26 Nigerian states increased spending faster than revenue over two years – World Bank

Twenty-six Nigerian states increased expenditure faster than their revenues between 2023 and 2025, highlighting the significance of making certain that increased spending is supported by sustainable revenue development and stronger fiscal administration.

The World Bank disclosed this in its October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities, which examined how state governments responded to the rise in public revenues following main financial reforms.

The report discovered that median expenditure development throughout the states assessed was roughly 134% in actual phrases between 2023 and 2025, in contrast with median revenue development of 79%.

Abia, Kaduna, Benue report widest spending-revenue gaps

According to the World Bank, expenditure development exceeded revenue development in 26 of the 34 states with obtainable knowledge, though the extent of the hole diversified significantly.

• “The spending response to higher revenues varied considerably across states. Between 2023 and 2025, expenditure growth in real terms exceeded revenue growth in 26 of the 34 states with available data,” the World Bank acknowledged.

Abia, Kaduna, Benue and Gombe recorded notably massive variations between the expansion of their expenditure and revenues.

However, six states recorded stronger revenue development than expenditure development. They have been Akwa Ibom, Enugu, Kano, Katsina, Niger and Taraba.

Ekiti and Ogun recorded broadly comparable development charges in each revenue and expenditure.

The World Bank famous that the completely different spending responses didn’t observe a transparent geographical or financial sample, highlighting the various fiscal choices made by state governments throughout the interval.

States benefited from increased federal allocations

The spending enlargement got here amid a major enhance in revenues obtainable to state governments following international trade market reforms, the removing of the petrol subsidy and enhancements in tax administration.

The World Bank reported that gross federation revenues increased by 69% in actual phrases between 2023 and 2025, whereas web distributable revenues rose by 60%.

State governments have been the most important beneficiaries of the rise in federation revenue flows. Their share of distributable federation revenues rose by roughly 129.5% in actual phrases, from N3.21 trillion in 2023 to N7.37 trillion in 2025, utilizing 2019 fixed costs.

This in contrast with a 40.8% enhance within the Federal Government’s share and a 100.7% enhance within the share allotted to native governments.

The report attributed the stronger revenue flows to increased statutory allocations, the settlement of longstanding federal obligations to states, increased VAT collections and devoted intervention funds, together with infrastructure and safety allocations.

Higher revenues drive enlargement in state spending

The enhance in obtainable assets additionally translated into a considerable enlargement in state expenditure.

Aggregate state spending rose from roughly N3.4 trillion in 2021 to N9.6 trillion in 2025 in actual phrases, in response to the report.

A good portion of the rise went into transport and different financial infrastructure-related spending.

Transport expenditure, specifically, increased from about N100 billion in 2021 to N2.5 trillion in 2025, accounting for 26.5% of complete state expenditure.

The World Bank additionally noticed that states increased spending on schooling, well being, housing, agriculture and social safety, though financial infrastructure recorded the strongest relative shift in spending priorities

Rising state revenues and uneven fiscal capability

The spending sample recognized by the World Bank comes amid a major enhance in revenue obtainable to Nigerian states, though their capability to generate funds internally stays uneven.

Nairametrics reported in October 2026 that state authorities revenues increased by 93% in actual phrases between 2023 and 2025, whereas expenditure rose by 92%. The World Bank report additionally discovered that capital spending increased as a share of complete expenditure, from 46% to 61%.

Earlier, in September 2026, Nairametrics reported that Nigeria’s 36 states and the Federal Capital Territory generated N5.15 trillion in internally generated revenue (IGR) in 2025, up 40.93% from N3.65 trillion in 2024. Lagos, Rivers and Enugu have been the three largest contributors, producing a mixed N2.60 trillion, with Lagos alone accounting for 34.4% of the overall.

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