Nigeria’s fiscal structure is once again in focus following fresh disclosures that state governments control nearly half of the country’s total public expenditure, raising critical questions about coordination, efficiency, and accountability across all tiers of government.
The Minister of Budget and Economic Planning, Abubakar Bagudu, revealed that subnational governments account for a significant share of national spending, underscoring the need for stronger policy alignment to achieve long-term economic goals.
He made this known while receiving the newly appointed Minister of State for Budget and Economic Planning, Doris Uzoka-Anite, at the ministry in Abuja.
States account for 48% of public spending – FG
The disclosure that States account for 48% of public spending – FG highlights the pivotal role of subnational governments in Nigeria’s economic management and development trajectory.
According to Bagudu, decisions taken at the state level have far-reaching implications for national growth, fiscal stability, and service delivery outcomes.
He emphasised that effective coordination between federal, state, and local governments remains essential, particularly as Nigeria pursues ambitious economic reforms and development targets.
The minister referenced deliberations by the National Economic Council, which identified intergovernmental collaboration as a critical driver of economic progress.
Coordination challenges in Nigeria’s fiscal system
Experts say the reality that States account for 48% of public spending – FG exposes longstanding coordination challenges within Nigeria’s fiscal framework.
While the Federal Government designs macroeconomic policies, a large portion of implementation occurs at the state level, often leading to inconsistencies in policy execution.
Analysts argue that without strong alignment, disparities in spending priorities, budget discipline, and project execution can undermine national development plans.
This situation is particularly evident in sectors such as infrastructure, healthcare, and education, where outcomes vary widely across states despite federal interventions.
$1tn economy target and growth strategy
Bagudu reaffirmed the Federal Government’s commitment to growing Nigeria’s economy to $1tn by 2030, a key pillar of the administration’s economic agenda under Bola Tinubu.
He explained that achieving this target would require sustained annual growth of about seven per cent, supported by structural reforms and strategic investments.
Central to this vision is the forthcoming National Development Plan covering 2026 to 2030, which will outline policy directions, investment priorities, and sectoral strategies.
According to him, the ministry serves as the country’s primary planning authority, responsible for harmonising fiscal policies and coordinating development programmes across all levels of government.
The fact that States account for 48% of public spending – FG makes their cooperation indispensable to the success of this plan.
Priority areas for economic expansion
The government has identified several priority areas aimed at accelerating growth and strengthening economic management.
These include increased investment in security, sustained funding for critical infrastructure, and intensified enforcement against illegal activities in the extractive sector.
Oil theft and illegal mining have continued to erode government revenues, making enforcement a key component of fiscal reform efforts.
Bagudu noted that addressing these challenges would not only boost revenue but also improve investor confidence and economic stability.
Role of international partnerships
The ministry is also deepening international partnerships to support Nigeria’s development objectives.
Bagudu highlighted the recent upgrade of bilateral relations with China to a comprehensive strategic partnership, which has already resulted in multiple agreements targeting economic growth.
Such partnerships are expected to provide financing, technical expertise, and investment opportunities in key sectors.
However, analysts caution that effective utilisation of these partnerships depends largely on coordination at both federal and state levels—further reinforcing why States account for 48% of public spending – FG remains a critical issue.
Private sector as growth engine
In her remarks, Uzoka-Anite stressed the importance of private sector participation in driving economic development.
She stated that about 95 per cent of Nigeria’s economic growth would need to come from private sector activities, with the government playing a supporting role.
According to her, policies under the Renewed Hope agenda must prioritise private investment, innovation, and enterprise development.
She expressed confidence that ongoing reforms have laid the groundwork for achieving the $1tn economy target.
Her position aligns with broader economic thinking that sustainable growth requires a strong partnership between government and private sector actors.
Strengthening institutional capacity
The Permanent Secretary of the ministry, Deborah Odoh, described the appointment of the minister of state as timely, noting that her experience would enhance policy implementation.
She emphasised the need for institutional efficiency and collaboration within the ministry to effectively deliver on its mandate.
Observers note that improving institutional capacity is essential, particularly as States account for 48% of public spending – FG, and effective oversight is needed to ensure funds are utilised efficiently.
Implications for governance and accountability
The revelation that states control nearly half of public expenditure raises important questions about governance and accountability.
Experts argue that transparency in state-level spending must be strengthened to ensure that public funds translate into tangible development outcomes.
There are also calls for improved monitoring mechanisms to track how funds are allocated and utilised across sectors.
Civil society organisations have long advocated for greater fiscal responsibility at the subnational level, including stricter compliance with budgetary frameworks and public procurement laws.
Outlook for Nigeria’s economic management
As Nigeria moves toward its long-term economic goals, the importance of coordinated fiscal management cannot be overstated.
The reality that States account for 48% of public spending – FG suggests that national development efforts will only succeed if all tiers of government work in alignment.
Analysts believe that improving intergovernmental collaboration, strengthening institutions, and enhancing accountability will be critical to unlocking Nigeria’s economic potential.
With ambitious targets such as a $1tn economy on the horizon, policymakers face the challenge of ensuring that fiscal decentralisation becomes a strength rather than a constraint.
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