- Nigerian states allocate N3.87 trillion for recurrent expenditure in their proposed 2025 budgets, highlighting a focus on administrative costs and essential services
- The 13 states' total proposed budget for 2025 is N9.07 trillion, with significant portions dedicated to both recurrent and capital expenditure
- Economists raise concerns about the heavy reliance on recurrent expenditure, warning it may limit funds for crucial infrastructure development
In their proposed budgets for the 2025 fiscal year, 13 Nigerian states have earmarked a total of approximately N3.87 trillion for recurrent expenditures.
The recurrent expenditure would account for a significant portion of the total budget proposed by the states, highlighting the emphasis on administrative costs, including salaries and overheads, while also directing substantial funds toward capital projects aimed at boosting infrastructure development.
The total proposed budget for these 13 states in 2025 is N9.07 trillion, with N3.87 trillion allocated for recurrent expenditures, which represent the ongoing costs of running the government and providing essential services.
The remaining N5.845 trillion is earmarked for capital expenditure, reflecting the states' focus on long-term infrastructural projects.
The breakdown of the recurrent expenditure allocation across various states reveals the priority placed on maintaining day-to-day governance functions.
In Lagos State, Governor Babajide Sanwo-Olu proposed a budget of N3.005 trillion, with N1.24 trillion allocated for recurrent expenditures, which constitute a significant part of the total budget. The state also dedicated N1.76 trillion for capital expenditures, underscoring its emphasis on infrastructure.
Bauchi State's budget for 2025, presented by Governor Bala Mohammed, totals N465.09 billion. N182.74 billion is allocated for recurrent expenditures, representing 39.3% of the budget.
The remaining N282.34 billion is allocated for capital expenditure, emphasising the state's commitment to development.
In Bayelsa, Governor Douye Diri proposed a budget of N689.4 billion, with N263.38 billion for recurrent expenditure (38.2% of the total) and N404.76 billion set aside for capital projects. Meanwhile, Osun State's budget of N390.03 billion allocates N245.8 billion (62.9%) for recurrent expenditure, with the remaining N144.23 billion directed towards capital expenditure.
Other states such as Oyo, Anambra, Gombe, and Ekiti have also presented their budgets, with varying proportions allocated for recurrent and capital expenditure. Anambra State, for instance, proposed N606.9 billion for 2025, with N467.5 billion for capital expenditure and N139.5 billion for recurrent costs. The state also projected a deficit of N148.3 billion.
Meanwhile, Katsina State’s budget includes N157.97 billion for recurrent expenditure (23.15% of the total budget), with a significant N524.27 billion dedicated to capital expenditure, which represents 76.85% of the budget.
Economists have raised concerns about the heavy reliance on recurrent expenditure, which they argue could limit the funds available for crucial capital projects. Charles Sanni, CEO of Cowry Treasurers Limited, pointed out that the large recurrent expenditure budgets indicate limited capacity for capital investment. He cautioned that low capital expenditure could hamper economic growth and lead to insufficient contributions to the GDP.
Sanni recommended strategies to improve the financial health of states, including cost optimisation through reduced political aide costs and stricter budget controls, as well as increasing internally generated revenue via public-private partnerships, multilateral organisations, and diaspora funding.
Economist Vincent Nwani also criticised the relatively small size of some of the proposed budgets, noting that the budgets of some Nigerian universities exceed those of entire states.
Nwani raised concerns about the allocation of capital funds for non-productive purposes, such as vehicle purchases, instead of long-term infrastructure projects that could drive economic growth. He emphasised the need for greater transparency, fiscal discipline, and improved income generation to meet state obligations and address debt repayment.
Nigeria loses $26bn yearly to electricity shortages –Report
Meanwhile, TheRadar reported that Nigeria suffers an estimated annual economic loss of $26 billion due to electricity shortages, according to a Standard Bank, Africa Trade Barometer report.
According to the report, businesses shore up electricity shortages by spending nearly $22 billion annually on off-grid fuel, which leads to increased operational costs.
