Capital spending by Federal Government ministries, departments, and agencies has remained severely constrained over the last three fiscal years, even as retained revenues expanded and debt service absorbed an overwhelming share of available resources, according to findings by The PUNCH.
An analysis of data from the Budget Office of the Federation’s Medium-Term Expenditure Framework and Fiscal Strategy Paper reports covering 2023, 2024, and the January–July period of 2025 showed that MDAs’ capital expenditure votes were persistently underfunded, leaving a cumulative gap of N15.21tn over the three-year period.
Despite successive increases in headline capital budgets, actual releases and spending failed to keep pace, reflecting deep structural pressure on public finances, largely driven by rising debt service obligations.
Over the three years, capital expenditure under the category “Capital Expenditure (MDAs + Others)” totalled N27.33tn when measured on a comparable basis that includes the 2025 pro rata. Actual capital expenditure traceable to those votes amounted to N12.13tn, leaving a shortfall of N15.21tn.
In percentage terms, MDAs accessed just 44.37 per cent of the capital funding provided for them over the period, meaning that more than half of the planned capital projects were left unfunded or only partially funded.
The underperformance was evident in each individual year. In 2023, the Federal Government budgeted N5.31tn for capital expenditure under MDAs and others. Actual capital expenditure stood at N3.25tn by year-end, implying a shortfall of N2.06tn and a performance ratio of about 61.15 per cent.
Although this represented the strongest year within the three-year window in relative terms, it still meant that nearly two-fifths of planned capital spending was not delivered.
The gap widened sharply in 2024. Capital expenditure under MDAs and others was budgeted at N11.21tn, more than double the 2023 provision, reflecting ambitious infrastructure and service-delivery plans.
However, actual capital expenditure for the year came to N5.81tn, leaving a deficit of N5.40tn and a performance of roughly 51.85 per cent. In absolute terms, the shortfall in 2024 alone exceeded the entire capital budget for MDAs in 2023.
By 2025, the squeeze became more pronounced. The full-year budget for MDAs’ capital expenditure stood at N18.53tn. When adjusted to a January–July pro rata expectation of N10.81tn, actual capital expenditure for MDAs and others in the first seven months was just N834.80bn. This translated to a pro rata shortfall of N9.98tn and a performance of about 7.72 per cent within the period reviewed.
In the MTEF document for 2026 – 2028, it was noted that “Capital expenditure implementation was notably weak. Only N834.80bn had been released to Ministries, Departments, and Agencies out of the pro-rata capital budget of N10.81tn, indicating less than 10 per cent performance at the review period.
“The low capital expenditure is mainly due to the effort to meet the 2024 capital budget, which was extended to December 2025. Overall, the total capital expenditure reached N3.60 trillion as of July 2025, representing a shortfall of 73.7 per cent of the target for the first seven months.”
The three-year actual figure of N12.13tn includes a N2.23tn capital development fund recorded in 2025 for projects approved in the 2024 budget but financed in the subsequent year. While this rollover funding provided some relief for stalled projects, it did little to alter the overall picture of persistent underfunding.
Even after accounting for this adjustment, the funding gap remained substantial, showing the scale of delayed or abandoned capital projects across MDAs. The capital squeeze stands in stark contrast to the trajectory of Federal Government retained revenues and debt service obligations over the same period.
In 2023, the Federal Government’s retained revenue, excluding government-owned enterprises, stood at N10.29tn, exceeding the budget projection of N8.63tn. However, debt service for the year amounted to N8.56tn, meaning that about 83.15 per cent of retained revenue was spent on servicing debt alone.
In practical terms, for every N100 earned by the Federal Government in retained revenue in 2023, about N83 went to debt service. This left limited fiscal room for other obligations, including capital expenditure. Indeed, MDAs’ capital expenditure in 2023 amounted to N3.25tn, representing about 31.54 per cent of retained revenue for the year.
While this ratio appears sizeable, it still means that debt service absorbed more than twice the share of revenue devoted to MDAs’ capital projects. The pressure intensified in 2024, despite a significant expansion in retained revenue. The Federal Government’s retained revenue for the year stood at N19.88tn, compared with a budget estimate of N23.02tn.
Debt service, however, rose sharply to N12.63tn, far above the budgeted N8.27tn. As a result, about 63.54 per cent of retained revenue in 2024 was spent on debt service. At the same time, MDAs’ capital expenditure in 2024 stood at N5.81tn, equivalent to about 29.25 per cent of retained revenue.
This marked a further decline in the share of revenue devoted to capital projects compared with 2023, even as capital needs expanded and infrastructure gaps widened.
The January–July 2025 figures suggest that the imbalance between debt service and development spending remains acute. Federal Government retained revenue in the first seven months of the year stood at N12.36tn, against a pro rata expectation of N22.18tn.
Debt service during the same period amounted to N9.81tn, exceeding the pro rata debt service benchmark of N8.35tn. This meant that about 79.39 per cent of retained revenue between January and July 2025 was spent on debt service.
In contrast, MDAs’ capital expenditure of N834.80bn represented just 24.80 per cent of retained revenue in the period. In effect, debt service consumed more than three times the amount spent on MDAs’ capital projects within seven months.
The dominance of debt service is also evident when compared with aggregate capital expenditure. Between January and July 2025, total capital expenditure across all categories stood at N3.60tn, while debt service alone amounted to N9.81tn.
