Capital Funding Crisis Deepens as N10tn Allocation Remains Unreleased
Nigeria’s federal government is facing a deepening cash crunch that has left critical capital projects across key sectors stalled, with ministers openly lamenting the sharp shortfall in funding for the 2025 fiscal year.
Figures from the Budget Office of the Federation show that out of an N18.53 trillion appropriation for capital expenditure for ministries, departments and agencies (MDAs), only about N834.8 billion had been released as of July 2025 a performance rate of just 7.72 per cent against a pro-rata benchmark of N10.81 trillion.
That leaves an almost N10 trillion shortfall in capital funding within the first seven months of the year, underscoring a severe liquidity constraint that has forced government to shift reliance toward project-tied loans rather than direct cash releases.
The shortfall has translated into painfully low execution rates for approved capital projects across crucial sectors. The Federal Ministry of Health and Social Welfare, for instance, was only able to access N36 million out of N218 billion budgeted for capital expenditure, an amount ministers said has rendered implementation of major health infrastructure plans nearly impossible.
Similarly, the Federal Ministry of Transportation reported only about one per cent release of its N256.73 billion capital allocation, pushing most of its 2025 projects into the following fiscal year.
Officials at the Ministry of Marine and Blue Economy also disclosed similarly dismal capital funding, receiving roughly 1.7 per cent of its budgeted funds, while other ministries like Women Affairs and Social Development saw less than half a per cent of approved capital votes released.
The crisis is not confined to 2025 alone. The Federal Ministry of Interior reported zero capital release for two consecutive fiscal years (2024 and 2025), meaning that all capital projects under its purview spanning internal security, immigration services, correctional services and more have been stalled entirely due to lack of funds. Lawmakers have expressed outrage, warning that persistent delays in capital disbursements undermine institutional performance and stall development.
The broader fiscal picture shows that total federal revenue itself has underperformed. Aggregate government revenues between January and July were N13.67 trillion, significantly below the expected N23.85 trillion pro-rata target. Oil revenue a major driver of Nigeria’s fiscal capacity underperformed sharply, although there were modest improvements in some non-oil lines such as Company Income Tax and VAT.
With constrained income and ongoing recurrent spending pressures, government officials argue there simply isn’t enough liquidity to meet both operational and capital obligations, even as debt service and wage bills absorb a large share of available resources.
Contractors and civil society groups have raised alarms about the damaging ripple effects of the capital funding drought. Many contractors claim they remain owed trillions for work done under previous budgets, a situation that has discouraged new investments and heightened fears of project abandonment across the country.
Civil society organisations have also criticized finance officials for favouring recurrent expenditure over capital allocations, warning that such prioritisation strokes long-term development and public confidence.
In parliament, lawmakers grilled the Accountant-General and budget officials over the delays and opaque execution of capital budgets, with some calling for performance-based budgeting and enhanced transparency in fund releases.
Government representatives, however, maintain that global economic pressures, unexpected revenue shortfalls and systemic reforms in budget execution explain part of the challenges, and insist that efforts are underway to stabilize public finances and improve overall fiscal performance.
For Nigeria’s economy already grappling with infrastructure deficits, underfunded public services, and rising debt obligations — the ongoing capital funding stall highlights the urgent need for deeper fiscal reforms, better revenue mobilisation and a more predictable cash-release system. Without such changes, key development projects may continue to languish, with long-term consequences for growth, jobs and public service delivery.
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