Nigerian states flush with cash but development stalls

States and their governors have received historically high monthly allocations from the Federation Account Allocation Committee (FAAC), but the lives of people under them aren’t any better.

In May 2025, FAAC disbursements stood at N1.681 trillion, up from N976 billion in May 2023—an increase of 72.17 percent. Yet, the rising tide has lifted a few boats.

Across 10 states in 2024, the average budget for ministries of works, transportation, and infrastructure stood at N145 billion, while spending on social development and poverty reduction averaged just N130 billion.

This indicates a preference among governors for physical infrastructure—primarily roads and buildings—over sectors that directly impact human welfare, such as health, agriculture, water supply, and social protection.

Only Abia, Kaduna, Kogi, and Taraba allocated more to welfare-oriented ministries than to construction. Even in states where social sector ministries received higher allocations, such as Kogi and Taraba, the offices of the governor and the State House of Assembly still recorded disproportionately high spending, often double of what was committed to physical infrastructure.

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Execution tells the real story

While the average capital budget performance for the Ministry of Works was around 78 percent, some states such as Lagos (96.5 percent), Akwa Ibom (89 percent), Abia (72 percent), and Kaduna (77 percent), significantly outperformed the average. In contrast, ministries responsible for social development and poverty reduction, despite receiving lower allocations than works, recorded even lower execution rates, averaging around 60 percent. In states like Taraba, Kogi, and Kaduna, performance dropped to as low as 40 percent.

Lagos was the only state among the 10 with an overall average performance of 86 percent, while others like Abia (45 percent), Oyo (43 percent), Enugu (54 percent), and Kaduna (45 percent) struggled to effectively implement both physical and social infrastructure budgets. The evidence points not just to misallocation but also to weak budget execution in people-focused sectors.

Roads lead, people follow

An expanded analysis of eight states—Adamawa, Abia, Enugu, Kogi, Kaduna, Akwa Ibom, Lagos, and Edo—confirms a consistent pattern. Even where education, health, agriculture, and social protection received budgetary attention, these functions were frequently outpaced by road transport and construction, both in funding size and performance.

In 2024, states like Lagos, Akwa Ibom, and Edo invested heavily in social infrastructure. Lagos allocated N140 billion to health and N128 billion to education, with capital performance above 75 percent. Akwa Ibom followed suit, spending N46.6 billion on education, N13 billion on health, with over 85 percent on social protection and agriculture budgets.

Edo also stood out, with N42.4 billion for health, N39.4 billion for education, and N27.9 billion for social protection, all executed at rates exceeding 85 percent.

However, even in these states, road transport dominated capital allocation. Edo: N96.9 billion (88 percent performance), Akwa Ibom: N269.9 billion (89 percent performance).

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2025: Collapse in social sector spending

By the first quarter (Q1) of 2025, the trend worsened in states with available data. Abia’s education capital spending fell from N65.2 billion in 2024 to N535 million, with just 0.4 percent execution. Edo’s agriculture allocation dropped to N236 million, executed at just 0.5 percent. In Adamawa and Enugu, capital implementation in key welfare sectors like health, water, and social protection fell below 3 percent.

In many cases, social protection received token allocations, sometimes between just N10 million and 200 million.

Meanwhile, construction and road transport retained or increased their dominance, especially in Abia and Kaduna, where road-related capital projects were the only functions with performance around 30 and 40 percent. This highlights a systemic tendency to allocate funds to people-centric sectors without delivering the results.

What experts say

Peter Obi, former Labour Party presidential candidate, captured this paradox in 2021 and during the 2023 campaign: “You can’t use infrastructure to drive economic development.”

His view aligns with that of Kingsley Moghalu, a former Central Bank of Nigeria (CBN) deputy governor, who has long insisted that: “The foundation of economic transformation is human development—mass education, healthcare, skills training, and access to potable water.”

Without these, roads and flyovers are unlikely to produce inclusive prosperity.

Bosun Tijani, Minister of Communications, Innovation and Digital Economy, lamented the August 2024 looting of an NCC Industrial Park in Kano by underprivileged children. What he missed, critics say, is that the looters were barefoot, unschooled children—victims of neglect, not lawlessness.

As Ayo Oyewumi, development commentator, rightly noted: “When we say human development is greater than building flyovers and buildings, you lot will argue. Instead, you keep talking about AI in a country with 65 percent illiteracy and 18 million out-of-school children.”

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Growth vs development

Many Nigerians—and their leaders—fail to grasp that economic growth and development are not the same, experts say. The former is about expansion; the latter is about transformation.

Dudley Seers, a development economist, posed the crucial test in 1969: “What has been happening to poverty? What has been happening to unemployment? What has been happening to inequality? If all three of these have declined from high levels, then beyond doubt, this has been a period of development for the country concerned. If one or two of these central problems have been growing worse, especially if all three have, it would be strange to call the result ‘development’, even if per capita income doubled.”

Robert Flammang of Texas State University also drew a sharp distinction: “Growth is more of the same. Development means structural change—something different, if not something better.”

Redirecting priorities

As FAAC disbursements grow, the question isn’t whether states have money, but what they are doing with it. The evidence from these 10 states shows that governors prioritise roads and physical structures over poverty alleviation, education, and health.

Analysts say governors must seek expert advice on how to reallocate resources to uplift their people, noting that poverty is local, and so must be its remedy.