States’ Capital Spending Plunges 58% as 2027 Election Politics Intensifies

The capital expenditure of 26 state governments dropped by N2.19 trillion in the first three months of 2026, raising concerns over slowing infrastructure development and mounting fiscal pressures as political activities ahead of next year’s elections gather momentum.

Analysis of quarterly financial reports published by the states showed that total capital spending fell from N3.79 trillion in the fourth quarter of 2025 to N1.59 trillion in the first quarter of 2026, representing a 58.1 per cent decline.

The sharp contraction comes amid growing political realignments ahead of the 2027 general elections, a period analysts say could shift government attention from long-term infrastructure investments to recurrent spending and political calculations.

Only one state, Oyo, recorded a significant increase in capital expenditure during the period, while most others posted steep declines.

Lagos remained the highest spending state despite a reduction, spending N340.76 billion on capital projects in the first quarter, down from N535.46 billion in the previous quarter. Oyo, however, increased its capital expenditure from N105.35 billion to N231.27 billion, a rise of nearly 120 per cent, coinciding with the state borrowing N164.88 billion – the highest loan figure among reporting states.

Akwa Ibom recorded one of the biggest cuts, reducing capital spending by N291.26 billion, a 67.9 per cent decline. Enugu saw the sharpest percentage drop, with capital expenditure plunging by 91.4 per cent from N365.69 billion to N31.37 billion.

Out of 36 states, 26 had uploaded their financial data as of Sunday. The remaining 10 states – including Abia, Anambra, Delta, Edo, Imo, Nasarawa, Ogun, Osun, Plateau, and Rivers – had yet to publish their first-quarter reports.

Despite the widespread decline in capital spending, the 26 states borrowed a combined N361.98 billion within the three months. Oyo accounted for nearly half of that total, followed by Bauchi with N56.57 billion and Niger with N39.28 billion.

Economists attributed the slowdown to typical end-of-year spending patterns, lengthy procurement processes, and growing debt obligations. A professor of economics noted that high governance expenses and weak oversight continued to limit economic benefits for citizens.

Another analyst warned that rising debt burdens could challenge the fiscal stability of subnational governments in the coming years, stressing that most states had failed to manage their balance sheets effectively.

However, some experts pointed out that capital expenditure typically gains momentum in the second and third quarters of the year due to bureaucratic procurement and contracting procedures.

The reduction in capital spending could have implications for economic growth, job creation, and infrastructure development, particularly as subnational governments are expected to play a larger role in driving economic activities.