Nigeria’s fiscal reforms have expanded government revenues, but increased resources do not automatically produce better schools, functioning hospitals, reliable infrastructure, or improved livelihoods. The deeper challenge lies in the institutions, political incentives, and accountability systems that determine how public money becomes public value.
John Onyeukwu |
There is a fundamental contradiction at the heart of Nigeria’s governance experience. Governments announce larger budgets, celebrate increased revenue collections, and defend difficult economic reforms as necessary sacrifices for future prosperity. Yet millions of Nigerians continue to encounter a state that struggles to provide basic public goods: functional healthcare, quality education, reliable electricity, safe roads, clean water, and effective security.
This contradiction raises a question that deserves greater attention than it receives in our national conversation: What happens between the collection of public revenue and the delivery of public services?
Nigeria’s public revenue relative to the size of its economy has historically been low, while infrastructure deficits, population growth, inflation, and debt obligations constrain government finances. However, resource scarcity does not adequately explain why available funds so frequently fail to produce outcomes proportionate to their cost.
Nigeria’s challenge is therefore not exclusively fiscal. It is institutional and political. It concerns how governments establish priorities, negotiate budgets, award contracts, manage bureaucracies, and hold public officials accountable.
A government may become more financially capable without becoming more institutionally effective. It may collect more revenue while delivering fewer services in real terms, construct more facilities without improving access, and increase expenditure without producing commensurate public value.
This is Nigeria’s governance paradox. Understanding it requires moving beyond revenue announcements to the political economy of public expenditure and institutional performance.
More Resources, But What Results?
The World Bank’s October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, provides important evidence.
According to the report, gross federation revenues increased by 69 per cent in real terms between 2023 and 2025. Aggregate state government revenues increased by approximately 93 per cent, while state expenditures rose by about 92 per cent, also in real terms. These increases represent a substantial expansion of fiscal resources available to state governments.
Capital expenditure increased from 46 per cent to 61 per cent of aggregate state spending, reflecting greater investment in infrastructure and other physical assets. This is significant progress. The evidence does not support the sweeping assertion that state governments have simply consumed additional revenues.
However, spending priorities raise important questions. Education’s share of total state expenditure declined from 14.9 per cent in 2021 to 12.1 per cent in 2025, while health remained around 7 per cent. Social protection increased from 1.4 per cent to 4.4 per cent. Although education and healthcare spending increased in absolute terms, they grew more slowly than investment in economic infrastructure.
These figures do not establish that public services have deteriorated. Indeed, real social spending per person improved across most states. The question is whether the scale, composition, and efficiency of expenditure are sufficient to reverse Nigeria’s accumulated development deficits.
Roads are essential for economic activity, but they do not substitute for qualified teachers, functioning healthcare centres, or effective social protection. Development requires complementary investments in physical infrastructure and human capabilities.
Recent Federation Account allocations reinforce the accountability question. According to reports on FAAC distributions, the three tiers of government shared approximately ₦3.007 trillion in August 2026 from July revenues. The subsequent distribution declined to ₦2.338 trillion. Although these allocations cover substantial existing obligations, their magnitude underscores the importance of expenditure transparency.
The central question is no longer simply whether governments have received additional resources. It is whether those resources are improving the lives of citizens.
Economic Recovery Is Not the Same as Development
Since 2023, the Federal Government has undertaken major economic adjustments, including petrol subsidy removal, foreign-exchange reforms, and revenue administration changes. These policies have imposed considerable costs on households while creating opportunities for improved fiscal sustainability.
There is evidence of macroeconomic progress. The World Bank’s October 2026 assessment reports that Nigeria’s real GDP grew by 4.2 per cent in the first half of 2026, compared with 3.9 per cent during the corresponding period of 2025. Inflation declined from its earlier peak, although household purchasing power remained under pressure.
Yet aggregate indicators tell only part of the story. The International Monetary Fund’s June 2026 Article IV Consultation estimated that approximately 63 per cent of Nigerians lived below the national poverty line, while about 27 million faced food insecurity in late 2025.
Macroeconomic stability is necessary for development, but it is insufficient. Lower inflation does not automatically restore lost purchasing power. Increased revenue does not automatically produce employment. Improved foreign reserves do not guarantee access to healthcare or education.
The developmental legitimacy of reform ultimately depends on whether macroeconomic gains translate into measurable improvements in people’s lives, particularly when citizens have borne substantial adjustment costs.
The real test of economic reform is not whether government has more money. It is whether citizens have better lives.
The Political Economy of Public Spending
Why does increased expenditure not consistently produce better public services? The answer requires examining political incentives rather than focusing exclusively on technical capacity.
Government budgets are political documents reflecting negotiations among elected officials, bureaucracies, contractors, interest groups, and political constituencies. While many expenditure decisions reflect legitimate development priorities, others are influenced by electoral calculations, patronage relationships, or the political visibility of projects.
