Is Nigeria’s capital expenditure meaningful?
Capital Expenditure in Nigeria. Source: Stears

Never in the history of Nigeria has government spending been so high or risen so rapidly—at least in nominal terms.

Budgeted (planned) expenses for this year (2022) alone were over ₦16 trillion—23 times higher than in 2000. Government (actual) spending has also averaged ₦6 trillion in the last decade, thanks to the spike witnessed during the Buhari administration (see above chart). Compare this to an average of ₦500 billion spent annually between 2000 and 2010.


Key takeaways:

  1. The federal government increased its expenses during the Buhari administration by more than 3x, the highest in any government administration since 2000, with claims of high spending on critical infrastructure.

  2. Similarly, capital expenditure by the FG in the first four months of 2022 (₦1.8 trillion) was almost five times larger than capex for the whole of 2015 (₦380 billion).

  3. However, capital expenditure in real terms has remained static. When we account for inflation by rebasing the nominal capital expenses, the federal government spent less on capital projects in 2021 (₦613 billion) than it did in 2011 (₦729 billion).


But there is nothing wrong with spending money or spending it in huge amounts. What matters is how money is spent—and for the federal government, its spending is in two broad areas: capital (e.g. building schools) and recurrent expenditure (e.g. paying back interest on loans).

Economists favour more capital project spending because it often has a significant positive impact on economic growth both in the short and long run. This is unlike recurrent expenditure, which still has a positive but often insignificant impact on economic growth. 

The Buhari administration claims its increased spending is due to aggressive investment in critical

This story is only available to Premium subscribers Subscribe or sign in to finish reading

Not ready to subscribe? Register to read a selection of free stories

Adesola Afolabi

Adesola Afolabi

Read Latest

Nigeria’s new railway game plan: states take the lead

PREMIUM - 31 MAR 2023

Can WhatsApp help startups scale?

PREMIUM - 30 MAR 2023

What drives crude oil prices?

PREMIUM - 29 MAR 2023

Can digital payments outpace cash transactions in Nigeria?

PREMIUM - 28 MAR 2023

Download our mobile app for a more immersive reading experience

Scan QR code
mobile download