Only 20% of N25trn 2024 Budget Goes to Capital Projects

The Federal Government has spent just N4.99tn – only 20 per cent of its total N24.91tn budget – on capital projects in 2024, leaving the country’s infrastructure needs largely underfunded.

Despite a significant rise in government spending, the lion’s share of the budget continues to be swallowed by recurrent expenditures, particularly debt servicing and personnel costs, raising concerns about the nation’s long-term development prospects.

The N24.91tn expenditure for 2024 represents an increase of N5.41tn from the previous year’s N19.5tn. The bulk of this increase is attributed to the growing cost of running the government, especially in servicing debt and managing the public sector.

Although revenue has risen by N3.45tn in 2024 to N9.44tn, it is still insufficient to cover the rising expenditure, leading to a worrying fiscal deficit. The government’s continued reliance on borrowing to cover the shortfall is deepening Nigeria’s debt burden.

In 2024, Nigeria’s retained revenue increased by 57 per cent, rising from N5.99tn in 2023 to N9.44tn. While this is a positive development, it is still not enough to match the rising costs of debt servicing, salaries, and other running expenses.

This leaves Nigeria with a N15.47tn gap between income and expenditure, which the government must borrow to fill, thus adding to the national debt. Although the capital expenditure for 2024 rose by N507.45bn—from N4.49tn in 2023 to N4.99tn—it still accounts for just 20 per cent of the total budget.

This percentage has actually dropped from 23 per cent in 2023, indicating that despite the increase in overall expenditure, the government is still not prioritising long-term infrastructure development.

Nigeria’s infrastructure needs are critical, with major gaps in transport, power, healthcare, and education. An overview of the 2024 Infrastructure Industry Report published by Agusto&Co revealed that with a rapidly expanding and urbanising population, Nigeria faces a significant infrastructure deficit, projected to reach $878bn by 2040.

However, the country’s current infrastructure stock constitutes only 30 per cent of GDP, far below the World Bank’s benchmark of 70 per cent. The country also ranks behind 23 other African countries on the African Development Bank’s Africa Infrastructure Development Index.

With only 20 per cent of the budget devoted to these projects, the country risks missing out on the investments needed to boost economic growth. Meanwhile, recurrent expenditure has jumped by N3.7tn, from N14.71tn in 2023 to N18.4tn in 2024, largely due to higher debt servicing and personnel costs

Debt servicing alone has grown by N2.74tn, from N8.86tn in 2023 to N11.6tn in 2024, now consuming 47 per cent of the total expenditure. This is an increase from 45 per cent in 2023, meaning that almost half of every naira spent by the government is used to service debt rather than to fund development.

This growing burden is squeezing other critical areas of government spending, including infrastructure, healthcare, and education, and further deepening Nigeria’s fiscal imbalance.

Personnel costs, which include salaries and pensions, have also risen by N1tn, from N3.49tn in 2023 to N4.49tn in 2024. These costs account for 18 per cent of total spending, remaining steady from last year.

However, the rising wage bill due to the minimum wage adjustment continues to put a strain on Nigeria’s finances, limiting funds available for infrastructure projects and social services.

As the size of the public sector grows, these costs are expected to continue increasing, putting further pressure on the budget. The rising share of the budget dedicated to debt servicing and personnel costs has sparked concerns about the sustainability of Nigeria’s fiscal model.

The country’s heavy reliance on borrowing is limiting its ability to invest in infrastructure and long-term development. With N11.6tn spent on debt servicing and N4.49tn spent on personnel costs in 2024, a total of 65 per cent of the N24.91tn budget has gone towards these recurrent expenses.

This leaves just 35 per cent for capital expenditure, social services, and overhead costs. Economic Confidential also observed that despite the increase in revenue collection, Nigeria’s fiscal deficit continues to widen.

In 2024, the government spent more on operational costs than it collected in revenue, leading to a N15.47tn shortfall. The government’s reliance on borrowing to fill the growing fiscal gap is evident in the widening fiscal deficit.

This gap between revenue and expenditure is largely being covered by borrowing, further adding to the country’s mounting debt obligations. With debt servicing taking up a growing share of the budget, the government’s fiscal path is becoming increasingly unsustainable.

Experts fear that the high cost of servicing debts could further strain government resources, leaving little room for investments in critical infrastructure and development programmes.

Speaking earlier, the President of the Nigerian Economic Society, Prof Adeola Adenikinju, said, “There is little we can do regarding our debt servicing. This is an obligation that we owe, and it will do a lot of damage to our image if we don’t pay. That is a consequence of past years of mismanagement and dependence on debt to run the government.”