The problem arises when political incentives reward project announcements and construction more strongly than completion, maintenance, utilisation, and developmental impact.
A newly constructed hospital provides an attractive political image. It can be commissioned and celebrated. But its developmental value depends on qualified personnel, functioning equipment, medicines, electricity, water, and sustainable operating funds. These less visible requirements are often harder to finance than construction.
Similarly, building classrooms matters, but improved learning requires trained teachers, instructional materials, effective school leadership, and measurable educational outcomes. Governments can demonstrate infrastructure progress without achieving corresponding improvements in learning.
This is not simply a problem of corruption, although corruption can aggravate it. It is fundamentally a problem of institutional incentives. Where political recognition attaches primarily to new projects, officials may have weaker incentives to maintain existing facilities or improve service quality.
Governments consequently inherit facilities that cannot operate effectively, announce additional projects, and reproduce the weaknesses that undermined earlier investments. Breaking this cycle requires assessing public investments by their full lifecycle costs and measurable benefits, not merely construction expenditure.
When Budgets Become Announcements
Nigeria’s public financial management challenges extend beyond expenditure priorities to budget credibility.
An approved budget authorises expenditure; it does not establish that funds have been released, projects implemented, or services delivered.
President Bola Tinubu’s December 2026 budget presentation provides a revealing illustration. According to the President, only ₦3.10 trillion, approximately 17.7 per cent of the 2025 capital budget, had been released by the end of the third quarter. The administration attributed this partly to projects carried over from the previous budget cycle.
Overlapping budgets, revenue uncertainty, procurement delays, and administrative bottlenecks can undermine implementation. Nevertheless, these are precisely the institutional problems effective public financial management should address.
The 2026 federal budget provides for aggregate expenditure of ₦68.32 trillion, including approximately ₦32.2 trillion for capital expenditure and ₦15.8 trillion for debt service. These figures demonstrate investment ambitions and competing fiscal obligations, not actual delivery.
Nigeria already possesses important constitutional accountability mechanisms. Sections 80–84 and 120–124 of the Constitution regulate federal and state public finances, while sections 85 and 125 address public audits. Legislative oversight and procurement legislation provide additional safeguards.
The persistent challenge is therefore not the complete absence of legal institutions, but the gap between formal mandates and effective implementation.
Budget credibility requires realistic forecasts, timely releases, disciplined procurement, transparent reporting, and independent verification of results.
The Human Development Deficit
Weak service delivery is particularly visible in Nigeria’s human development indicators. UNICEF’s Nigeria education profile estimates that approximately 10.5 million children aged 5–14 are out of school, while only 61 per cent of children aged 6–11 regularly attend primary school. Although these are longstanding estimates rather than new 2026 figures, they illustrate the magnitude of Nigeria’s education challenge.
The consequences extend beyond enrolment. Children who fail to acquire foundational literacy and numeracy face disadvantages that constrain productivity, employment, and national competitiveness. Education expenditure should therefore be assessed not merely by classrooms constructed or teachers employed, but by whether children attend school, complete basic education, and acquire measurable competencies.
The same applies to healthcare. Constructing primary healthcare centres represents an output, but improved health outcomes depend on qualified personnel, essential medicines, functioning equipment, and access to treatment.
Public service delivery must ultimately be judged from the perspective of citizens who need the services, not merely institutions responsible for providing them. This requires shifting from expenditure centred accountability to outcome centred accountability.
What Other Countries Teach Us
International experience demonstrates that better outcomes are possible when governments align political incentives, administrative capacity, and performance accountability.
Brazil offers an instructive example through Bolsa Família, its conditional cash transfer programme, which linked social assistance to education, healthcare, beneficiary identification, and monitoring. A World Bank assessment of Brazil’s social protection system reported that social transfers, including Bolsa Família and social pensions, contributed to a 58 per cent decline in extreme poverty, a 30 per cent decline in poverty, and a 41 per cent reduction in inequality between 2004 and 2014. These estimates concern the broader social transfer system, not Bolsa Família alone.
Indonesia provides another example. Through the KIAT Guru initiative, communities monitored teacher performance and participated in developing service agreements. According to the World Bank’s assessment, the intervention benefited approximately 26,000 students across five districts and improved learning outcomes, particularly where community monitoring was combined with consequences for teacher absence.
Nigeria should not mechanically replicate these programmes. Institutional contexts differ. The lesson is that expenditure becomes more effective when supported by reliable information, coordinated implementation, credible incentives, and measurable outcomes.
Effective service delivery depends not simply on how much money governments allocate, but on the institutional arrangements through which resources become results.
The Missing Ingredient: Political Economy
Many governance reforms fail because they treat institutional weaknesses primarily as technical problems. The conventional response to poor performance is to introduce regulations, develop manuals, organise workshops, establish monitoring frameworks, or deploy digital platforms.
