Business
State govs adopt fiscal responsibility by boosting capex

To foster long-term economic growth and fiscal responsibility, state governments across Nigeria are ramping up their capital expenditure (capex) investments.
With rising demands for infrastructure development, job creation, and improved public services, governors are rethinking their budgeting priorities by channeling more resources into capital projects rather than recurrent expenses. This strategic shift aims to drive sustainable growth by funding critical sectors like education, healthcare, transportation, and technology, ensuring that state economies become more resilient and capable of meeting future challenges.
Southeast govs adopt image-saving budget
The states in the region, like their counterparts in other regions, are apparently awash with huge fund inflows as a result of subsidy removal by President Bola Tinubu on May 29, 2023. We can argue about the actual value of the naira in view of rampaging inflation, which stood at 33.6 percent at the end of 2024, but the fact remains that governors have suddenly found themselves in new wealth.
This is clearly reflected in their 2025 budgets, which recorded massive increases, some of them 100 percent. However, a remarkable development is the focus on capital vote targeted at building projects and providing services that will impact the people, and minimal growth in recurrent expenditures.
This could be attributed to the election of technocrats as governors in the states of the region, unlike before, when they were mostly core politicians. Four of the five governors in the zone are professionals as well as first term governors, except Hope Uzodimma of Imo state. These are Prof. Chukwuma Soludo of Anambra, Dr. Alex Otti of Abia, Mr. Peter Mbah of Enugu, and Dr. Nwanuforo of Ebonyi. These people want to impress, especially since there are no god-fathers breathing down their neck.
This new found riches in the states also corresponds with their new resolve to increase capital vote, which peaked at an average of 67%, a record before now, with Enugu at 90% as highest and Imo 45% the lowest. Another important development in the budgets is the huge leap in their Internally Generated Revenue, IGR, which showed that no state is without internal revenue.
Although, the people are hard pressed paying the taxes imposed on them, however, the attention being given to capex really justifies such taxes. In Abia, the IGR rose by 213%, reaching about N100 billion, the highest growth in the country. Today, the state can run without FAAC allocation.
The governors now understand that there a nexus between tax and development, unlike before when they collected FAAC and mismanaged it.
The focus on capex, which is across the country, except Lagos state, may also indicate a sense of healthy competition and peer review mechanism among the leadership at the subnational level.
There is a clear consensus among governors on the focus on development, except a few outliers, such as Imo and Lagos, which have second term governors.
Moving away from recurrent expenditure suggests more fiscal responsibility among the governors to provide service to the people, perhaps as a result of the indignity and disgrace suffered by those who fritter public funds in the hands of EFCC in recent years. Also the governors generally avoided deficit budget except Soludo, who may be under pressure to impress for reelection next year.
Although, the budgets are scanty on fiscal data to provide opportunity for more detailed analysis, except Enugu, which went far beyond the average, others did not understand the importance of such information for their government. So, there is still a lot of opaqueness in the finances of most states.
Interestingly, there also is attention on basic projects, such as education, which received as much 33% of vote in Enugu state, more than the UNESCO requirement of 25 percent. Others include health, water, agriculture, roads etc. Most governors carefully avoided white elephant projects, such airports, Government House, conference centres etc. except Abia, which building an airport.
However, the governors should be commended on the new sense of leadership and fiscal responsibility that reigns amongst them, and we urge them to ensure strict implementation of projects to justify the new focus and value for money.
North central govs make haste against poverty
The governors of this region seems to be in haste to banish poverty from their midst, with an average score of 55%, ranging from as high as 82% in Plateau and 24% as lowest in Kwara, with the provision of infrastructure to improve the life of their people. This is because only with the provision of capital projects and services can poverty be tackled.
The governors are also frugal and modest in their approach of budgeting by avoiding debt and deficit as much as possible, which indicates a high level of fiscal responsibility by living within their means rather than encumbering the states with false sense of wealth.
Unlike southern governors, they are not involved in white elephant projects, which consume huge revenue but of little impact on the state and people, which has accounted for the challenges of fighting poverty since 1999, when democracy returned 25 years ago. They are mainly focused of providing basic facilities, such as roads, agriculture, water, schools, etc
Niger state seems to be exception to the rule with a massive budget of N1.2 trillion more than most southern states, which are the envy of most northern states in term of resources. His big vision in such area as agriculture should be encouraged, although the threat of insecurity, which is pervasive in the state should be of much concern so that such investment is not wasted. Last year, he took the initiative by providing over two thousand tractors for the state, which President Tinubu applauded.
However, there a lot of opacity in their budget narrations, whether by accident and design, which makes detailed analysis difficult. This situation hides important facts in the budgets, which could work for against them ultimately.
Northwest makes best of lean purse
There is an increasing awareness among the governors of the need to prioritize capex over recurrent expenditure. It is clear that the removal of subsidy has been a blessing to the states with massive inflows from the Federation allocations.
However, even with such growth in the states’ coffers, the region still experience lean purses compared with other regions, especially given the fact that it is the region with the highest poverty index in the country. But this has not affected their resolve to change the poverty level in their states.
