The World Bank has urged Nigerian state governments to strengthen budget planning, cash management, and spending controls to ensure that rising public revenues translate into completed projects and better services.

Gloria Joseph-Raji, a senior economist at the bank, made the appeal on Tuesday at the launch of BudgIT’s 2026 State of States Report in Abuja.

She said states had more resources for service delivery following recent revenue increases but needed to improve how they plan and manage public spending.

Ms Joseph-Raji said exchange-rate reforms, the removal of the petrol subsidy, and improvements in tax administration had increased government revenues since mid-2023.

She also pointed to additional funds states received through federal settlements of outstanding obligations and intervention funds for infrastructure and security.

Ms Joseph-Raji said states had increased their internally generated revenue (IGR) and that, while many had previously struggled to meet essential commitments such as civil-service salaries, the World Bank’s understanding was that all states were now meeting those obligations and had additional resources for service delivery.

Ms Joseph-Raji, however, said state finances remained vulnerable because most governments relied heavily on transfers from the federation account.

She said those transfers represented 73 per cent of aggregate state revenue between 2021 and 2025, excluding Lagos, which has a larger IGR base.

In 2025, they accounted for more than three-quarters of revenue in all but a handful of states, she said.

She added that IGR was sufficient to cover recurrent expenditure in only two states.

Heavy reliance on federal transfers leaves most states exposed to changes in the amount and timing of shared revenue, she said.

According to the World Bank’s October Nigeria Development Update, many state budgets set spending targets beyond what governments can realistically finance and implement.

The report also says supplementary budgets and mid-year changes to spending plans can weaken budget credibility.

It notes that cash-flow forecasts, procurement plans, and spending commitments are not consistently integrated. 

When agencies commit to spending without confirmed funding, the report warns, projects may be delayed or stalled, payments may be held up, and expenditure arrears may accumulate.

The warning comes as state revenues have grown. The World Bank said aggregate state revenue rose by about 93 per cent in real terms between 2023 and 2025, while expenditure increased by about 92 per cent. 

Capital spending’s share of total expenditure grew from 46 per cent to 61 per cent over the same period.

Also, BudgIT figures show that 34 states budgeted a combined N35.22 trillion for 2026 and had spent N8.60 trillion by the end of June, or 24.4 per cent of their combined approved budgets.

Oyo recorded the highest expenditure performance at 43.4 per cent, while Enugu and Cross River recorded the lowest, at 10.5 per cent and 11.1 per cent, respectively.

Ms Joseph-Raji said states have primary or shared responsibility for sectors, including education, healthcare, roads, agriculture, and electricity.

They also work with local governments on primary healthcare, primary education, and sanitation. 

She called for stronger public investment management and for fiscal risks and debt management to be integrated more closely into state budget processes.

Ms Joseph-Raji also urged states to include donor-funded activities in their budget systems and report them consistently in budget implementation reports and annual financial statements. This, she said, would make fiscal reporting more complete.

Joy Ehinor-Esezobor, a programme manager at the Ford Foundation’s West Africa office, said the findings of fiscal reports should be a starting point for action. 

She urged state governments to engage with the evidence and review their spending priorities.

Ms Ehinor-Esezobor cited the 2022 State of States report, which documented that at least 15,397 ghost workers had been identified and removed from the payrolls of 13 states after biometric and bank-verification exercises.

The Ford Foundation representative said the result could not be attributed to a single report, but it illustrated why reliable financial information and effective public financial management matter.

Ms Ehinor-Esezobor said legislatures and civil society organisations should scrutinise budgets and help citizens understand what fiscal evidence shows.

She urged journalists to go beyond repeating revenue and spending figures by checking whether funded projects are delivered, whether they serve communities, and whether government priorities reflect people’s needs.

Ms Ehinor-Esezobor said the goal should be more than improved fiscal rankings; information should help strengthen accountability and improve living conditions.