This implies that the Federal Government spent roughly N2.7 on debt service for every N1 spent on capital projects during the period. The composition of debt service over the years further illustrates the pressure on public finances.
In 2023, total debt service of N8.56tn exceeded the budget provision by nearly N2.00tn, driven largely by higher domestic debt service and interest on ways and means advances. In 2024, foreign debt service rose sharply, contributing to the overshoot of more than N4.36tn above the budgeted debt service figure.
These trends have direct implications for MDAs’ ability to implement capital projects. With debt service taking priority in cash management, capital releases are often delayed, rationed, or rolled over to subsequent years.
The existence of the capital development fund for 2024 projects financed in 2025 is itself an indication of how capital execution timelines have been stretched. Beyond MDAs, capital expenditure by government-owned enterprises also showed mixed performance.
In 2023, GOEs’ capital expenditure stood at N573.13bn against a budget of N835.39bn. In 2024, actual GOEs’ capital expenditure fell to N354.99bn compared with a budget of N820.91bn.
However, in the first seven months of 2025, GOEs’ capital expenditure matched its pro rata expectation at N478.86bn, suggesting that funding constraints were more severe for MDAs than for GOEs during the period.
The broader capital expenditure envelope, which includes grants, donor funding, and multilateral or bilateral project-tied loans, also faced significant shortfalls in 2025.
While the pro rata plan for aggregate capital expenditure in January–July 2025 stood at N13.67tn, actual spending was just N3.60tn, leaving a gap of N10.07tn within seven months.
For MDAs, the cumulative effect of these shortfalls is seen in delayed road projects, unfinished schools and hospitals, stalled water schemes, and slow progress on security and digital infrastructure.
The repeated gap between budgeted and actual capital spending also raises questions about the realism of annual capital plans and the effectiveness of budget execution frameworks.
The data show that while the Federal Government’s retained revenue has grown significantly since 2023, the benefits of that growth have been largely absorbed by debt service and non-debt recurrent expenditures.
With MDAs being underfunded, contractors handling federal road projects had, in the last few days, staged protests at the Ministry of Finance, alleging prolonged non-payment for completed and ongoing works.
The contractors under the aegis of the All Indigenous Contractors Association of Nigeria staged a protest at the Federal Ministry of Finance over alleged unpaid funds for projects executed in 2024.
The association claimed the Federal Government owes contractors about N4tn, but is specifically demanding the release of N760bn, which it said the Minister of Finance, Wale Edun, had earlier pledged to pay in September.
The protesting contractors placed a symbolic coffin at the entrance of the ministry, saying it represented the hardship and deaths some members had suffered due to the prolonged non-payment.
The Federal Government has promised to calm rising tensions among road contractors, assuring that all outstanding payments will be cleared this December, following days of protests by contractors over mounting debts and stalled project financing.
The Minister of Works, David Umahi, who gave the assurance during the reopening of the repaired Keffi Flyover in Nasarawa State, said President Bola Tinubu had acknowledged the debt backlog and approved the constitution of a special committee to verify and settle all outstanding claims.
The PUNCH earlier in August 2025 reported that the Federal Government may extend the 2025 budget into 2026, as slow capital project implementation, procurement delays, and a shutdown of the cash-planning portal left many projects stalled about eight months into the fiscal year.
The possibility of a rollover came to light at a stakeholders’ engagement in Abuja, organised by the Office of the Accountant-General of the Federation, to review progress and challenges in implementing the extended 2024 capital budget and the 2025 capital budget under the Bottom-Up Cash Planning Policy.
By December, President Bola Tinubu asked the National Assembly to approve the extension of the implementation of the 2025 Appropriation Act to March 31, 2026, as part of efforts to end the practice of running multiple budgets simultaneously.
The President said the proposed amendments would allow for the full release of at least 30 per cent of capital allocations to Ministries, Departments, and Agencies, noting that delayed releases had continued to undermine budget performance.
The PUNCH earlier exclusively reported that the Federal Government ordered ministries, departments, and agencies to carry over 70 per cent of their 2025 capital budget into the 2026 fiscal year as the administration moves to prioritise the completion of existing projects and contain spending pressures in the face of weak revenues.
This directive is contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning and circulated to all ministers, service chiefs, heads of agencies and top government officials in Abuja.
According to the circular, “MDAs are to upload 70 per cent of their 2025 FGN Budget to continue in FY2026. All such rollover and uploads MUST be in line with the immediate needs of the country as well as government’s development priorities that aligns with the policy direction of the new administration which hinges on National Security, the Economy, Education, Health, Agriculture, Infrastructure, Power & Energy as well as social safety nets, women & youth empowerment.”
Development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, lamented that federal capital spending had become unstable again after several years of progress.
He said the January–December cycle “went perfectly” for a few years and helped align government projects with private-sector planning. “Now I don’t know how they are going to manage it,” he said. “Most capital projects are also going to suffer. The normalcy we had achieved in the cycle is already broken.”
Ilias warned that delays of this scale disrupt project execution across the economy, especially in states that model their fiscal calendars around federal spending.
He added that uncertainty in budget timelines reduces credibility and makes it harder for the government to coordinate reforms with expenditure priorities.
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