Nigeria’s Revenue Surge Shifts Spending Toward Infrastructure

Real GDP grew by 4.2% in the first half of 2026, outperforming the previous year’s figures as agriculture and services buoyed the economy. While this recovery has finally stabilized poverty rates—the first such pause since 2019—inflationary pressures continue to erode household purchasing power. Higher global oil prices further bolstered export earnings, pushing the current account surplus to $12 billion, though these gains are partially offset by oil-backed debt obligations and rising fuel costs.

State governments now wield significantly more capital, with infrastructure spending jumping from 46% to 61% of total budgets. Transport and housing projects have become the primary focus for regional administrators. However, this pivot has relegated human capital to the background. Education’s share of state expenditure dropped to 12.1% in 2025, down from nearly 15% four years prior, and healthcare spending remained stagnant at roughly 7%. While social protection funding saw a modest rise, the data suggests a widening gap between the construction of physical assets and the provision of essential social services.

Moving forward, the challenge for Nigerian authorities is to improve the quality of public spending rather than simply increasing the volume of investment. With the World Bank projecting 4.4% economic growth through 2028, the effectiveness of these fiscal gains will be measured by whether they translate into better jobs and improved living standards, or if they remain locked in infrastructure projects that fail to address the country’s deeper human development requirements.