Capital budgets without cash: How Ntrillions approved by NASS failed to reach MDAs

•Eight FG ministries suffer 98.7% funding gap
•Lawmakers question credibility of Nigeria’s budget system

By Gift ChapiOdekina, Abuja, with additional reports from Babajide Komolafe, Economy Editor, Peter Egwuatu, Asst. Business Editor

There are indications that Nigeria may be facing a fiscal crises following reports of large-scale underfunding of capital budgets.

Financial analysts say the development is set to jeopardize the current administration’s target of $1 trillion economy by 2030.
Already, the development is unsettling the National Assembly, which has begun scrutinizing the details of the implementation of the capital component of the budget.

The scrutiny was sparked off by shocking disclosures at the National Assembly by several ministries at the budget defense sessions, where the Ministers and heads of agencies said they received only a tiny fraction of funds approved for capital projects in the 2025 fiscal year.
So far it has been found out that only N9.13 billion or 1.3 percent was released out of N1.218 trillion capital budgets of eight ministries for execution of the budgeted projects, leaving a funding gap of 98.7 percent.
The Federal Government’s executives admitted to lawmakers that billions of naira appropriated by the parliament for infrastructure, health, and development projects were never released to their ministries.
The revelation reached a dramatic point when the Minister of Health and Social Welfare, Muhammad Ali Pate, disclosed before the House of Representatives Committee on Healthcare Services that his ministry received only N36 million, about 0.02 percent of the N218 billion approved for capital expenditure in the 2025 budget, a disclosure that has triggered outrage among members of the House of Representatives and raised serious questions about Nigeria’s budget implementation framework.

These fresh revelations have also exposed a troubling reality in Nigeria’s public finance system: billions of naira approved by lawmakers for capital projects in 2025 were either drastically under-released or not released at all.
Vanguard also learnt that other infractions such as selective releases have been uncovered.
The disclosures made by ministers and heads of agencies while defending their 2026 budget proposals have raised serious concerns among lawmakers about the credibility of Nigeria’s appropriation process and the growing gap between budget approvals and actual project execution.

Evidence across other ministries
Vanguard findings show similar tales of woes on capital budget releases across many other ministries.
Multiple ministries and agencies disclosed that they received only a tiny fraction of their capital allocations in 2025.

Some of them include Ministry of Women Affairs which got N394.8 million released, just 0.44% of the approved capital budget of N89.8billion; Ministry of Marine & Blue Economy, ¦ 202million, about 1.7% releasedout of the N353billion capital budget; Ministry of Transportation received N2.5 billion, about 1.0% out of the approved N256.7billion capital budget; Federal Ministry of Housing & Urban Development got N2.0 billion, about 2.0% of the N100billion capital budget; Federal Ministry of Water Resources got N1.0 billion, about 1.5% of the N80billion capital budget; and Ministry of Agriculture & Food Security, which got N3.0 billion out of N120billion budgeted.

Why funds were not released
Officials of the Ministry of Finance attributed the shortfall to Nigeria’s cash-planning framework, which allows spending only when funds are available in the treasury.

However, fiscal analysts say deeper structural issues are responsible, including: revenue shortfalls, high debt servicing obligations,
competing recurrent expenditure, weak cash-flow, and weak cash management
Nigeria now spends a large portion of its revenue servicing debt, leaving limited funds available for capital development.

The immediate consequence is that many projects approved by lawmakers remain unimplemented.
In the health sector alone, dozens of planned hospital upgrades, medical equipment procurements, and primary healthcare projects reportedly stalled due to lack of funding.

Similarly, infrastructure projects under transportation and housing ministries have been pushed forward into subsequent budgets.
One lawmaker warned during deliberations that the trend risks creating a cycle where projects are repeatedly inserted into budgets but never executed.

Budget analyst Ali Musa, speaking with Vanguard, said that the growing gap between appropriations and actual releases threatens the credibility of Nigeria’s fiscal framework.
He stated: “When ministries know that large portions of their capital budgets may never be released, the annual budget risks becoming more of a speculative document rather than a spending instrument.
“The situation also complicates the work of lawmakers who must approve new budgets while previous appropriations remain largely unimplemented.

Pressure mounts onfiscal authorities
The revelations have increased pressure on the executive arm of government to improve transparency around budget execution.
Some lawmakers are now pushing for: quarterly reports on capital releases, stricter oversight of the treasury, and reforms in the cash-management system.
They argue that unless funds approved by parliament are actually released, Nigeria’s development agenda could remain stuck between ambitious budgeting and weak implementation.

