Nigeria’s 36 states recorded a 93 per cent increase in revenue between 2023 and 2025, but their spending on education declined as a proportion of total expenditure, according to the World Bank.
The bank disclosed this in its latest Nigeria Development Update, which assessed the impact of rising public revenue on government spending priorities across the country.
According to the report, states’ aggregate revenue increased by approximately 93 per cent in real terms during the period, while expenditure rose by 92 per cent.
The World Bank attributed the revenue growth partly to exchange-rate reforms, the removal of petrol subsidies, improved revenue administration and increased allocations from the Federation Account.
It also identified refunds, the settlement of outstanding federal obligations, intervention funds and stronger value-added tax collections as factors that boosted state finances.
Despite the improved revenue position, the report showed that education spending declined from 14.9 per cent of total state expenditure in 2021 to 12.1 per cent in 2025.
Health expenditure remained broadly stable at about seven per cent, while spending on social protection increased from 1.4 per cent to 4.4 per cent over the period.
The bank also reported a significant increase in capital expenditure, which accounted for 61 per cent of state spending, compared with 46 per cent previously.
Transport infrastructure recorded the largest increase in capital spending, alongside substantial investments in housing, agriculture and other economic sectors.
Mathew Verghis, the World Bank’s country director for Nigeria, said the additional revenue available to states presented an opportunity to improve infrastructure, education, healthcare and access to water.
He, however, stressed the need for greater spending efficiency, accountability and improved public service delivery to ensure that increased government revenue translates into tangible benefits for citizens.
The report acknowledged improvements in fiscal reporting, transparency and internally generated revenue among states but emphasised the importance of greater investment in human capital.
It noted that stronger investment in education, healthcare and other essential services would be critical to translating economic reforms into sustainable employment opportunities and improved living standards.
The World Bank projected that Nigeria’s economy would grow by an average of 4.4 per cent between 2026 and 2028, provided reforms are sustained and service delivery improves.
It urged federal and state governments to ensure that rising public revenue results in measurable improvements in the welfare of Nigerians.