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The Federal Government spent only N3.10tn on capital projects in the first nine months of 2025 despite accessing N11.89tn from various debt financing sources during the period, highlighting the wide gap between borrowing and infrastructure spending.
Latest data from the Budget Office of the Federation’s Third Quarter 2025 Budget Implementation Report showed that total debt financing inflows stood at N11.89tn as of September 2025, comprising N7.08tn in domestic borrowing and N4.81tn in multilateral and bilateral project-tied loans.
However, actual capital expenditure amounted to N3.10tn over the same period, representing just 26.07 per cent of total financing receipts.
The figure was also significantly below the prorated capital expenditure target of N17.58tn for the first three quarters of the year, with actual spending falling short by N14.48tn, or 82.3 per cent.
A breakdown of the spending showed that capital expenditure by Ministries, Departments, and Agencies amounted to N1.21tn, while Government-Owned Enterprises spent N615.68bn. Grants and donor-funded projects accounted for N1.08tn.
Notably, no expenditure was recorded under the multilateral and bilateral project-tied loan component despite a three-quarter budget provision of N2.52tn for such projects.
The report attributed the slow pace of project implementation partly to administrative and cash management challenges. “Cash management bottlenecks — including bottom-up cash planning delays — continue to slow project execution and raise project cost risks,” the Budget Office stated.
The figures indicate that while the government continued to rely heavily on domestic and external financing to support budget execution, only a fraction of the borrowed funds had translated into actual capital project spending by the end of the third quarter.
A renowned economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, earlier warned that rising Federal Government borrowing from the domestic financial system is increasingly crowding out the private sector, as banks favour low-risk, high-yield government securities over lending to businesses.
“The increase in credit to the government can be attributed to a number of factors.
The government has been raising money to finance the deficit. So, this financing of the deficit has led to the issuance of bonds, treasury bills, and so on, which banks also buy. The rate is also very attractive, and it’s more attractive to them than lending to the real sector,” Yusuf said. He further urged the government to moderate its borrowing.
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