Ibom had a capital budget of N573.32 billion for 2024 but appropriated N483.88 billion, indicating an execution percentage of 84.4%. Adamawa State planned N146.39 billion but only spent N109.99 billion, yielding a 75.2% implementation rate.
Other states reported varying levels of execution in 2024, as governors attempted to resolve capital projects in various sub-nationals.
Meanwhile, 35 state governors have pledged at least N17.51 trillion to improve infrastructure. This implies a 54.39 per cent increase, or N6.17 trillion, over the N11.343 trillion anticipated for 2024.
Experts have expressed concerns about the state’s ability to complete these projects quickly, given the significant deficits carried over from previous years.
With several projects already delayed, stakeholders are apprehensive that the 2025 budgets could suffer similar implementation challenges unless funding deficits are adequately rectified.
A breakdown revealed that the Abia government intends to spend N611.67 billion in 2025. Akwa Ibom has boosted its capital spending prediction to N655bn; Adamawa expects to spend N348.96bn in 2025, and Anambra plans to spend N467 in 2025.
Bauchi wants to spend N284.02 billion in 2025, while Bayelsa intends to spend N433.26 billion. Lagos State has lofty plans for 2025, including N2.07 trillion for infrastructure development. Delta State allocated N630.46 billion for infrastructure in 2025. Other states have announced capital project intentions for the coming year.
The report added that Nigerian states face several challenges, as “internally generated revenue growth remains subdued due to socioeconomic constraints and inefficiencies in tax collection.
“Most states depend on FAAC transfers, with Lagos being an exception due to its higher IGR capabilities. Rising current spending, driven by high inflation and recent increases in the minimum wage, further pressures state finances.”
It added that “most Nigerian states rely on subsidised facilities from the Federal Government to finance their investments. Despite significant capital expenditure needs, states struggle to fully utilise budgeted capex due to funding and implementation constraints, with an average of only about 60 per cent of budgeted capex executed.”
This is due to a variety of issues, including budget and implementation restrictions, low revenue, and a failure to make the significant investments required to satisfy the expanding demands of the people and economy.
As the year passes, voters will be watching closely to see if the states can reach these lofty goals while also addressing significant infrastructure shortages that continue to plague the country.
