Procurement bottlenecks, worsening insecurity, and rising costs of goods and services have been identified as major reasons several state governments failed to meet their capital expenditure targets in the first six months of 2025, DIP CONNECTS reports.
Findings from states’ second-quarter Budget Implementation Reports revealed that capital spending across many states remained far below expectations, despite ambitious provisions in their 2025 budgets to accelerate infrastructure growth.
A fresh breakdown of government expenditure between January and June 2025 showed that 31 states collectively disbursed N2.75tn for capital projects. However, this figure represents only a fraction of the N17.51tn budgeted for capital expenditure in the 2025 fiscal year. The performance translates to about 15.7 per cent, meaning the 31 states achieved less than one-fifth of their capital expenditure target in the first half of the year.
This underperformance has stalled critical infrastructure projects and worsened hardship for citizens who depend on improved roads, schools, hospitals, and water systems.
The trend mirrors 2024, when states earmarked N11.34tn for capital projects but ended up with a N3.98tn funding gap due to revenue shortfalls, rising wage bills, and heavy debt servicing. Analysts warn that the same structural weaknesses remain unresolved.
Experts explain that capital expenditure refers to long-term investments by states aimed at improving infrastructure, services, and the economy, such as building roads, bridges, schools, hospitals, transport systems, and other key infrastructure.
Public demand for improved infrastructure has grown louder in the wake of fuel subsidy removal and foreign exchange devaluation, both of which significantly boosted revenues for federal, state, and local governments, raising expectations for visible development outcomes.
Last month, President Bola Tinubu urged state governors to prioritise citizens’ welfare by investing more in rural electrification, agricultural mechanisation, poverty eradication, and infrastructure development.
“The economy is working. We are on the path of recovery, but we need to stimulate growth in the rural areas. Let us collaborate and do what will benefit the people,” Tinubu appealed, urging governors to work closely with the Federal Government.
Despite higher revenues, many states still failed to meet their infrastructure commitments, with governors blaming insecurity, cumbersome procurement processes, and rising project costs.
An analysis of fiscal performance across states shows wide variations. Between January and June 2025, 31 states collectively spent N2.75tn on capital projects and N2.35tn on recurrent expenditure.
Some states devoted most of their resources to infrastructure, while others leaned heavily on recurrent costs such as salaries, allowances, and overheads.
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Top performers:
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Imo: N188.1bn capital vs N50.29bn recurrent
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Enugu: 81.9% of its spending (N99.59bn) went into capital vs N22.06bn recurrent
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Bayelsa: N238.29bn capital vs N107.26bn recurrent
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Abia: N133.1bn capital vs N39.73bn recurrent
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Edo: N179.56bn capital
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Akwa Ibom: N179.76bn capital
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Borno, Gombe, Jigawa, Kebbi, Zamfara also leaned more towards capital.
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Lagging states:
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Kogi: N133.22bn recurrent vs N73.16bn capital
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Ekiti: N101.1bn recurrent vs N56.1bn capital
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Osun: N89.37bn recurrent vs N57.13bn capital
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Oyo: N129.06bn recurrent vs N110.64bn capital
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Cross River: N84.8bn recurrent vs N30.53bn capital
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Benue: N44.5bn recurrent vs N23.32bn capital (key projects stalled due to insecurity).
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Some states, like Kaduna (N108.45bn capital vs N100.31bn recurrent) and Ebonyi (N36.89bn capital vs N38.38bn recurrent), maintained near parity.
State reports attributed poor capital performance to insecurity, procurement delays, bureaucratic bottlenecks, and soaring costs of materials. Benue, for instance, blamed widespread insecurity that stalled projects and limited contractor mobilisation. In Sokoto, capital performance stood at 19.7%, while Ebonyi recorded just 11.3%.
Despite optimism from some states that performance will improve in Q3, analysts caution that persistent underperformance could undermine infrastructure delivery and economic growth at subnational levels.
Professor Segun Ajibola, an economist at Babcock University, noted that high governance expenses and weak accountability at the state level mean little economic impact is felt by citizens.
Meanwhile, the 31 states spent a combined N2.36tn on recurrent expenditure in the first half of 2025, surpassing their capital spending. Ogun (N157.15bn), Kogi (N133.22bn), Oyo (N129.06bn), Kano (N115.24bn), and Akwa Ibom (N113.44bn) emerged as the highest recurrent spenders, while Enugu (N22.06bn), Katsina (N26.39bn), Zamfara (N37.57bn), Ebonyi (N38.38bn), and Abia (N39.73bn) posted the lowest.
ADEOLA KUNLE
