Nigerian states more than quadrupled their infrastructure spending between 2022 and 2025, as increased Federation Account allocations, stronger internally generated revenue and post-2023 fiscal reforms created additional room for governments to accelerate capital investment, according to a BudgIT report.
Aggregate infrastructure expenditure rose from N1.489 trillion in 2022 to N6.166 trillion in 2025, representing a 314 percent nominal increase and a compound annual growth rate (CAGR) of 60.57 percent.
BudgIT said the improvement in state finances was driven largely by higher Federation Account allocations following major fiscal reforms, alongside stronger internally generated revenue in several states.
The resulting fiscal space allowed governments to channel more resources into roads, transport infrastructure, public buildings, housing, water projects, power infrastructure and other capital programmes intended to improve productivity and public service delivery.
Infrastructure takes larger share of state budgets
The scale of the spending increase is reflected not only in the naira value but also in the proportion of state resources committed to infrastructure.
Infrastructure accounted for 34.49 percent of aggregate actual expenditure by Nigerian states in 2025, compared with 23.95 percent in 2022.
The 10.53 percentage-point increase suggests that a substantially larger share of public expenditure was redirected towards long-term development projects.
Lagos emerged as the highest spender in absolute terms, with its infrastructure expenditure far exceeding that of other states.
Abia recorded the highest CAGR in infrastructure expenditure, while Northern states dominated the top 10 states by growth, according to the analysis.
Despite the expansion in infrastructure financing, road construction and public works continued to absorb the bulk of state investment.
The Ministry of Works accounted for 68.7 percent of total infrastructure expenditure between 2022 and 2025.
The dominance of works spending highlights the continued priority given to roads and other public works as states seek to improve connectivity and facilitate the movement of people and goods.
But the composition of spending also points to emerging investment priorities, particularly housing and electricity.
Housing expenditure rose from N87.62 billion in 2022 to N501.52 billion in 2025, while its share of total infrastructure expenditure increased from 4.5 percent to 7.7 percent.
BudgIT said the rise indicates increased state investment in public housing schemes, urban renewal programmes and residential infrastructure as governments respond to housing deficits and efforts to improve living conditions.
Power spending rises 25-fold
Power was another major growth area, with expenditure increasing from N10.88 billion in 2022 to N273.20 billion in 2025.
Its share of aggregate infrastructure expenditure consequently rose from 0.6 percent to 4.2 percent.
The increase reflects growing state interest in electricity infrastructure and independent power projects, as governments seek to address power constraints that continue to weigh on economic activity.
The expansion of spending in power is particularly significant because reliable electricity remains a critical input for manufacturing, commerce, small businesses and public services.
Land administration and rural development also recorded steady increases, indicating that infrastructure spending is gradually extending beyond roads and conventional public works.
Fiscal reforms unlock capital spending
BudgIT’s findings show that the infrastructure expansion was closely tied to the improvement in state fiscal capacity.
Higher Federation Account allocations provided the largest source of additional fiscal space, while stronger internally generated revenue in many states and wider fiscal reforms implemented after 2023 further supported the increase.
The result was a larger pool of resources available for capital projects.
Yet the sharp increase in infrastructure spending also places greater emphasis on the quality and effectiveness of expenditure.
With infrastructure now accounting for more than one-third of aggregate actual state expenditure, the economic impact of the spending is expected to increasingly depend on whether projects are completed, maintained and capable of generating measurable productivity and public-service gains.
BudgIT noted that its analysis excluded expenditure implemented through oil-producing area development commissions, such as the Delta State Oil Producing Areas Development Commission (DESOPADEC).
The organisation said such expenditure is reported under different institutions, including the Governor’s Office, making it difficult to identify and consistently extract from Budget Implementation Reports.