He lamented that most of the time, the government does not meet the provisions for capital expenditure in the budget. Adenikinju added, “Even when they say N48tn, you can be assured that they are not going to spend that.”

He noted that spending on debt servicing will not yield any positive benefit for the Nigerian economy. “It is sad because debt service will not do anything positive for the economy. It is not going to improve infrastructure. It is not going to enhance economic growth. It is not going to yield any significant positive effect on the economy. We have been wasteful in the past, and that is the consequence we have to deal with now,” he said.

In January 2024, retained revenue stood at N449.66bn, but by December, it had surged to N1.52tn. This revenue growth is encouraging, but it still doesn’t close the gap between expenditure and income, and Nigeria continues to depend on borrowing to fund its budget.

Despite slight increases, capital expenditure remains volatile. Even in months where capital spending increases, the overall allocation is still insufficient to address the country’s infrastructure challenges.

The 2024 budget, initially approved with a total expenditure of N28.78tn and revenue of N19.60tn, has seen significant deviations in actual spending. The actual expenditure released for the year is N24.91tn, which is lower than the budgeted amount, with N9.44tn in retained revenue.

Debt servicing has taken up N11.6tn, far exceeding the N8.27tn initially allocated. Recurrent non-debt expenditure stood at N18.4tn, surpassing the N8.77tn budgeted figure.

Capital expenditure received only N4.99tn, which is well below the N10tn planned for infrastructure development. Also, the initial N28.7tn approved by parliament for the 2024 fiscal year was revised upward to N35.06tn, representing an increase of N6.2tn.

According to President Bola Tinubu’s letter to the National Assembly, the additional funds included N3.2tn for the “Renewed Hope” infrastructure projects and other critical infrastructure across the country, as well as N3tn for additional recurrent expenditure to ensure the proper functioning of the Federal Government.

As a result, the fiscal deficit has risen to N15.47tn, significantly higher than the budgeted N9.18tn deficit in the approved 2024 budget. The National Assembly earlier criticised the significant discrepancies between recurrent and capital expenditures, as well as the low level of fund releases for capital projects under the ongoing 2024 budget.

During a joint sitting of the Chairmen of Senate and House Committees on Appropriations with the Presidential Economic Team to discuss the 2025 Appropriation Bill, Senator Solomon Adeola and Hon. Abubakar Bichi, Chairmen of the Senate and House Committees respectively, urged the economic team to prioritise the release of funds for capital projects in the 2024 budget.

They argued that capital project implementation is the main way Nigerians benefit from government spending, whereas recurrent expenditure impacts only a small segment of the population.

In a statement issued by Senator Adeola’s media adviser, Kayode Odunaro, the Senator called for a significant reduction in the ratio of recurrent to capital expenditure, suggesting a shift from the current 80:20 ratio to at least 60:40.

“Capital releases to MDAs are the major drivers of economic activities within the nation. The non-release of funds for capital projects is a significant issue affecting the performance of the 2024 budget. It is essential that funds are released to prevent abandoned projects and ensure the success of President Tinubu’s Renewed Hope Agenda,” the statement read in part.

The Senate and the House of Representatives recently, for the second time, extended the implementation of the capital component of the 2024 budget to December 31, 2025, sparking renewed criticism against President Bola Tinubu and the National Assembly.

With the new deadline of December 31, 2025, Nigeria is now operating two budgets within a single fiscal year, the 2024 budget, which is still being implemented and the 2025 budget, which has already passed and is currently in force.

Economists, financial experts, and the Organised Private Sector have described the repeated extensions as evidence of poor execution capacity by Ministries, Departments, and Agencies. Others argue the move may undermine fiscal discipline and complicate tracking of budget performance.

The Director-General of the Infrastructure Concession Regulatory Commission, Jobson Ewalefoh, recently called on private investors, both local and international, to seize emerging opportunities in Nigeria’s infrastructure sector, declaring the country “open for business and ready for partnership.”

Speaking at the Nigeria Public-Private Partnership Summit 2025 in Abuja, Jobson said the scale of Nigeria’s infrastructure deficit offers one of the most compelling investment opportunities on the continent.

“Nigeria is open for business and more importantly, ready for partnership. With over 200 million people, a growing middle class, rich natural endowments, and an enormous infrastructure gap estimated at over $2.3tn, the case for PPPs in Nigeria is not only compelling, it is urgent,” the ICRC boss declared.