Nigeria’s state revenues rose 93% between 2023 and 2025, but education received a smaller share of total expenditure, according to the World Bank.
Nigeria’s 36 states recorded a 93 per cent increase in aggregate revenue between 2023 and 2025, but education’s share of total state expenditure declined to 12.1 per cent in 2025, raising questions about spending priorities despite improved public finances.
The World Bank disclosed this in its latest Nigeria Development Update, which examined how rising government revenues influenced spending patterns and public service delivery across the country.
According to the report, made available to the News Agency of Nigeria (NAN) by the World Bank in Washington, D.C., states’ aggregate revenues grew by approximately 93 per cent in real terms during the period, while total expenditure increased by 92 per cent.
Despite the growth in public finances, education’s share of total state expenditure fell from 14.9 per cent in 2021 to 12.1 per cent in 2025.
The figures indicate that education accounted for a smaller proportion of state spending, although the decline in its budget share does not necessarily mean that the actual amount spent on education fell.
Education Spending Declines as Social Protection Rises
The World Bank report showed that education’s share of state expenditure declined over the period examined, while spending on other sectors followed different patterns.
Health expenditure remained broadly stable at approximately seven per cent of total state spending. In contrast, social protection’s share increased from 1.4 per cent to 4.4 per cent.
The changing expenditure shares highlight the choices facing state governments as they allocate additional resources among education, healthcare, social protection and infrastructure.
The World Bank stressed that investment in human capital remains essential to ensuring that economic reforms translate into sustainable employment, improved productivity and better living standards.
Education plays a central role in developing the skills needed by workers and businesses, making the allocation of public resources to the sector an important consideration in Nigeria’s long-term development.
Reforms Drive Revenue Growth Across States
The report attributed the increase in state revenues partly to exchange-rate reforms, the removal of petrol subsidies and improvements in revenue administration.
Higher allocations from the Federation Account also contributed to the growth, alongside refunds, the settlement of longstanding federal obligations, intervention funds and stronger Value Added Tax (VAT) collections.
The World Bank further highlighted improvements in fiscal reporting, transparency and internally generated revenue among states.
These developments have expanded the resources available to state governments, creating opportunities to strengthen public services and invest in infrastructure.
However, the report emphasised that higher revenue alone does not guarantee better outcomes. The effectiveness of public spending and the ability of governments to deliver essential services remain critical to determining how citizens benefit from improved public finances.
Capital Expenditure Accounts for 61% of State Spending
Capital expenditure accounted for 61 per cent of total state spending, compared with 46 per cent previously, according to the report.
Transport infrastructure recorded the largest increase in capital spending, while states also increased investments in housing, agriculture and other economic activities.
The shift towards capital projects reflects increased investment in infrastructure and other assets intended to support economic activity.
However, the World Bank highlighted the need to ensure that rising public revenues also translate into improvements in essential services, including education, healthcare and access to water.
Mathew Verghis, the World Bank Country Director for Nigeria, said the additional resources available to governments offered an opportunity to improve infrastructure and public services.
He emphasised that spending efficiency, accountability and better service delivery would determine whether increased revenues produced meaningful improvements in Nigerians’ living conditions.
World Bank Projects 4.4% Economic Growth
The World Bank projected that Nigeria’s economy would grow by an average of 4.4 per cent between 2026 and 2028, while stressing the importance of sustaining reforms and improving service delivery.
The projection comes as federal and state governments continue efforts to strengthen public finances and translate economic reforms into tangible benefits for households and businesses.
The report underscored the need for governments to direct resources towards priorities that support human capital development, economic productivity and access to essential services.
For Nigeria’s states, the challenge extends beyond generating more revenue to ensuring that public spending delivers measurable improvements in citizens’ welfare.
The decline in education’s share of state expenditure therefore raises an important question about how governments will balance infrastructure development with the investment in human capital needed to sustain long-term economic growth.
