36 States, FCT Budget Hits N40tn in 2026, But Capital Spending Share Drops

By Victor Idajili

Nigeria’s 36 states and the Federal Capital Territory have raised their combined budgets by 47.5% for 2026, from N27.22 trillion in 2025 to N40.14 trillion. 

But despite the bigger budget, the share going to capital projects has fallen, raising concerns about infrastructure development and long-term growth.

An analysis of the 2026 budgets shows that capital expenditure now makes up 64.34% of total state spending, down from 73.24% in 2025. In naira terms, states and the FCT allocated N25.83 trillion to capital projects out of the N40.14 trillion total, compared to N19.94 trillion from the N27.22 trillion budget in 2025.

So while capital spending increased in absolute terms, its proportion shrank by nearly 9 percentage points. This suggests more resources are being channeled to recurrent costs such as salaries, debt servicing and running government.

Spending priorities differ across regions. The FCT raised its capital allocation to 76.19% in 2026 from 72.3% in 2025, with its total budget climbing from N1.81 trillion to N2.29 trillion. The South-South, North-West and North-East also increased their infrastructure share. South-South moved from 58% of N5.26 trillion to 70% of N8.08 trillion, North-West from 64.24% of N4.6 trillion to 75.3% of N6.53 trillion, and North-East from 58.34% to 64.15% as its budget grew to N4.14 trillion.

On the other hand, South-East, South-West and North-Central cut their capital budgets. The South-East recorded the steepest drop, from 82.05% to 61% even though its budget rose to N5.73 trillion. The South-West had a marginal decline from 55.4% to 55.03% with a budget of N8.7 trillion, while North-Central fell sharply from 72% to 59.04% with a N4.7 trillion budget.

Analysts warn that reducing the share for capital projects could weaken states’ ability to attract investment, especially if infrastructure like roads, power and water suffers. Prof. Jonathan Aremu of International Economics described it as a paradox to cut capital spending when population and infrastructure demands are rising. “Capital projects are meant to support productive activities. When money meant for capital projects is going down, it becomes a paradox, especially because the demand for infrastructure is rising,” he said. He also questioned implementation, asking whether states are even executing the projects they budget for.

Economist Chukwunonso Iheoma said capital budgets fund the infrastructure that drives industry. “If a state earmarks more money for recurrent expenditure, it may be infrastructurally deficient. It cannot attract foreign investment, and existing investors may be forced to exit to another state where they will have access to the infrastructure.”

Emerging markets analyst Ike Ibeabuchi attributed the shift partly to pre-election spending pressures, noting that governors often increase salaries and handouts instead of building infrastructure. However, he added that 64% for capital is still an improvement from past years when recurrent spending dominated.

The combined N40.14 trillion for states and FCT is also dwarfed by the Federal Government’s budget. President Bola Tinubu signed the 2026 Appropriation Act of N68.32 trillion into law on April 17, 2026, meaning the federal budget is N28.32 trillion higher than what all states and the FCT plan to spend.