States capital projects suffer delay over N4.5tn funding shortfall
About 29 state governments currently face a deficit of N4.25tn in funding capital projects, as this has resulted in the delay of various infrastructure projects in the affected states, The PUNCH reports.
These states collectively disbursed a total sum of N3.76tn out of a budget target of N8.25tn to fund capital projects, requiring additional funding of N4.25tn.
The amount disbursed in the first nine months of 2024 is N280bn lower than the capital expenditure of N4.04tn spent by the sub-nationals in the 2023 fiscal year.
This is despite an increase of 40 per cent in their monthly allocation from the Federal Government, highlighting a considerable gap between the planned capital investment and actual expenditure by the sub-national entities.
This latest development also comes against the backdrop that these state governors spent N1.994tn on recurrent expenditures, including refreshments, sitting allowances, travelling, and utilities between January and September 2024.
It was also gathered that the states obtained a N533.29bn loan, while it spent N658.93bn to service its debts owed to local, foreign, and multilateral creditors.
However, these states fell short in their revenue-generating targets, collecting a total sum of N1.92tn as internally generated revenue but fell short of the revenue target of N2.868tn, recording a deficit of N948.28bn.
According to experts, capital spending is the fund disbursed by the state on long-term investments aimed at improving infrastructure, services, or the economy.
These expenditures are typically used for projects that have a lasting benefit, such as building roads, bridges, schools, hospitals, public transport systems, and other essential infrastructure to foster economic growth, improve quality of life, and ensure better public services for citizens.
The PUNCH analysis showed a shift in spending priorities towards recurrent costs and debt servicing, raising concerns over the long-term impact on economic development.
A state-by-state analysis of its capital spending showed that Lagos, Rivers, and Delta made the highest investment in infrastructure development, while only 11 states achieved over 50 per cent spending of their projected spending, seven states achieved between 30 and 40 per cent while 11 states spent less than 30 per cent of its budgeted amount on capital investments.
Abia state spent N128.15bn on capital investments in nine months out of the budgeted target of N475.74bn, achieving a 26.09 implementation rate.
Adamawa spent N79.24bn, reaching 54.1 per cent of the N114.51bn targeted spending.
Akwa Ibom state spent N83.11bn, which accounted for 16.9 per cent of its targeted expenditure of N490.91bn.
While Anambra state disbursed N97.003bn for capital investment, representing 30.9 per cent of the N313.93bn spending target.
For Bauchi State, Governor Bala Mohammed allocated a total sum of N74.35bn for capital expenditure out of the planned N178.66bn. Bayelsa state spent N147.31bn on infrastructure, reaching only 55.6 per cent of its planned N265.01bn investment.
Benue State spent N32.76bn on capital expenditure, achieving only 14.7 per cent of the N115.24bn projected budget.
Cross Rivers spent N59.54bn out of its budgeted N180.94bn capital spending representing a 21.0 per cent implementation rate.
Delta state spent N237.09bn out of its budgeted N408.35bn capital spending representing a 58.1 per cent implementation rate.
Ebonyi state spent N103.41bn out of its budgeted N132.80bn capital spending representing a 77.9 per cent implementation rate.
While Edo state disbursed N176.02bn for capital investment, representing 68.2 per cent of the N188.55bn spending target.
Ekiti state disbursed N59.79bn for capital investment, representing 84.7 per cent of the N70.62bn spending target.
Enugu state spent N163.57bn of the budgeted N414.33bn, achieving a 39.5 implementation rate.
Further analysis showed that Imo state spent N138.82bn (29.3 per cent) of N474.56 projected spending. Jigawa disbursed N102.24bn (40.2 per cent) of N176.53bn projected spending.
Similarly, Katsina spent N139.52bn (38.9 per cent) of 331.297bn projected spending.
Kebbi state capital spending was N58.52bn, achieving 28.4 per cent of N163.82bn.
Kogi state spent N86.14bn to improve its infrastructure but fell short of its budgeted spending of N112.54bn, achieving a 37.4 implementation rate.
Lagos spent N770.03bn on capital investments in nine months out of the budgeted target of N1.32tn, achieving a 57.8 per cent implementation rate.
Nasarawa disbursed N54.54bn (62.9 per cent) of its budgeted target for capital expenditure. Rivers spent N431.86bn on capital investments in nine months out of the budgeted target of N343.71bn, achieving a 79.6 per cent implementation rate.
Niger spent N171.98bn (26.8 per cent) of its N464.66bn target. Ondo spent N49.96bn (22.5 per cent) of its N222.26bn target.
Osun allocated N68.12bn (22.5 per cent) of its N109.85bn target. Oyo allocated N88.11bn (17 per cent) of its N152.53bn target.
Taraba allocated N58.81bn (29.1 per cent) of its N201.94bn target. Yobe disbursed N79.26bn (72.4 per cent) of its N120.12bn target.
While Zamfara allocated N84.22bn (27.3 per cent) of its N308.20bn target.
Last month, Credit ratings company Fitch revealed that state governments in Nigeria do not execute 40 per cent of the capital expenditure in their various budgets.
The report added that Nigerian states face several challenges as “Internally Generated Revenue growth remains subdued due to socioeconomic constraints and inefficiencies in tax collection. Most states depend on FAAC transfers, with Lagos being an exception due to its higher IGR capabilities. Rising current spending, driven by high inflation and recent increases in the minimum wage, further pressures state finances.
It said, “Most Nigerian states rely on subsidised facilities from the federal government to finance their investments. Despite significant capital expenditure needs, states struggle to fully utilise budgeted capex due to funding and implementation constraints, with an average of only about 60 per cent of budgeted capex executed.”
This is due to several factors, including funding and implementation constraints, low revenue, and falls short of the extensive investments required to meet the growing demands of the population and the economy.
The Federal Government has also fallen short in its capital spending, declining by 25.3 per cent to N1.99tn in the first half of 2024, from N2.68tn in the corresponding period last year.
Since the release of the 2025-2027 MTEF, experts have highlighted the de-emphasising of CAPEX, evidenced by the decline of allocation from 42.3 per cent in 2024 to 34.4 per cent of the total budget in 2025 while, debt servicing, MDA personnel costs, and MDA overhead costs as a share of total spend are expected to increase.
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