Budget data reveal widening gap between capital plans and actual releases as debt service dominates government finances
Capital spending by federal ministries, departments and agencies (MDAs) has remained under severe pressure over the last three fiscal years, despite rising government revenues, as debt servicing continues to consume the bulk of available funds.
An analysis of official data from the Budget Office of the Federation’s Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Papers for 2023, 2024 and the January–July 2025 period shows that MDAs suffered a cumulative ₦15.21 trillion shortfall in capital funding over the period.
Although successive budgets projected ambitious increases in capital expenditure, actual releases consistently fell far below approved amounts, highlighting deep structural strains in public finances driven largely by escalating debt obligations.
Over the three years, capital allocations under the category “Capital Expenditure (MDAs + Others)” amounted to ₦27.33 trillion on a comparable basis, including a pro rata adjustment for 2025. However, actual capital spending traceable to those votes stood at just ₦12.13 trillion, leaving more than half of planned projects unfunded.
In percentage terms, MDAs accessed only 44.37 per cent of their approved capital budgets over the three-year period, meaning that many infrastructure and service-delivery projects were either delayed, scaled down or abandoned.
Year-by-Year Performance Shows Worsening Trend
In 2023, the Federal Government earmarked ₦5.31 trillion for capital spending under MDAs and related categories. By year-end, actual expenditure reached ₦3.25 trillion, resulting in a shortfall of ₦2.06 trillion and a performance rate of 61.15 per cent.
While this marked the strongest showing within the review period, it still meant that nearly two-fifths of planned capital spending was not delivered.
The situation deteriorated significantly in 2024. Capital expenditure for MDAs and others was budgeted at ₦11.21 trillion, more than double the 2023 provision. Actual spending, however, came in at ₦5.81 trillion, leaving a gap of ₦5.40 trillion and a performance rate of 51.85 per cent.
Notably, the capital shortfall recorded in 2024 alone exceeded the total capital allocation to MDAs in 2023.
By 2025, the squeeze had intensified further. The full-year capital budget for MDAs stood at ₦18.53 trillion. When adjusted to a January–July pro rata benchmark of ₦10.81 trillion, actual capital releases during the first seven months of the year amounted to just ₦834.80 billion.
This translated to a pro rata funding gap of ₦9.98 trillion and a performance level of 7.72 per cent within the period reviewed.
The 2026–2028 MTEF acknowledged the weak implementation, noting that less than 10 per cent of the pro rata capital budget had been released to MDAs by July 2025. It attributed the low performance partly to efforts to complete the extended 2024 capital budget, which runs into December 2025.
Overall capital expenditure across all categories reached ₦3.60 trillion by July 2025, representing a 73.7 per cent shortfall against the target for the first seven months of the year.
Debt Service Crowds Out Development Spending
While capital spending struggled, debt servicing absorbed a dominant share of government revenue throughout the period.
In 2023, Federal Government retained revenue stood at ₦10.29 trillion, exceeding the budget estimate. However, ₦8.56 trillion, about 83.15 per cent was spent on debt service, leaving limited fiscal space for capital projects.
MDAs’ capital expenditure of ₦3.25 trillion represented just 31.54 per cent of retained revenue, less than half the amount devoted to debt servicing.
The pressure persisted in 2024. Retained revenue rose to ₦19.88 trillion, but debt service climbed to ₦12.63 trillion, accounting for 63.54 per cent of revenue. Capital spending by MDAs amounted to ₦5.81 trillion, or 29.25 per cent of retained revenue.
Between January and July 2025, retained revenue stood at ₦12.36 trillion, while debt service reached ₦9.81 trillion, consuming nearly 80 per cent of revenue in the period. In contrast, MDAs’ capital spending of ₦834.80 billion accounted for just 24.80 per cent of retained revenue.
Overall, the Federal Government spent about ₦2.7 on debt service for every ₦1 on capital projects during the first seven months of 2025.
Project Delays, Protests and Budget Rollovers
The sustained funding gaps have translated into delayed road projects, unfinished schools and hospitals, stalled water schemes, and slow progress in security and digital infrastructure.
Contractors handling federal road projects recently staged protests at the Federal Ministry of Finance, alleging prolonged non-payment for completed and ongoing works. The All Indigenous Contractors Association of Nigeria claimed the government owes contractors about ₦4 trillion, demanding the immediate release of ₦760 billion earlier promised by the Minister of Finance.
The protests included the placement of a symbolic coffin at the ministry’s entrance, representing what the contractors described as hardship and deaths suffered due to unpaid obligations.
In response, the Federal Government assured contractors that outstanding payments would be cleared in December. The Minister of Works, David Umahi, said President Bola Tinubu had approved the creation of a special committee to verify and settle all valid claims.
The government has also acknowledged delays in capital execution. President Tinubu has asked the National Assembly to approve an extension of the 2025 Appropriation Act to March 31, 2026, citing slow releases and procurement bottlenecks.
Additionally, MDAs have been directed to roll over 70 per cent of their 2025 capital budgets into 2026, under a new budget circular aimed at prioritising the completion of ongoing projects amid weak revenues.
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