Even as the region with high poverty, which often requires recurrent palliative, such as direct cash transfers, the governors in the region have preferred going to the root of the problem by enhancing capex allocation to lift the region from poverty. This realization must be a collective decision, especially as most of them are first term governors.
The focus on capital projects shows a new commitment to tackle poverty, which average score in the region is 83%.
Northeast battles terror with budgetary commitment
Sometimes in 2001, then Adamawa state governor, Boni Haruna, lamented that the states were spending over 70 percent of their resources on recurrent expenditure, and there could be little physical development without changing the equation. Well, the governors seem committed to doing just that with great resolve to promote capital projects in their budgets.
Challenged by insecurity caused terrorism in the past decade, which has brought massive destruction to infrastructure, as the terrorists embark on looting and burning of housing, the governments are constantly called on to construct new resettlements for Internally Displaced Person, (IDPs), reconstruct villages for the return of people previously displaced.
However, Bauchi state, which was not covered by this survey, because of lack of information on the budget, has been in the news for the wrong reasons. The budget contains the purchase of six computers for the whooping sum of N400 million, only in Nigeria.
Gov. Babagaba Zulum of Borno, the state most affected by insurgency, has out-performed himself ensuring that the state remains on its feet in spite of the attacks through prudent allocation of resources.
Another rising star performer appears to be Gov. Kefas of Taraba state, who has brought professionalism into governance and scientific methods in budgeting. The state seems to making the best of its resources.
South-South pushes to boost development and infrastructure
The South-South region of Nigeria, which includes Akwa Ibom, Bayelsa, Cross River, Delta, Edo, and Rivers states, plays a crucial role in the nation’s economy due to its significant oil and gas reserves. In 2024, the region’s budget allocations and economic policies have greatly influenced its development trajectory. Notably, the total budget for the South-South zone in 2025 is projected to be ₦4.941 trillion, representing a 38.9 percent increase from ₦3.556 trillion in 2024.
The states in the South-South region have customized their budgets to tackle specific regional challenges and harness opportunities. For example, while Lagos State is not part of the South-South, it allocated ₦550.689 billion for infrastructure in its 2024 budget, focusing on transportation projects, affordable housing, and urban renewal. Although this allocation pertains to Lagos, it reflects a wider national trend of prioritizing infrastructure development, which the South-South states are likely to follow, given their pressing infrastructural needs.
A break down of the region’s budget allocation reveals that the total budget across the six states increased by 38.96% from ₦3.556 trillion in 2024 to ₦4.941 trillion in 2025.
This reflects a significant expansion in financial allocations, likely aimed at boosting development, and infrastructure, or addressing inflationary trends. Further details show that Rivers State has the highest budget in both years, with a 2025 allocation of ₦1.188 trillion, reflecting a notable increase from ₦800 billion in 2024.
Cross River State shows the smallest budget, yet it still increased by over ₦200 billion, indicating an upward trend despite its smaller share.
According to BH research Capital expenditure in the region saw the largest growth, rising by 63.03% from ₦1.874 trillion in 2024 to ₦3.055 trillion in 2025. This suggests a strong focus on infrastructure, development projects, or long-term investments. Meanwhile, every state except Cross River reported specific 2024 figures, but for 2025, Cross River allocated ₦328 billion, indicating a newfound emphasis on capital projects.
While Akwa Ibom State leads in capital expenditure for 2025 with ₦655 billion, followed closely by Rivers State with ₦678 billion. Both states appear to prioritize infrastructure and development heavily, Bayelsa State doubled its capital expenditure, rising from ₦257.777 billion in 2024 to ₦426.07 billion in 2025, suggesting a significant shift in investment priorities. However, there was modest growth in the recurrent expenses which grew by 25.11%, from ₦1.412 trillion in 2024 to ₦1.766 trillion in 2025, revealing its focus on maintaining existing programs and operational costs without excessive spending growth in this area.
On State Trends, Rivers State allocated the highest recurrent expenses in 2025 (₦462 billion), reflecting its large operational demands while Cross River introduced a recurrent budget in 2025 with ₦170 billion, suggesting a new focus on operational funding. Some states, such as Delta and Akwa Ibom, reduced their recurrent allocations compared to 2024, possibly reallocating funds toward capital projects.
Comparative Analysis:
Focus on Development:
The sharp rise in capital expenditure (63.03%) compared to the recurrent expense growth (25.11%) highlights a strategic shift toward long-term developmental projects rather than day-to-day operations.
States like Bayelsa and Edo particularly emphasize this shift, with significant increases in capital allocations.
Balanced Growth:
States like Rivers and Delta maintain balanced growth in both capital and recurrent expenditures, ensuring development while managing operational costs.
Variations in Priorities:
While some states, like Cross River, previously lacked detailed allocations for 2024 capital and recurrent expenses, the new data for 2025 shows increased financial transparency and strategic planning.
Analysts observed a strong emphasis on development and infrastructure across all six states, particularly in Rivers, Akwa Ibom, and Bayelsa. The overall budgetary increase reflects expanding government ambitions to address developmental gaps and improve state-level infrastructure. However, the variations between capital and recurrent spending suggest differing priorities, with some states focusing heavily on infrastructure while others maintain balanced growth.