Nigeria’s 36 states recorded a 93 per cent increase in revenue between 2023 and 2025, but reduced the share of their expenditure allocated to education from 14.9 per cent in 2021 to 12.1 per cent in 2025, the World Bank has said.
The bank disclosed this in its latest Nigeria Development Update, published on Friday, October 9, 2026, warning that increased public revenue must translate into better education, healthcare, infrastructure and living conditions for Nigerians.
According to the report, the states’ aggregate revenue rose by approximately 93 per cent in real terms during the period, while their expenditure increased by 92 per cent.
The World Bank attributed the revenue growth partly to exchange-rate reforms, the removal of petrol subsidies, improved revenue administration and increased allocations from the Federation Account.
It said states also benefited from refunds, the settlement of outstanding federal obligations, intervention funds and stronger value-added tax collections.
Despite the improved revenue, the report showed that education received a smaller proportion of state expenditure in 2025 than it did in 2021.
The bank said health spending remained broadly stable at about seven per cent of total state expenditure, while the share allocated to social protection increased from 1.4 per cent to 4.4 per cent.
Capital expenditure, however, rose significantly, accounting for 61 per cent of state spending, compared with 46 per cent previously.
The report identified transport infrastructure as the sector with the largest increase in spending, alongside substantial investments in housing, agriculture and other economic activities.
The World Bank Country Director for Nigeria, Mathew Verghis, said the additional revenue created an opportunity for state governments to improve public services.
He, however, stressed the need for greater spending efficiency, accountability and improved service delivery to ensure that increased public resources benefited citizens.
The bank acknowledged improvements in states’ fiscal reporting, transparency and internally generated revenue.
It nevertheless warned that stronger investment in human capital was necessary to translate economic reforms into sustainable employment and improved living standards.
The report projected average economic growth of 4.4 per cent between 2026 and 2028, subject to sustained reforms and improved public service delivery.
It urged federal and state governments to ensure that increased revenue resulted in tangible improvements in the welfare of Nigerians.
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