By Tanko Lami

State governors have unveiled ambitious plans to boost capital expenditure in 2025, earmarking N17.51tn for infrastructure projects aimed at addressing critical deficits across their states.

In 2024, governors allocated N11.34tn for similar projects but struggled to secure adequate funding, leading to a budgetary shortfall of N3.98tn.

This underscores a broader strategy to invest N28.85tn in infrastructure over two years, leveraging increased revenue inflows from the Federal Government.

Statutory allocations from the Federation Account Allocation Committee (FAAC) to all tiers of government surged by N4.994tn in 2024, reaching N15.12tn a 49.24% increase from the N10.143tn disbursed in 2023.

Notably, state governments received the highest share, with N5.22tn (34.5%) of the total allocation.

However, despite the increased revenue, many states have struggled to meet their infrastructure commitments, delaying crucial projects in sectors such as transportation, healthcare, and education.

Budget analysis for 2024 from 32 states, along with approved 2025 budgets from 35 states, highlights significant funding gaps, raising concerns about long-term economic growth.

A review of expenditure trends revealed a shift in spending priorities toward recurrent costs and debt servicing, diverting funds from essential capital projects.

Experts emphasize that capital expenditure dedicated to long-term investments such as roads, bridges, schools, and hospitals is crucial for economic development and improved public services.

The analysis showed that nine states, including Delta, Ekiti, Edo, Lagos, Rivers, Yobe, Osun, Bauchi, and Akwa Ibom, achieved an implementation rate of over 80%.

Fifteen states met between 50% and 76% of their targeted spending, while eight states fell below the 50% mark.

Despite financial constraints, Lagos, Niger, and Enugu have emerged as frontrunners in capital expenditure planning, dedicating the largest portions of their budgets to infrastructure development.

A state-by-state breakdown of capital expenditure implementation in 2024 shows varying levels of success among Nigerian states. Lagos State, which proposed the highest capital expenditure of N1.53tn, managed to spend N1.31tn, achieving an implementation rate of 85.5 per cent.

Abia State initially budgeted N474.29bn for capital projects but could only implement N250.47bn, reflecting a 52.8 per cent execution rate.

Similarly, Akwa Ibom allocated N573.32bn but utilized N483.88bn, achieving an 84.4 per cent implementation rate.

Adamawa State, which planned N146.39bn for capital expenditure, spent N109.99bn, translating to an implementation rate of 75.2 per cent.

Other states recorded varying levels of execution as governors attempted to complete capital projects across their regions.

Looking ahead, 35 state governments have outlined plans to allocate at least N17.51tn for infrastructure development in 2025.

This marks a 54.39 per cent increase equivalent to N6.17tn from the N11.343tn proposed in 2024.

However, experts have raised concerns about the states’ ability to execute these projects efficiently, citing significant deficits from previous years.

With numerous projects already delayed, stakeholders worry that 2025 budgets could face similar implementation challenges unless funding gaps are adequately addressed.

A detailed breakdown of 2025 capital expenditure projections shows that:

Abia State plans to spend N611.67bn

Akwa Ibom has increased its capital expenditure projection to N655bn

Adamawa plans to allocate N348.96bn

Anambra is set to spend N467bn

Bauchi has budgeted N284.02bn

Bayelsa plans to allocate N433.26bn

Lagos State, with the highest allocation, has earmarked N2.07tn for infrastructure

Delta State has set aside N630.46bn

Other states have also outlined their infrastructure development plans for 2025.

Despite these ambitious allocations, challenges persist.

A report noted that Nigerian states face multiple obstacles as “Internally Generated Revenue growth remains subdued due to socioeconomic constraints and inefficiencies in tax collection.”

It added that “Most states depend on FAAC transfers, with Lagos being an exception due to its higher IGR capabilities. Rising current spending, driven by high inflation and recent increases in the minimum wage, further pressures state finances.”

Furthermore, the report highlighted that “most Nigerian states rely on subsidised facilities from the Federal Government to finance their investments. Despite significant capital expenditure needs, states struggle to fully utilise budgeted capex due to funding and implementation constraints, with an average of only about 60 per cent of budgeted capex executed.”

This shortfall is attributed to several factors, including funding difficulties, implementation bottlenecks, and inadequate revenue generation.

As the year unfolds, citizens and stakeholders will closely monitor whether state governments can meet their ambitious targets and bridge the infrastructure gaps that continue to challenge the nation’s development.

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