Nigeria’s 36 states and the Federal Capital Territory have increased their combined budgets by 47.5 per cent to N40.14tn in 2026, up from N27.22tn in 2025, even as the share allocated to capital projects has declined.
An analysis of the 2026 budgets shows that capital expenditure accounts for 64.34 per cent of the aggregate allocation, compared with 73.24 per cent in 2025.
In nominal terms, states and the FCT have budgeted N25.83tn for capital projects in 2026, compared with N19.94tn allocated from the N27.22tn combined budget last year.
The figures show that while capital spending has risen in naira terms, its share of total expenditure has fallen by nearly nine percentage points.
The shift indicates that a larger proportion of state resources is being directed towards recurrent expenditure and other obligations, even as governments seek to expand infrastructure and stimulate economic activity.
Spending patterns, however, vary significantly across the country. The South-South, North-West and North-East increased the proportion of their budgets allocated to infrastructure, while the South-East, South-West and North-Central reduced their capital spending shares.
South-South, North-West Raise Capital Spending
The Federal Capital Territory increased its capital expenditure allocation to 76.19 per cent in 2026 from 72.3 per cent in 2025. Its total budget also rose from N1.81tn to N2.29tn.
In the South-South, capital expenditure rose from 58 per cent of the region’s N5.26tn budget in 2025 to 70 per cent of its N8.08tn budget in 2026.
The North-West also increased its capital spending share from 64.24 per cent to 75.3 per cent. Its combined budget rose from N4.6tn in 2025 to N6.53tn this year.
The North-East increased capital expenditure from 58.34 per cent to 64.15 per cent, while its aggregate budget climbed from N3.35tn to N4.14tn.
South-East, South-West Cut Capital Allocation
The South-East recorded the sharpest decline, reducing its capital spending share from 82.05 per cent in 2025 to 61 per cent in 2026.
The reduction came despite an increase in the region’s combined budget from N3.6tn to N5.73tn.
The South-West marginally reduced its capital allocation from 55.4 per cent to 55.03 per cent, while its aggregate budget increased from N6.7tn to N8.7tn.
In the North-Central, capital expenditure fell significantly from 72 per cent in 2025 to 59.04 per cent in 2026. The region’s combined budget rose from N3.93tn to N4.7tn.
Analysts have warned that a declining share of capital expenditure could affect states’ ability to attract investment if reduced infrastructure spending weakens the business environment.
They said sustained investment in roads, power, water, transport and other critical infrastructure remains essential for improving productivity and making states more attractive to investors.
The increase in aggregate state budgets also comes amid growing fiscal pressures, including rising personnel costs, debt obligations and demand for public services.
Experts said the key challenge for state governments would be balancing recurrent commitments with adequate investment in productive infrastructure capable of supporting economic growth and generating future revenue.
States’ Budgets Trail Federal Allocation
The analysis also shows that the Federal Government’s 2026 budget is significantly larger than the combined budgets of the 36 states and the FCT.
President Bola Tinubu signed Nigeria’s N68.32tn 2026 Appropriation Act into law on April 17, 2026.
The combined budgets of the states and FCT are therefore N28.32tn lower than the Federal Government’s budget.
Analysts argue that states should commit more resources to development to ensure that infrastructure and other economic benefits reach communities faster.
Professor of International Economics Jonathan Aremu said the decline in the share of capital spending was concerning, particularly as the population continues to grow.
“Capital projects are meant to support productive activities. When money meant for capital projects is going down, it becomes a paradox, especially because the demand for infrastructure is rising,” he said.
Aremu also raised concerns about the implementation of approved budgets, noting that monitoring remained weak.
“Are they implementing even the ones they have budgeted? If the states are not increasing their budgets, how then will there be development across the regions?” he asked.
A former central banker and consultant economist, Chukwunonso Iheoma, said capital budgets were necessary for developing infrastructure and supporting industrial growth.
“If a state earmarks more money for recurrent expenditure, it may be infrastructurally deficient. It cannot attract foreign investment, and existing investors may be forced to exit to another state where they will have access to the infrastructure.”
Emerging markets analyst Ike Ibeabuchi attributed part of the shift to increased recurrent spending ahead of elections.
“Most governors often like to increase salaries, distribute items to the people and share gifts in pre-election years. It is quite common among them. Rather than build more roads, they would share bags of rice and beans. It is the way politicians think,” he argued.
However, Ibeabuchi noted that the 64 per cent capital allocation remained relatively high compared with historical levels.
“We started this campaign to raise capital projects in 1999. I remember when it used to be 30 per cent capital budget, 70 per cent recurrent. But the situation is much better now. All we are saying is that we need to get to 70 per cent capital expenditure every year. That is one way we can make progress in Nigeria fast.”
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