The World Bank has reported that Nigeria's 36 states experienced a significant 93% increase in revenue between 2023 and 2025. This growth is attributed to various factors, including exchange-rate reforms, the removal of the petrol subsidy, improved revenue administration, and increased allocations from the Federation Account. As a result, the states' aggregate revenue rose substantially in real terms.
According to the World Bank's latest Nigeria Development Update, the increased revenue led to a 92% rise in state expenditure during the same period. The report highlights that states benefited from various sources, including refunds, settlement of longstanding federal obligations, intervention funds, and stronger Value Added Tax collections. This significant increase in revenue presents an opportunity for states to improve infrastructure, education, healthcare, and water services.
Despite the substantial revenue growth, the World Bank notes that education's share of total state expenditure declined from 14.9% in 2021 to 12.1% in 2025. In contrast, health expenditure remained relatively stable at approximately 7%, while social protection's share increased from 1.4% to 4.4%. The bank emphasizes that stronger investment in human capital is necessary to translate economic reforms into sustainable employment and improved living standards.
The World Bank's report also reveals that capital expenditure accounted for 61% of state spending, compared to 46% previously. The largest increase in spending was recorded in transport infrastructure, alongside substantial investments in housing, agriculture, and other economic sectors. This shift in spending priorities indicates a focus on infrastructure development and economic growth.
Matthew Verghis, the World Bank's Country Director for Nigeria, stresses that greater spending efficiency, accountability, and improved service delivery are essential to ensuring that additional public resources benefit Nigerians. The bank acknowledges improvements in states' fiscal reporting, transparency, and internally generated revenue, which have contributed to the revenue growth.
The World Bank projects average economic growth of 4.4% between 2026 and 2028, subject to sustained reforms and improved service delivery. The report urges federal and state authorities to ensure that increased public revenue translates into tangible improvements in Nigerians' welfare. This requires effective implementation of reforms and efficient allocation of resources to priority sectors.
The World Bank's report was made available to the News Agency of Nigeria (NAN) in Washington, D.C. The bank's findings highlight the need for states to prioritize education and human capital development, despite the challenges posed by declining revenue shares. By doing so, Nigeria can achieve sustainable economic growth and improve living standards for its citizens.
Key points
- Nigeria's 36 states recorded a 93% increase in revenue between 2023 and 2025.
- Education's share of total state expenditure declined from 14.9% in 2021 to 12.1% in 2025.
- The World Bank projects average economic growth of 4.4% between 2026 and 2028.