Policy coordinationis lacking —Omordion
Commenting on the underfunding of capital project, Ambrose Omordion, Chief Operating Officer, at InvestData Consulting Limited, said: “It is obvious that in Nigeria the economic team of this government is lacking coordination and that is why we are in this kind of environment where the capital component is grossly underfunded even with the several borrowing we are having here and there.
‘‘Yes, we might have good policy, good intentions, but the coordination and how we go about using resources to achieving the target or those objectives, as a leader or the government is very important.
‘‘As we speak today, the government in 2024 to 2025 and now in 2026 are still borrowing money. ‘‘In the budget current expenditure spending, paying salaries have been on, while the capital budget expenditure that’s supposed to impact the economy with infrastructure is nearly abandoned? ‘‘Even with all the borrowing, even now we’re having some of it in windfall, in oil price, our reserve heating, almost 13 years high.

We may have generatedabout 50 billion dollars from the oil windfall since the middle-east crises, which is good for the economy, but how are we managing all the resources?’’
On wayford, he said: “For me, the first thing is that we need to redefine our purpose and then, there must be a good intention on governance.
‘‘The government has a good intention of having a forecast of a one trillion dollar economy. Of course the $1 trillion economy is achievable, but how do we get there?

‘‘We need to have a coordinated policy, so that each sector will know that there is a target to meet.
‘‘However, the reverse is the case as policies are not coordinated. The country has an enormous good workforce but putting them in the right sector is lacking. You will see one ministry doing one thing and another doing different things countering the other and that will not lead to the general objective of growing the economy. ‘‘Like I said earlier there is no coordinated policy to give a direction where the country wants to be. It is left to the government to have a re-coordinated work to move with their policies so that at the end of the day we will achieve the overall goal of a trillion dollar economy.

Under-funding of capital budget is a monumental disaster for economy— Adonri
Also commenting, Vice Executive Chairman at High-Cap Securities Limited, a Lagos based investment house, said: ”Capital expenditure by government is what propels the productive economy; It is the core of public capital formation which industries require to sustain their productive momentum; It facilitates the ability of the economy to generate productive employment and create wealth long into the future; It ought to command the greatest focus of public finance.

‘‘Consequently, the under-funding of Capital budget is a monumental disaster for the economy.
“Where we are now in public finance is disgraceful. For government to find it difficult to fund capital projects means that the budget was unrealistic in the first instance.”

On way forward, he said: “We shall continue to advocate a conservative approach to budgeting wherein deficit budgeting becomes a misnomer.

‘‘There is always an Action Plan which is the implementation framework for every budget. It should be tenaciously adhered to and monitored by the Inspector General for budget implementation.”

Shows excessive revenue shortfall, poor coordination of budgeting process—Olayinka
Commenting as well, Tajudeen Olayinka, Investment Banker & Chartered stockbroker, said: “Non funding of capital budget in spite of sustained domestic and foreign borrowings by government is an indication of excessive revenue shortfall and poor coordination of the budgeting process.
‘‘This should not really happen if budgeting process had been properly coordinated at the executive level, and same properly communicated to the legislative arm who is fond of introducing questionable elements into the federal government budget.
‘‘Failure to fund capital budget will definitely retard developmental process and slow down economic growth.
‘‘Therefore, it is the capacity of the economy that is being underfunded in the process, and should not be encouraged going forward.
‘‘Government must sit up if the desire to achieve $1trillion economy must be met in 2030. You need to build capacity to create efficiency in the economy, and that means, you must fund capital budget consistently to attain this lofty objective.”
On wayforward, he said: “Funding budget requires revenue optimisation through effective and efficient tax collection, and ensuring low cost borrowings. ‘‘Where government cannot fund capital budget in spite of meeting borrowing plan, it means it must optimize its revenue by setting target on all its revenue sources and leaving out questionable elements often introduced to the budget by the National Assembly. ‘‘This is the only way to drive an inclusive economic growth. Funding capital component of the budget is critical to driving significant economic growth.”

Infrastructure decay is sustained – Abidoye
Highlighting the implications of capital budget underfunding, Tunde Abidoye, Head, Equity Research at Quest Merchant Bank stated: ‘‘The key implications are the decaying limited infrastructure that are incapable of driving the national development goals.
‘‘Secondly, the limited infrastructure leads to high cost of production for manufacturing and trading businesses, and it indirectly feeds into the elevated cost of items, including food, raw materials etc.
‘‘A lot of Nigerian products can’t compete on the international market because of high production costs related to transportation, storage, electricity etc

‘‘Finally, it indirectly leads to increased borrowing by the government. We have seen this administration, in particular, try to fund its infrastructure drive through borrowings in order to cover the funding gap’’.

It reflects revenue challenges facing FG – Olubunmi
In his own comments, Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co, said the poor funding of capital budget ‘‘reflects the revenue generation challenges that the Federal Government is facing. ‘‘Unfortunately, there’s little headroom for borrowing based on our debt servicing to revenue ratio, although we note the gradual improvement in the ratio.
‘‘There’s hope that things will get better particularly with the ongoing implementation of the tax form Act.
‘‘The improvement in the profitability of companies as the economy gradually rebounds should also increase the company income tax and support the ability to meet the capital budget obligations.’’

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