Nigeria’s states have gained substantially more spending power since economic reforms began, but education is taking a smaller share of their budgets, according to the World Bank’s October 2026 Nigeria Development Update. The findings put the quality of state spending at the centre of the debate over whether improving public finances are reaching ordinary households.
President Bola Tinubu welcomed the report on 11 October, describing it as evidence that his administration’s reforms were working. Yet the Bank’s assessment also sets a more demanding test: converting stronger revenues into reliable services, productive jobs and better living standards.
The update, released on 8 October and titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, examines both Nigeria’s economic outlook and the choices states have made with their additional resources. Its significance reaches beyond the federal government because state spending shapes infrastructure and public services across the country.
According to the Bank’s accompanying release, aggregate state revenues increased by about 93 per cent in real terms between 2023 and 2025. Expenditure rose by about 92 per cent. Capital spending’s share of total expenditure increased from 46 per cent to 61 per cent, with transport infrastructure recording the largest increase.
Health, education and social protection spending also increased, but more slowly than economic infrastructure expenditure. Education’s share of total spending fell from 14.9 per cent in 2021 to 12.1 per cent in 2025, while health remained at roughly seven per cent. Social protection’s share rose from 1.4 per cent to 4.4 per cent.
A declining share does not mean education expenditure fell in absolute terms. It means other areas grew faster. That distinction matters when assessing whether larger budgets are delivering a balanced investment in roads, classrooms, health facilities and the people who use them.
The Bank’s presentation identifies exchange-rate and petrol-pricing reforms as important contributors to the revenue gains. States also benefited from refunds, settled federal obligations and intervention funds. Gross federation revenues increased by 69 per cent in real terms between 2023 and 2025.
The gains were uneven. Oil-producing states generally received the largest federation revenue flows in absolute terms, while many states starting from smaller revenue bases recorded larger percentage increases. The presentation cautions that growth rates and allocation sizes measure different things.
Tinubu urged governors to spend their higher revenues prudently and prioritise improvements in living standards, health and education. In the statement issued by presidential spokesman Bayo Onanuga, he said: “The dividends of reform are becoming visible.”
The President also acknowledged that more work was needed to bring down food costs and create decent employment. He reaffirmed plans to expand targeted cash transfers, accelerate compressed natural gas deployment, raise agricultural productivity and improve access to healthcare and education.
The wider economic picture gives both grounds for optimism and reasons for caution. The Bank reported growth of 4.2 per cent in the first half of 2026, compared with 3.9 per cent a year earlier. Its presentation nevertheless highlights inflation, insecurity, global financial conditions and election-related spending among the risks ahead.
Inflation slowing is different from prices falling. Even when the rate of increase eases, households can continue paying more for essential goods. Likewise, poverty stabilising is an encouraging change in direction, but does not establish that every family has become better off.
The update’s policy agenda combines continued economic discipline with reliable energy, transport and digital infrastructure, healthier and better-skilled people, stronger institutions and more efficient spending. Its organising priority is the creation of more and better jobs.
For citizens, the practical questions are therefore local as well as national. How much of a state’s approved budget was actually spent? Which projects were completed? Do schools and health facilities have the staff and resources needed to use new buildings effectively? These are measures through which a larger public purse can be judged.
Road investment and human development need to work together. Better transport can improve access to markets and services, while education and health help people take advantage of those connections. The allocation figures invite scrutiny of that relationship rather than a simple choice between one spending category and another.
The report presents a valuable opportunity for governors, legislators and residents to examine priorities while revenues are stronger. The ultimate measure of reform will be visible in services and livelihoods. Readers can consult the World Bank’s published update alongside their state’s budget implementation reports and ask how additional resources are being translated into practical improvements.
