Barbara Bako, Abuja.
State governments across Nigeria recorded a 93 per cent increase in revenues in real terms between 2023 and 2025, with much of the additional fiscal space channelled into infrastructure and other development spending, the World Bank has said.
The World Bank disclosed this in its October 2026 Nigeria Development Update (NDU), titled “Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities,” presented in Abuja on Thursday.
According to the report, aggregate state expenditure also increased by about 92 per cent over the period, while the share of capital spending in total state expenditure rose from 46 per cent to 61 per cent.
Transport infrastructure recorded the largest increase in spending, alongside higher allocations to housing, agriculture and other investments aimed at supporting economic activity.
Presenting an overview of the report, the World Bank Lead Economist for Nigeria, Dr. Fiseha Haile, said the increase in state revenues followed major macroeconomic reforms, including foreign exchange reforms, the removal of the petrol subsidy and stronger revenue administration.
He said gross federation revenues increased by 69 per cent in real terms between 2023 and 2025, with states recording the largest increase in federation revenue flows.
Haile said improved tax administration had also contributed to growth in states’ internally generated revenue, although many states remained heavily dependent on federation transfers.
The report found that the increase in revenues had significantly influenced state spending priorities, with economic infrastructure receiving a larger share of expenditure.
However, the World Bank noted that spending on education, healthcare and social protection, although it also increased, did not grow at the same pace as spending on economic infrastructure.
Education’s share of total state expenditure declined from 14.9 per cent in 2021 to 12.1 per cent in 2025, while health spending remained broadly stable at about seven per cent. The share of spending on social protection, however, increased from 1.4 per cent to 4.4 per cent over the same period.
World Bank Country Director for Nigeria, Dr. Matthew Verghis, said the increase in state revenues presents an opportunity to improve infrastructure, education, healthcare and other services that directly affect Nigerians.
He said states had expanded transport infrastructure and strengthened their fiscal positions, including through reductions in domestic debt, but stressed the need for stronger spending efficiency and accountability.
Verghis also said federation transfers continued to dominate state financing, leaving many states exposed to fluctuations in federally shared revenues.
He called for stronger internally generated revenue, improved budget credibility, better cash and commitment controls, stronger public investment management and closer integration of debt management into state budget processes.
Nigeria’s economy grows 4.2%
The World Bank also reported an improvement in Nigeria’s broader economic performance, with real GDP growth reaching 4.2 per cent in the first half of 2026, up from 3.9 per cent in the corresponding period of 2025.
The growth was driven largely by services and a stronger contribution from agriculture.
The bank said the stronger economic performance had helped stabilise the poverty rate after years of increases, although inflation remained a challenge following higher energy prices and the impact of the Middle East conflict.
Nigeria’s external position also strengthened, with gross external reserves rising above $54 billion in September, while higher oil prices supported export earnings and public revenues.
Looking ahead, the World Bank projects Nigeria’s economy to grow by an average of 4.4 per cent between 2026 and 2028, provided the government sustains its reform programme, improves public service delivery and creates conditions for stronger private-sector-led growth.
Speaking at the event, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the reforms had helped stabilise the economy and put Nigeria on a path towards faster growth.
Oyedele said sustaining growth above population growth would be important to reducing poverty, while stressing the government’s focus on private-sector-led and job-rich growth.
The event also featured the CBN Deputy Governor, Muhammad Sani Abdullahi, Katsina State Governor, Malam Dikko Umaru Radda, and the Chief Executive Officer of the Nigerian Economic Summit Group, Dr. Tayo Aduloju.
Good production costs money and you can support what we do. Please find our details below👇🏾👇🏾👇🏾 Account name: MARKET ONLINE MEDIA Bank: UBA Acc No: 1026401930.
