The Federal Government utilised only N3.10trn for capital projects between January and September 2025, despite securing N11.89trn in debt financing during the same period, highlighting a significant gap between borrowing and infrastructure spending.
Data from the third-quarter 2025 Budget Implementation Report released by the Budget Office of the Federation showed that total financing inflows comprised N7.08trn from domestic sources and N4.81trn from multilateral and bilateral loans tied to specific projects.
However, actual capital expenditure stood at just 26.07 per cent of total borrowings, far below expectations.
The figure also fell significantly short of the prorated target of N17.58trn for the first three quarters, leaving a deficit of N14.48trn, or 82.3 percent.
A breakdown of the spending indicated that Ministries, Departments and Agencies accounted for N1.21trn, Government-Owned Enterprises spent N615.68bn, while grants and donor-funded projects contributed N1.08trn.
Notably, there was no recorded spending under multilateral and bilateral project-tied loans, despite a budget provision of N2.52trn for such projects within the period.
The Budget Office attributed the slow pace of capital project execution to administrative hurdles and cash management constraints, including delays in bottom-up cash planning, which it said continue to hamper implementation and increase project costs.
Economic analysts have raised concerns over the trend. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, warned that rising government borrowing is crowding out private sector access to credit, as financial institutions prefer investing in government securities with higher returns and lower risk.
Similarly, the Director-General of the Manufacturers Association of Nigeria, Segun Kadir Ajayi, noted that the pattern reflects a growing reluctance by banks to lend to businesses, particularly in the manufacturing sector, which has been forced to scale back expansion due to high borrowing costs and weak economic conditions.
Responding to concerns about the country’s debt profile, the Director-General of the Budget Office, Tanimu Yakubu, defended the government’s borrowing strategy, describing deficit financing as a standard economic tool used globally to stimulate growth, especially during periods of economic strain.
He argued that Nigeria’s fiscal challenges stem from longstanding structural issues such as dependence on oil revenue, subsidy burdens, and weak revenue mobilisation, rather than current policies alone. He also stressed the need for improved revenue generation and more efficient use of borrowed funds.
Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, cautioned that the country must reduce its reliance on borrowing and develop a more sustainable fiscal framework to support key sectors, including infrastructure, education, healthcare, and security.
The wide gap between borrowing and actual capital spending underscores ongoing challenges in Nigeria’s budget implementation process.
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