Delayed capital budget raises alarm as experts warn of escalating costs, economic risks

Eight months into 2025, the federal government is yet to implement the capital component of the national budget, a delay that has sparked serious concern among economists, labour unions, and policy experts over its damaging impact on infrastructure delivery, poverty reduction, and fiscal credibility.

The slow rollout comes amid a new directive barring Ministries, Departments, and Agencies (MDAs) from awarding contracts without prior approval from Finance Minister and Coordinating Minister of the Economy, Wale Edun. Experts argue that while the measure aims to enforce fiscal discipline, it could further stall capital budget execution.

Economists warn that the delay threatens growth, escalates project costs, and erodes investor confidence.

Dr. Paul Alaje, Chief Economist at SPM Professionals, described the situation as “alarming,” noting that MDAs were only just receiving sensitisation on capital project implementation as August closes.

“The delay or inconsistency in the budget cycle has huge implications,” Alaje said. “First is price variation. Economic rates at the time of budget submission are not the same when projects finally start. Inflation today is over 21 percent. Cement prices now are far higher than when the budget was proposed. That pushes costs up and reduces value.”

He warned that repeated rollovers, as seen in 2024, undermine fiscal credibility and worsen inflationary pressures. “When payments are delayed, those who should have benefited from government projects remain in poverty. By the time funds are released, the intended impact is diluted,” he added.

Alaje called for structural reforms to speed up disbursements, recommending a shift to digital platforms for budget processing and fund releases. “The world has moved beyond paper-based submissions and physical meetings. Technology should drive approvals, monitoring, and disbursement,” he said.

He also urged a return to the January–December budget cycle, stressing: “If we don’t fix this, we will continue to face inflation, cost overruns, and stalled infrastructure. No project should be delayed when funds are available.”

Labour leaders share similar concerns. The President of the National Union of Food, Beverage, and Tobacco Employees (NUFBTE), Comrade Garba Ibrahim, described the late sensitisation exercise as “unacceptable.”

“We are almost in September of 2025, and you are just sensitising MDAs on the capital budget. When will implementation begin?” he asked. “This lack of urgency makes Nigerians lose faith in the national budget.”

Ibrahim accused key institutions of complicity. “There is compromise everywhere, the legislature, the executive, and the judiciary. Who will checkmate these delays?” he queried.

Finance experts and academics are equally worried. A Professor of Economics at the University of Benin, Hassan Oaikhenan, said the delay “undermines the timeliness and effectiveness of government projects.”

“Capital spending drives medium to long-term growth. Delaying disbursement until mid-year compresses the execution window for MDAs, leading to rushed procurement, poor-quality delivery, and abandoned projects. It also reduces the multiplier effect of government spending on jobs and private sector confidence,” Oaikhenan explained.

Other experts who spoke anonymously warned that most projects outlined in the 2025 budget will not be completed, given the late start. They called on the government to institutionalise early-year sensitisation and ensure implementation begins no later than the second quarter.

“If budgets are implemented on time, especially capital projects, Nigerians will feel the impact. But as it stands, people have lost trust in the process because nothing happens for months after the budget is signed,” one expert noted.

Despite improvements in budget passage timelines in recent years, analysts insist that early approval must be matched with timely implementation to achieve at least 80 percent performance in the coming years.