Nigeria’s capital spending suffered a significant setback in 2025, declining by N1 trillion as soaring recurrent expenditure consumed an ever-larger share of government revenue, leaving infrastructure investment starved of funds, the World Bank has warned.
The disclosure is contained in the bank’s April 2026 Nigeria Development Update, which revealed that capital spending contracted from 1.3 per cent of GDP equivalent to N5.5 trillion in 2024, to 1.0 per cent of GDP, amounting to N4.5 trillion, in 2025. The bank described capital expenditure as having served as the primary adjustment margin in the face of mounting fiscal pressure.
The squeeze came against the backdrop of a sharp rise in overall government spending, which climbed to approximately N29.7 trillion, driven largely by higher personnel costs, swelling debt service obligations, and expanded intervention spending. A substantial portion of Federation Account revenue was also absorbed before reaching key programmes, including N1.1 trillion for military-related special interventions and N900 billion for the Renewed Hope Development Programme.
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Beyond reduced allocations, the World Bank raised sharp concerns about budget execution quality. Only 24 per cent of the prorated 2025 capital budget for Ministries, Departments, and Agencies was actually implemented, leaving the bulk of approved infrastructure spending unspent.
The consolidated fiscal deficit widened to approximately 3.1 per cent of GDP in 2025 from 2.8 per cent in 2024. The bank acknowledged improvements in non-oil tax revenues but noted these gains were insufficient to offset the surge in recurrent spending.
Structural weaknesses in Nigeria’s budget process were also flagged as compounding the problem. The 2025 budget was approved six weeks after the close of the fiscal year it was meant to govern, while the 2026 budget had yet to receive legislative approval as of 25th March 2026.
The Senate has since extended the capital budget implementation window to 30th June 2026, with Senate Leader Opeyemi Bamidele warning that without the extension, critical infrastructure projects could be abandoned.
The World Bank’s findings serve as a sharp reminder that reform-driven revenue gains mean little if the resulting funds are consumed by recurrent obligations before they can reach the infrastructure that drives long-term economic growth.
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