WorldStage– The World Bank Group has disclosed that Nigeria’s 36 states recorded a 93 percent increase in revenues between 2023 and 2025, but education’s share of their expenditures declined.
The finding was published by the World Bank Group in its latest Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities.
Released from Washington, D.C., the report reveals that while state revenues rose by roughly 93 percent, aggregate expenditures also climbed by 92 percent over the same two-year period.
The World Bank attributed the fiscal windfall to major federal policy shifts, including foreign exchange-rate reforms, the removal of the petrol subsidy, enhanced revenue administration, and higher allocations from the Federation Account.
States also capitalized on increased Value Added Tax (VAT) collections, federal debt settlements, and special intervention funds.
Rather than channeling the bulk of the expanded fiscal space into social services, state governments prioritized infrastructure.
Capital expenditure jumped significantly, moving from 46 percent to 61 percent of total state spending.
Transport infrastructure captured the largest share of this investment, alongside housing, agriculture, and other economic projects.
In effect, social sector investments lagged, as education’s share of total state expenditure dropped from 14.9 percent in 2021 down to 12.1 percent by 2025.
The report states that Governors leaned toward physical infrastructure, pushing capital spending to 61% of budgets, primarily targeting transport, housing, and agriculture.
Chief Economist Dr. Fiseha Haile noted this hardware-focused shift in 29 of 33 evaluated states.
Country Director Mathew Verghis urged leaders to balance infrastructure with human capital investments in schools and clinics to ensure long-term poverty reduction.
Verghis, World Bank Country Director for Nigeria, noted that higher revenues have offered states a rare window to upgrade public services.
However, he emphasized that greater spending efficiency, strict accountability, and stronger human capital investments are vital to ensure the extra resources translate into sustainable jobs and better living standards for citizens.
The report said states’ aggregate revenues rose by approximately 93 percent in real terms, while expenditure increased by 92 percent during the period.
The institution attributed the improvement partly to exchange-rate reforms, petrol subsidy removal, stronger revenue administration and increased allocations from the federation account.
