State governors have outlined ambitious plans to boost capital expenditure in states to address the infrastructure deficit in their various domains. The governors have earmarked N17.51tn to fund capital projects in their 2025 budgets.
They had earmarked N11.34tn to fund similar projects in 2024 but could not secure sufficient funds, as the states recorded a deficit of N3.98tn last year.
This indicates that the sub-nationals plan to spend N28.85tn on infrastructure upgrades to boost economic development in two years following the improved revenue allocations from the Federal Government.
Recall that statutory allocations from the Federation Account Allocation Committee (FAAC) to the three tiers of government increased by N4.994tn to N15.12tn within the 12 months of 2024.
The amount indicates an increase of 49.24 per cent from N10.143tn disbursed to meet their obligations in 2023.
An analysis of the monthly communique issued by the committee showed that the 36 state governments got the highest allocation of N5.22tn representing 34.5 per cent of N15.14tn total allocation to the three tiers of government.
Despite the windfall, states still fall short of their mandate to deliver infrastructural projects for the benefit of their citizens.
This financial shortfall has delayed the implementation of several infrastructure projects, undermining efforts to improve critical sectors such as roads, healthcare, and education.
An analysis of the 2024 budget implementation reports for 32 states and the approved 2025 budgets for 35 states, obtained from the websites of the respective states and analysed by our correspondent, reveals the scale of the challenges.
Analysis showed a shift in spending priorities towards recurrent costs and debt servicing, raising concerns over the long-term impact on economic development.
According to experts, capital spending is the fund disbursed by the state on long-term investments aimed at improving infrastructure, services, or the economy.
These expenditures are typically used for projects that have a lasting benefit, such as building roads, bridges, schools, hospitals, public transport systems, and other essential infrastructure to foster economic growth, improve quality of life, and ensure better public services for citizens.
The analysis showed that nine states, including Delta, Ekiti, Edo, Lagos, Rivers, Yobe, Osun, Bauchi, and Akwa-Ibom achieved over 80 per cent implementation rate. 15 states achieved between 50 to 76 per cent of their targeted spending, and eight states scored below 50 per cent.
Despite the financial constraints, states like Lagos, Niger, and Enugu have emerged as the front-runners in terms of planned capital expenditure, setting aside the largest portions of their budgets for infrastructure development.
A state-by-state breakdown showed that Lagos State, which proposed the highest capital expenditure of N1.53tn, successfully spent N1.31tn, achieving an implementation rate of 85.5 per cent. Abia State initially proposed N474.29bn for its 2024 capital expenditure. However, the state only managed to spend N250.47bn, representing a 52.8 per cent implementation rate.
In a similar vein, Akwa Ibom had a capital budget of N573.32bn for 2024 but appropriated N483.88bn, reflecting an implementation rate of 84.4 per cent. Adamawa State planned N146.39bn but only spent N109.99bn, resulting in an implementation rate of 75.2 per cent.
Other states recorded different levels of implementation in 2024, as the governors tried to fix capital projects in the various sub-nationals.
Meanwhile, 35 state governors have expressed plans to allocate at least N17.51tn to enhance infrastructure. This represents an increase of 54.39 per cent or N6.17tn from the N11.343tn proposed in 2024.
Experts have voiced concerns about the state’s capacity to promptly execute these projects, given the significant deficits carried over from previous years.
With many projects already delayed, stakeholders are worried that the 2025 budgets could encounter similar implementation issues unless funding gaps are adequately resolved.
A breakdown showed that the Abia government plans to spend N611.67bn in 2025. Akwa Ibom has increased its capital expenditure projection to N655bn, Adamawa plans to spend N348.96bn in 2025, and Anambra plans to spend N467 in 2025.
Bauchi plans to spend N284.02bn in 2025, Bayelsa plans to spend N433.26bn in 2025. Lagos State has ambitious plans for 2025, with an earmarked N2.07tn for infrastructure development. Delta State allocated N630.46bn for infrastructure in 2025. Other states also outlined their plans for the year in terms of capital projects.
The report added that Nigerian states face several challenges as “Internally Generated Revenue growth remains subdued due to socioeconomic constraints and inefficiencies in tax collection.
“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.”
It added 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 is due to several factors, including funding and implementation constraints, low revenue, and falling short of the extensive investments required to meet the growing demands of the population and the economy.
As the year progresses, citizens will be watching closely to see whether the states can meet these ambitious targets and address the critical infrastructure gaps that continue to challenge the nation. – Punch.
