Thirteen Nigerian states have unveiled their proposed budgets for the 2025 fiscal year, collectively allocating ₦3.87 trillion for recurrent expenditures. This amount, covering salaries, overheads, and other administrative costs, represents a significant portion of their total combined budget of ₦9.07 trillion.
The budgets prioritize a balance between addressing day-to-day operational costs and committing substantial funds to capital projects aimed at fostering infrastructure development. Recurrent expenditure, which supports essential services and the daily running of government operations, makes up a notable fraction, leaving ₦5.845 trillion dedicated to long-term capital investments.
Sectoral Allocation by States
- Lagos State: Governor Babajide Sanwo-Olu presented the highest budget among the 13 states, totaling ₦3.005 trillion. Of this, ₦1.24 trillion (41.3%) is allocated to recurrent expenditure, while ₦1.76 trillion is earmarked for capital expenditure, emphasizing infrastructural development.
- Bauchi State: With a proposed budget of ₦465.09 billion, Governor Bala Mohammed allocated ₦182.74 billion (39.3%) to recurrent expenses and ₦282.34 billion to capital projects.
- Bayelsa State: Governor Douye Diri’s ₦689.4 billion budget dedicates ₦263.38 billion (38.2%) to recurrent expenditure, leaving ₦404.76 billion for capital investments.
- Osun State: Governor Ademola Adeleke allocated ₦245.8 billion (62.9%) of his ₦390.03 billion budget to recurrent expenditure, while ₦144.23 billion will fund capital projects.
- Oyo State: Governor Seyi Makinde proposed ₦678.09 billion, with ₦325.57 billion (49.41%) for recurrent costs and ₦349.29 billion for capital development.
- Anambra State: Governor Charles Soludo’s ₦606.9 billion budget directs ₦139.5 billion (23%) to recurrent expenditure and ₦467.5 billion to capital projects, despite a projected deficit of ₦148.3 billion.
Other states, including Gombe, Ekiti, Cross River, Akwa Ibom, Delta, Plateau, and Katsina, have also presented budgets that demonstrate varying allocations between recurrent and capital expenditures, reflecting their unique priorities and fiscal challenges.
Capital vs. Recurrent Expenditure
Capital expenditure, which focuses on long-term investments in infrastructure and development, has been allocated the majority share of the budgets across most states. In Cross River State, ₦328 billion (65.9% of the budget) is directed toward capital expenditure, while recurrent costs take up ₦170 billion. Similarly, in Katsina State, ₦524.27 billion (76.85%) is allocated to capital projects, compared to ₦157.97 billion for recurrent expenses.
Despite the emphasis on capital projects, many economists have raised concerns about the sustainability and effectiveness of these budgets.
Expert Insights on Budget Sustainability
Charles Sanni, CEO of Cowry Treasurers Limited, highlighted the potential impact of high recurrent expenditures. “The significant allocation to recurrent expenses means limited funds for capital investments, which are crucial for economic growth, human development, and social infrastructure,” he remarked. Sanni recommended cost optimization through measures such as reducing personnel costs, implementing strict budget controls, and minimizing political overheads. He also urged states to explore increased internally generated revenue via public-private partnerships and support from multilateral organizations.
Economist Vincent Nwani expressed concern over the relatively small size of the budgets in the context of their developmental goals. “Some Nigerian universities have larger annual budgets than some states. The budgets, while focusing on capital projects, often include non-productive expenditures such as vehicle purchases rather than strategic investments in economic growth,” he stated. Nwani also called for greater transparency and accountability to ensure funds are used effectively.
What Lies Ahead
As states balance their allocations between operational costs and developmental projects, experts emphasize the need for innovative revenue generation and prudent fiscal management. The projected spending on infrastructure is promising, but without addressing inefficiencies and ensuring transparency, these budgets may fall short of driving significant economic transformation.
The 2025 fiscal year will test the ability of these 13 states to manage resources effectively while striving to meet their obligations and developmental aspirations.