These interventions can be valuable, but they frequently disappoint when they ignore the political incentives governing institutional behaviour.
A government may adopt comprehensive procurement legislation and electronic procurement systems. Yet if influential actors continue benefiting from discretionary contract awards or weak enforcement, formal improvements may coexist with persistent dysfunction.
Similarly, publishing budget documents does not automatically produce accountability. Citizens must understand the information, oversight institutions must possess the capacity and independence to investigate discrepancies, and officials must face credible consequences for noncompliance.
Political economy analysis helps explain who benefits from existing arrangements, who bears reform costs, which actors can obstruct change, and what coalitions might support improved performance.
Reforms that threaten entrenched interests without sufficient political support may fail regardless of their technical quality. Conversely, reforms that align institutional improvements with credible political and administrative incentives have greater prospects of sustainability.
Public institutions do not operate outside politics. They function within political environments that shape their priorities, resources, leadership, and accountability. The task of institutional reform is not to eliminate politics from public administration, but to establish rules and incentives that make political advantage more compatible with delivering public value.
From Fiscal Reform to an Accountability Compact
Nigeria’s increased public revenues create an opportunity to reconsider the relationship between government and citizens. Economic reforms have required Nigerians to absorb higher living costs and considerable uncertainty. Governments have justified these sacrifices partly on the grounds that fiscal adjustments will generate resources for future prosperity.
That argument establishes an accountability obligation. If citizens must bear the costs of reform, they are entitled to credible evidence of its benefits.
Federal and state governments should establish transparent frameworks tracking how resources translate into services. Citizens should know what governments receive, what they allocate, what they actually spend, and what improvements result.
Public investments should incorporate lifecycle costing, including staffing, operation, maintenance, and sustainability. Legislatures should scrutinise implementation outcomes rather than concentrate primarily on budget approvals. Auditors-General and public accounts committees require institutional support to ensure that audit findings lead to corrective action.
Civil society, professional associations, communities, and independent media must also have meaningful access to public information.
Accountability should reward performance. Governments demonstrating measurable improvements in education, healthcare, infrastructure maintenance, and poverty reduction should be recognised, studied, and encouraged to replicate successful approaches.
Nigeria needs a governance system that rewards results rather than announcements, functionality rather than construction, and public value rather than the mere absorption of budgetary allocations.
The 2027 Election and the Politics of Delivery
With the presidential and National Assembly elections scheduled for January 16, 2027, Nigeria is approaching another opportunity to assess political leadership and institutional performance.
Incumbents will emphasise projects completed and reforms introduced. Challengers will highlight unmet expectations and propose alternatives. Both arguments are legitimate, but neither is sufficient without credible evidence.
When governments announce increased education spending, citizens should ask whether more children are learning. When they celebrate healthcare infrastructure, the question should be whether facilities are functional and accessible. When political leaders announce roads or employment initiatives, the public should demand evidence of completion, economic impact, and value for money.
The same scrutiny must apply to those seeking to replace incumbent governments. Promises of better governance are insufficient without credible explanations of how institutions will be strengthened, expenditure priorities changed, and accountability enforced.
Nigeria’s political competition should increasingly be organised around competing theories of institutional delivery rather than competing collections of promises.
Democratic accountability becomes meaningful when citizens can connect political choices to measurable public outcomes.
Government Must Be Judged by What It Delivers
Nigeria’s recent fiscal experience presents both an opportunity and a warning. Increased public revenues, stronger macroeconomic indicators, and expanded capital expenditure demonstrate that economic reforms can create additional fiscal space. They do not guarantee effective public institutions.
It would be inaccurate to dismiss improvements in capital spending and macroeconomic stabilisation. It would be equally mistaken to assume that these improvements automatically constitute better governance or justify the sacrifices citizens have endured.
The decisive issue is whether public resources produce measurable, sustainable, and equitable improvements in people’s lives.
This requires confronting the institutional weaknesses and political incentives separating government expenditure from public value. It demands credible budgets, disciplined implementation, functional oversight, stronger service delivery institutions, and political leadership willing to be judged by outcomes rather than announcements.
The question should not end with how much revenue has been collected, how large a budget has become, or how many projects have been commissioned. It must extend to whether children are learning, patients are receiving treatment, businesses are becoming more productive, communities are safer, and households are experiencing improved living standards.
A government that collects more but delivers little has not solved the governance problem. It has merely expanded the resources available to an underperforming system.
Nigeria’s next great reform must therefore go beyond raising public revenue. It must reform the institutions, incentives, and accountability arrangements that determine what public money achieves.
The measure of a functioning state is not the size of its treasury, but the quality of the public goods it delivers. We should always have this in mind.
John Onyeukwu is a Lawyer and Governance & Social Impact Practitioner based in Abuja.
Email: john@impactbridgeafrica.com
