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The World Bank’s April 2026 Nigeria Development Update reveals that the Nigerian government’s capital expenditure decreased by N1 trillion in 2025.
This decline saw infrastructure and growth-oriented investment drop from 1.3% of GDP in 2024 to just 1.0% in 2025.
According to the report, capital spending became the primary casualty as the Nigerian government struggled to balance its books against a surge in total spending, which reached N29.7 trillion.
The fiscal squeeze was largely driven by a sharp rise in recurrent costs, including a ballooning wage bill, massive debt service obligations, and substantial intervention spending.
Specific deductions from the Federation Account—such as N1.1 trillion for military initiatives and N900 billion for the Renewed Hope Development Programme—further drained resources.
Consequently, even when funds were allocated, actual project execution remained dismal; only 24% of the capital budget for various agencies was actually implemented in 2025.
Beyond high costs, the World Bank pointed to structural flaws in the budgeting process that hinder progress. Delays in budget approvals and poor coordination between the executive and legislative branches have undermined fiscal credibility.
For instance, the 2025 budget was finalised six weeks after the fiscal year ended, and as of late March 2026, the current year’s budget had yet to be approved.
This lack of predictability has led to a cycle where capital spending is frequently used as an adjustment tool to cover fiscal shortfalls.
While non-oil tax revenue saw improvements due to better compliance, the gains were not enough to offset the rising deficit, which widened to 3.1% of GDP.
In response to these funding gaps, the Senate recently extended the implementation period for the 2025 capital budget until June 30, 2026.
This move aims to prevent the abandonment of critical infrastructure projects, as the Nigerian government hopes to achieve more optimal execution levels despite having released only about 30% of the required funding so far.
