Nigerian states are collecting significantly more revenue following recent economic reforms, but a growing share of their spending is going towards infrastructure rather than education. The World Bank’s latest report shows that state revenues increased by 93% in real terms between 2023 and 2025, while education’s share of total expenditure fell from 14.9% in 2021 to 12.1% in 2025.
Released on October 8, 2026, the bank’s Nigeria Development Update examines how increased public revenue has changed state government spending priorities. Its findings raise a key question: are the gains from Nigeria’s economic reforms translating into better public services and stronger investment in people?
How Nigerian States Gained More Revenue
The Nigerian states revenue increase in 2026 reflects changes introduced over the past few years, including petrol subsidy removal, foreign exchange reforms, stronger tax administration and higher Value Added Tax collections.
The World Bank said state revenues rose by 93% in real terms between 2023 and 2025, while state expenditure increased by 92%. States also benefited from higher federal allocations, refunds and the settlement of outstanding federal obligations.
The additional money has given state governments more room to fund public projects and strengthen their finances. However, the bank warned that states must improve spending efficiency and accountability if Nigerians are to feel the benefits.
Why Education Is Losing Its Share
The World Bank Nigeria state revenue report does not say that education spending fell in absolute terms. Instead, education spending increased in real terms from about ₦500 billion in 2021 to ₦1.1 trillion in 2025, but it did not grow as quickly as other areas of government spending.
Education’s share of total state expenditure consequently dropped from 14.9% to 12.1%. Health spending remained broadly stable at around 7%, while social protection’s share rose from 1.4% to 4.4%.
The figures suggest that states are giving greater priority to economic infrastructure and other investments. Capital expenditure increased from 46% of total state spending to 61% between 2023 and 2025, with transport infrastructure recording the largest increase.
Roads Are Getting More Attention Than Human Capital
The increase in Nigeria infrastructure spending is not necessarily a bad development. Better roads and transport networks can reduce business costs, improve access to markets and help create jobs.
However, education and healthcare also determine whether people can benefit from economic growth. Underfunded schools, poor learning outcomes and limited access to quality healthcare can weaken the workforce that states need for long-term development.
The challenge is therefore not simply to spend less on infrastructure. It is to ensure that investment in roads and other projects does not leave essential public services behind.
What States Must Do Next
The World Bank said higher revenues provide an opportunity to improve infrastructure, education, healthcare and water services. It also stressed the importance of better spending efficiency, transparency and accountability.
The Nigerian state education budget decline as a share of expenditure should encourage closer examination of individual state budgets, school funding and actual service delivery. National figures can show the overall trend, but they do not mean every state has made the same spending choices.
For residents, the real test of economic reform is whether public money produces better schools, reliable healthcare, improved transport and more opportunities for work.
Nigeria’s states now have greater financial resources than they did before the reforms. The next challenge is making sure those resources improve people’s lives, not just government balance sheets.
