Expectations are high among stakeholders that the 2025 budgets of most states could address the serious economic challenges facing Nigerians if the governors strictly implement their allocations to capital projects.
An appraisal of the various allocations to key sectors of their budgets now approved by the legislatures showed that 25 of the 36 states of the federation prioritised capital expenditures over recurrent expenditures.
It is anticipated by experts that the concentration on capital projects will generate more jobs and spread income as the projects are being executed in various parts of the country.
Also, the siting of new projects in some rural areas and senatorial districts is seen as capable of not only bringing development to the affected communities but equally improving the living conditions of the people with disposable income.
From the data gathered by LEADERSHIP Sunday, 25 states voted 65.7 percent or N13.3 trillion of their total N20.2 trillion in 2025 for capital projects against the N6.87 trillion they devoted to recurrent expenditure.
The budgets released by the states under review indicated that most of them are spending upwards of 60 percent of their appropriations on capital projects except Kano State which assigned the bulk of its N549 billion budget to recurrent expenses. The state plans N312.6 billion representing 56.9 per cent of its total budget on operating expenses with capital projects getting 43.1 per cent or N236.5 billion.
The statistics further showed that Enugu and Niger States will spend the highest percentage of their budget on capital projects with 86.3 and 84.3 per cent of their total budget going to capital expenditure respectively. Of its budget of N971 billion, Enugu State will spend N837.9 billion on capital expenses with N133.1 billion appropriated for recurrent expenses.
Also, Niger State with N1.2 trillion budget and an internally-generated revenue of N74.18 billion aims to spend N1.01 trillion on capital projects while N188.4 billion goes to recurrent expenditure.
With a meagre internally-generated revenue (IGR) of N3.94 trillion, 19 states in Nigeria want to expend N16.27 trillion on recurrent and capital expenditures in 2025. This buttresses the concerns by civil society organisations (CSOs) that most states of the federation cannot survive without the federal allocations, as the IGR can only cover 24 per cent of the budget.
The collated data further revealed that only two states, Lagos and Enugu, can adequately fund their recurrent expenditure with their IGR and still have funds left with majority of the states’ recurrent expenditure being multiples of their IGR.
Last year, BudgIT raised eyebrows on the reliance of states on federal allocation, pointing out that 34 of the 36 states in the country cannot cover their operating costs without relying on allocations from the Federation Account Allocation Committee (FAAC).
Rivers and Lagos were the only two states that generated enough IGR to cover their operating expenses, with IGR to operating expense ratios of 121.26 percent and 118.39 percent respectively.
In its 2024 State of States Report, asides Lagos and Rivers states, which were able to meet their recurrent obligations fully with their IGR, several others, including Ogun, Anambra, Cross River, Kwara, Kaduna and Edo, managed to generate IGR sufficient to cover at least 50 per cent of their operating costs, with the rest relying on federal transfers.
According to the report, Akwa Ibom, Imo, Taraba, Yobe, Bayelsa and Jigawa states required over five times their IGR to meet operating costs. However, all 36 states managed to raise enough revenue, comprising IGR, federal allocations, aid and grants, to fully cover their recurrent expenditures.
For the 2025 spending, the data showed that with an IGR of N1.97 trillion, Lagos State has a budget of over N3 trillion consisting of N1.239 trillion recurrent and N1.766 trillion capital expenditure, while Enugu with an IGR of N509.94 billion, plans to spend N971 billion on both recurrent and capital expenditure. With capital expenditure taking 86.3 per cent of its budget at N837.9 billion, its operating expenses are being put at N133.1 billion.
Only five states, Lagos, Kaduna, Abia, Rivers and Oyo can cover more than 50 per cent of their recurrent expenditure with their IGR, as most states can only cover just about 20 percent of their operating costs with their IGR.
According to the data, Kaduna, Abia, Oyo and Rivers IGR can cover 59.8, 72.5, 50.6 and 64.9 per cent of their recurrent expenditure respectively. Katsina’s IGR of N64.43 billion can cover 40.8 per cent of its operating cost, while Niger State with a recurrent obligation of N453.56 billion has a cover of 39.4 percent with its N74.18 billion IGR. Anambra also has a 43 per cent coverage of its N139.5 billion recurrent expense with its N60 billion IGR.
Jigawa’s near total reliance on external funding was evident as the state with a total budget of N698.3 billion comprising N161.75 billion operating cost and N534.76 billion planned-spending for capital projects, is generating only N13.002 billion.
Compared to what was budgeted for capital projects, only Lagos is able to use its IGR of N1.97 trillion to cover its capital expenditure of N1.766 trillion. Niger State which had the second highest budget of N1.2 trillion of which N188.42 billion and N1.01 trillion is planned for recurrent and capital expenditures can only cover 39.4 and 7.3 percent of its recurrent and capital expenditures.
Stakeholders Warn Against Non-implementation, Corruption
In a reaction to the budgetary and fiscal policies of the states, the founder and chief executive of the Centre for Promotion of Private Enterprises (CPPE), Dr Muda Yusuf, said that apportioning 65 per cent of the total budget to capital expenditure is commendable for the states considering the state of the nation.
Yusuf said some states in the past had spent more than 50 per cent of their budget on paying salaries alone, stressing that to spend over 60 per cent on capital projects was a welcome development on the part of the states.
To him, the states can do better, adding that budgeting up to 65 per cent of total spending on capital projects will “significantly impact the development of those states. There are some states that are not even doing up to that and there are some states that the monthly salaries are gulping up to 50 per cent of their total revenue because they have very huge overheads in terms of personnel. But if they are able to put 65 per cent of their budget on capital, I think it is not bad.”
To the chief executive of Cowry Assets Management Limited, Johnson Chukwu, implementation remains a major challenge for many states as budgets are in most cases not adhered to. “Allocations to any expense head may not be a parameter to measure effectiveness of the budgeting process.
“In the last one year, the allocation going to the three tiers of government has increased by 40 per cent and I wouldn’t think that one can reasonably say that we’ve seen an improvement in infrastructure built that mirrors the 40 per cent increase in the revenue of the government. That is why I say we need to take that allocation with some level of circumspect,” he said.
