Nigerian States’ Revenues Rise 93%, but Education Spending Drops — World Bank

Nigeria’s state governments recorded a 93 per cent increase in aggregate revenues in real terms between 2023 and 2025, but education’s share of total expenditure declined, according to the World Bank.

The findings were contained in the bank’s October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, released on Thursday.

The report said state revenues rose by about 93 per cent in real terms during the period, while total expenditure increased by approximately 92 per cent.

The growth in revenue was attributed partly to exchange-rate reforms, the removal of the petrol subsidy, improved revenue administration and higher collections from Value Added Tax. States also benefited from increased federal allocations, refunds, intervention funds and the settlement of outstanding federal obligations.

Despite the additional resources, the World Bank observed that state governments directed a growing proportion of their budgets towards economic infrastructure rather than human-capital development.

The share of capital expenditure in total state spending rose from 46 per cent to 61 per cent between 2023 and 2025. Transport infrastructure recorded the largest increase, while spending on housing, agriculture and other growth-related investments also expanded.

However, education’s share of total state expenditure fell from 14.9 per cent in 2021 to 12.1 per cent in 2025.

The report clarified that spending on education, healthcare and social protection increased in absolute terms, but grew more slowly than expenditure on economic infrastructure.

Health spending remained broadly stable at about seven per cent of total expenditure, while social protection’s share increased from 1.4 per cent to 4.4 per cent over the same period.

World Bank Country Director for Nigeria, Mathew Verghis, said the increase in state revenues presented an opportunity to improve infrastructure, education, healthcare and water services.

He stressed that stronger spending efficiency, accountability and service delivery would be necessary to ensure that additional public resources translated into better living conditions for Nigerians.

The bank also highlighted improvements in fiscal reporting and transparency among states, while urging governments to strengthen internally generated revenue and improve the quality of public spending.

Nigeria’s economy grew by 4.2 per cent in the first half of 2026, compared with 3.9 per cent in the corresponding period of 2025, according to the report.

The World Bank projected average economic growth of 4.4 per cent between 2026 and 2028, while emphasising that sustained reforms and better public service delivery would be essential to creating jobs and reducing poverty.