Nigeria’s capital spending drops as recurrent costs rise
The World Bank has reported a significant drop in the Federal Government’s capital spending due to rising recurrent expenses. According to its April 2026 Nigeria Development Update, capital spending fell by N1tn in 2025, with only 24 per cent of the prorated 2025 capital budget implemented. The report highlights that increased personnel costs, debt service, and intervention spending have squeezed fiscal space for growth-enhancing investments. The Senate extended the implementation of the 2025 capital budget from March 31 to June 30, 2026 due to low execution levels.
TLDR
- Capital spending declined from 1.3% of GDP (N5.5tn) in 2024 to 1.0% (N4.5tn) in 2025, as recurrent expenditure absorbed most fiscal resources.
- Only 24% of the prorated 2025 capital budget for MDAs was implemented, leaving much of the approved investment unspent.
- The consolidated fiscal deficit widened to about 3.1% of GDP in 2025 from 2.8% in 2024, despite improved non-oil tax collections.
- The 2025 budget was approved six weeks after the end of the fiscal year, and the 2026 budget was still pending as of March 25, 2026.
- The Senate extended the implementation of the 2025 capital budget from March 31 to June 30, 2026 to address low execution rates and prevent project abandonment.
