States’ Revenue Surges 93%, but Education’s Share of Spending Declines

Nigeria’s state governments recorded a 93 per cent increase in revenue between 2023 and 2025, but education received a smaller share of total government expenditure, raising questions about how states are allocating their growing financial resources.

The findings are contained in the World Bank’s October 2026 Nigeria Development Update, which examined how increased public revenue has influenced spending priorities across the country. According to the report, state revenues increased by approximately 93 per cent in real terms over the two-year period, while total expenditure rose by 92 per cent.

The report attributed the increase in available public funds partly to foreign exchange reforms, the removal of the petrol subsidy, improved revenue administration and higher receipts from the Federation Account.

Despite the growth in revenue, the World Bank found that state governments directed a larger proportion of their spending towards infrastructure and other economic investments than towards essential social services.

Capital expenditure accounted for 61 per cent of total state spending in 2025, compared with 46 per cent in 2023. Transport infrastructure recorded the largest increase, while spending on housing, agriculture and other investments intended to support economic growth also expanded.

However, education’s share of total state expenditure declined from 14.9 per cent in 2021 to 12.1 per cent in 2025. Health expenditure remained relatively stable at approximately seven per cent, while social protection spending increased from 1.4 per cent to 4.4 per cent during the same period.

Although spending on education and healthcare increased in absolute terms, the report noted that these sectors received a smaller proportion of government expenditure relative to other priorities. This distinction highlights the challenge of ensuring that increased public revenue translates into improved access to essential services.

The World Bank said the additional financial resources available to states presented an opportunity to address infrastructure gaps, strengthen public services and improve living standards. It also stressed that the impact of increased revenue would depend on how effectively governments managed and allocated their funds.

Mathew Verghis, the World Bank’s Country Director for Nigeria, said stronger spending efficiency, accountability and service delivery would be essential to ensuring that the benefits of economic reforms reach Nigerians.

The report also highlighted improvements in fiscal transparency and internally generated revenue across several states, noting that further progress in revenue collection and expenditure management would be important in sustaining these gains.

The findings come amid broader improvements in Nigeria’s economic performance. The World Bank reported that the country’s real gross domestic product grew by 4.2 per cent in the first half of 2026, compared with 3.9 per cent during the corresponding period in 2025.

Nevertheless, persistent inflation and pressure on household purchasing power remain concerns. The report emphasised that sustaining economic progress would require governments to combine fiscal reforms with effective public spending and stronger delivery of essential services.

With state revenues increasing substantially, the challenge now is to ensure that the additional resources produce measurable improvements in education, healthcare, infrastructure and the overall welfare of citizens.