February 09, (THEWILL) — Nigeria’s 36 states are heading into 2026 with their most ambitious spending plans on record, budgeting a combined N37.01 trillion, a sharp increase from N25.03 trillion in 2025. On the surface, the numbers signal a bold push for growth, with N24.87 trillion, or 67.45 percent of total spending, earmarked for capital projects, reflecting a nationwide pivot toward infrastructure, economic expansion and long-term development.
However, a closer look at state-level and regional data reveals a more nuanced fiscal reality. While capital spending dominates in most states, recurrent expenditure and rising debt burdens continue to exert pressure on public finances. The 2026 budgets therefore reflect a delicate balancing act between investing for the future and sustaining the present cost of governance.
Compared with 2025, total state spending has risen by nearly 48 percent, driven by higher revenue expectations, inflationary pressures and ambitious infrastructure plans. Yet recurrent expenditure has also surged, largely due to the implementation of the N70,000 minimum wage, pension obligations and higher overhead costs. Across states, recurrent spending has risen by an estimated 45 percent on average, raising concerns about fiscal sustainability even as capital allocations expand.
Across the North Central zone, budgets have grown significantly despite tight fiscal space. Niger State, the zone’s largest spender, has budgeted N1.03 trillion for 2026, allocating 73.8 percent (N789.77 billion) to capital projects, even as it carries a N141.5 billion domestic debt burden.
Plateau (N914.86 billion) and Kogi (N820.49 billion) also expanded spending sharply, with capital allocations of 62.7 percent and 55 percent respectively. Benue, Kwara and Nasarawa operate with smaller envelopes and capital ratios between 56 and 66 percent, but rising recurrent costs and domestic debt, such as Benue’s N134 billion, continue to limit fiscal flexibility.
The North East presents one of the most consistent capital investment profiles nationwide, driven largely by reconstruction and development needs. States such as Borno (N890.33 billion), Bauchi (N877 billion) and Taraba (N650.5 billion) allocate between 65 and 70 percent of their budgets to capital expenditure. Despite these strong ratios, fiscal vulnerabilities persist. Bauchi alone carries N143.6 billion in domestic debt and $172.8 million in foreign obligations, while Adamawa, Gombe and Yobe maintain moderate but rising debt profiles.
In the North West, capital ambition is a defining feature of the 2026 budgets. Zamfara leads nationally with 83 percent of its N871.34 billion budget devoted to capital projects, followed by Katsina at 81 per cent and Jigawa at 76.9 percent.
Notably, some states combine high capital spending with relatively low debt, with Jigawa’s domestic debt of N852.5 million the lowest among all states. Kaduna, however, stands out with significant foreign debt of $658.7 million, even as it allocates 71 percent of its N985.9 billion budget to capital projects.
The South East emerges as one of the most infrastructure-driven zones. Imo State tops the chart with 83.4 percent of its N1.44 trillion budget, about N1.20 trillion, allocated to capital spending, followed closely by Abia at 80 percent, Enugu at 79.7 percent and Anambra at 79 percent. Budgets in the zone rose sharply from 2025, particularly in Ebonyi, where spending jumped from N202.1 billion to N884.87 billion. However, domestic debt remains a concern, with Enugu carrying N180.5 billion and Imo N98 billion.
Oil-producing states in the South South dominate the upper end of the spending scale. Rivers State, with a N1.85 trillion budget, Delta at N1.7 trillion and Akwa Ibom at N1.39 trillion all allocate about 70 to 75 percent of spending to capital projects. These large budgets come with substantial debt burdens, as Rivers carries N364.4 billion in domestic debt, Delta N205 billion, while foreign obligations remain significant in Edo at $337.8 million and Cross River at $201 million.
The South West highlights the growing tension between scale and efficiency. Lagos State, Nigeria’s only multi-trillion-naira sub-national economy, has budgeted N4.24 trillion for 2026, accounting for more than 11 percent of all state spending nationwide. However, only 52 percent is allocated to capital projects, while N1.72 trillion goes to recurrent expenditure.
Lagos also holds the country’s largest sub-national debt burden, with N1.04 trillion in domestic debt and $1.05 billion in foreign obligations. Smaller states in the zone face similar pressures, as Ekiti allocates just 47 percent to capital spending, while Ogun, Osun and Oyo grapple with rising recurrent bills alongside growing debt stocks.
Across all zones, rising capital budgets coexist with significant legacy debt. States such as Lagos, Rivers, Delta, Ogun and Cross River carry heavy domestic obligations, while foreign currency exposure is particularly notable in Kaduna, Edo, Lagos and Cross River. At the national level, debt servicing is projected to exceed N15 trillion in 2026, consuming nearly 60 percent of government revenues, raising concerns that today’s capital-heavy budgets could translate into heavier fiscal pressures in the years ahead.
Overall, Nigeria’s 2026 state budgets mark a decisive shift toward infrastructure-led growth, with most states committing the bulk of their resources to capital projects. Yet the data also show that the cost of running government is rising almost as fast as investment ambitions, while debt remains a persistent constraint.
As implementation begins, the real test will be whether these investments generate economic returns strong enough to contain recurrent expenditure and stabilise debt, making the 2026 budgets not just a spending milestone but a defining fiscal stress test for Nigeria’s states.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
