World Bank exposes widening gap between revenue and s
Twenty-six Nigerian states increased their spending faster than their revenue between 2023 and 2025, raising concerns about the sustainability of their spending and the need for better financial management.
The World Bank disclosed this in its October 2026 Nigeria Development Update titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities.Abia, Kaduna, Benue and Gombe recorded some of the widest gaps between revenue growth and expenditure during the period.
However, six states recorded faster revenue growth than spending. They were Akwa Ibom, Enugu, Kano, Katsina, Niger and Taraba.
Ekiti and Ogun recorded almost equal growth rates in revenue and expenditure.
The report noted that there was no clear geographical or economic pattern in the spending decisions made by the states.
The World Bank disclosed this in its October 2026 Nigeria Development Update titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities.
The report examined how state governments used the additional funds they received following major economic reforms.
According to the World Bank, the median growth in state spending was about 134 per cent in real terms between 2023 and 2025, while revenue grew by 79 per cent.
Abia, Kaduna, Benue record biggest gaps
The World Bank said spending grew faster than revenue in 26 of the 34 states with available data.The World Bank’s findings come amid a significant increase in the revenue available to Nigerian states, although their ability to generate money internally remains different.
In October 2026, Nairametrics reported that state government revenue increased by 93 per cent in real terms between 2023 and 2025, while expenditure rose by 92 per cent.
The World Bank also found that capital expenditure increased from 46 per cent to 61 per cent of total state spending.
Earlier, in September 2026, Nairametrics reported that Nigeria’s 36 states and the Federal Capital Territory generated N5.15 trillion in internally generated revenue (IGR) in 2025.
This represented a 40.93 per cent increase from the N3.65 trillion recorded in 2024.
Lagos, Rivers and Enugu were the three highest revenue-generating states, contributing a combined N2.60 trillion.
Lagos alone accounted for 34.4 per cent of the total revenue generated internally.
States receive more money from federal allocations
The increase in state spending followed a rise in the revenue available to state governments after the removal of the petrol subsidy, foreign exchange reforms and improvements in tax collection.
The World Bank reported that gross federation revenue increased by 69 per cent in real terms between 2023 and 2025, while the amount available for distribution among the three tiers of government rose by 60 per cent.
State governments benefited the most from the increase.
Their share of distributable federation revenue grew by about 129.5 per cent in real terms, from N3.21 trillion in 2023 to N7.37 trillion in 2025, using 2019 prices.
Spending on transport rose sharply from about N100 billion in 2021 to N2.5 trillion in 2025. This represented 26.5 per cent of total state expenditure.
States also increased spending on education, healthcare, housing, agriculture and social protection.
However, infrastructure recorded the biggest increase in spending priority.
State revenue and spending continue to rise
The World Bank’s findings come amid a significant increase in the revenue available to Nigerian states, although their ability to generate money internally remains different.
In October 2026, Nairametrics reported that state government revenue increased by 93 per cent in real terms between 2023 and 2025, while expenditure rose by 92 per cent.
The World Bank also found that capital expenditure increased from 46 per cent to 61 per cent of total state spending.
Earlier, in September 2026, Nairametrics reported that Nigeria’s 36 states and the Federal Capital Territory generated N5.15 trillion in internally generated revenue (IGR) in 2025.
This represented a 40.93 per cent increase from the N3.65 trillion recorded in 2024.
Lagos, Rivers and Enugu were the three highest revenue-generating states, contributing a combined N2.60 trillion.
Lagos alone accounted for 34.4 per cent of the total revenue generated internally.
Source: Nairametrics