Nigeria's 36 states have recorded a significant 93% increase in revenues between 2023 and 2025, according to a report by the World Bank. The bank's latest Nigeria Development Update attributes the improvement to exchange-rate reforms, petrol subsidy removal, stronger revenue administration, and increased allocations from the federation account. States also benefited from refunds, settlement of longstanding federal obligations, intervention funds, and stronger Value Added Tax collections.
The report highlights that states' aggregate revenues rose by approximately 93% in real terms, while expenditure increased by 92% during the period. Despite the increase in revenues, education's share of total state expenditure declined from 14.9% in 2021 to 12.1% in 2025. This decline is concerning, as education is a critical sector that requires significant investment to improve human capital.
Health expenditure remained broadly stable at approximately 7%, while social protection's share increased from 1.4% to 4.4%. The bank notes that capital expenditure increased significantly, accounting for 61% of state spending, compared with 46% previously. This increase in capital expenditure is a positive development, as it suggests that states are investing in infrastructure and other critical sectors.
Transport infrastructure recorded the largest increase, alongside substantial spending on housing, agriculture, and other economic investments. The World Bank Country Director for Nigeria, Mathew Verghis, emphasized that increased revenues provided the opportunity to improve infrastructure, education, healthcare, and water services. He stressed that greater spending efficiency, accountability, and improved service delivery were essential to ensuring that additional public resources benefited Nigerians.
The bank acknowledged improvements in states' fiscal reporting, transparency, and internally generated revenue. However, it stressed that stronger investment in human capital was necessary to translate economic reforms into sustainable employment and improved living standards. The report also projected average economic growth of 4.4% between 2026 and 2028, subject to sustained reforms and improved service delivery.
The World Bank report urges federal and state authorities to ensure that increased public revenues translate into tangible improvements in Nigerians' welfare. The bank's findings suggest that while states have made progress in increasing revenues, there is still much work to be done to improve the quality of life for Nigerians. The report's recommendations emphasize the need for greater efficiency, accountability, and investment in critical sectors.
The Punch newspaper reported that the World Bank's findings were made available to the News Agency of Nigeria by the World Bank in Washington D.C. The report's release highlights the ongoing efforts of international organizations to support Nigeria's economic development and provide insights into the country's progress. The World Bank's Nigeria Development Update is a valuable resource for policymakers, researchers, and stakeholders seeking to understand the country's economic trends and challenges.
Key points
- Education's share of state expenditure declined from 14.9% in 2021 to 12.1% in 2025.
- States' aggregate revenues rose by approximately 93% in real terms between 2023 and 2025.
- Capital expenditure increased significantly, accounting for 61% of state spending.
