Nigeria’s development plans have outrun its finances

The Nigerian government can no longer afford to build Nigeria by itself. Its future now depends on convincing private capital to do what the government no longer can.

Being the third most populous country in the world comes with its benefits but it also has its challenges especially in Nigeria’s case. To cater to a population expected to exceed 400 million in 24 years, Nigeria needs to build schools, hospitals and roads. It needs to modernise ports and expand railways. Nigeria also needs to end, or at least considerably reduce, a housing deficit long estimated at more than 20 million units and needs to, at the very minimum, triple electricity generation to match its industrial ambitions. Nigeria must also grow non-oil exports and will need to lift a million people out of poverty each year over the next decade.

The promises are sweeping. The balance sheet is not.

For decades, Nigerians have viewed economic development through a familiar lens: government builds the roads, government finances the dams, government expands power infrastructure, government establishes industrial parks and government catalyses growth.

That model is no longer financially viable.

The uncomfortable reality confronting, Africa’s most populous nation is that the Federal Government no longer possesses the fiscal capacity to finance the development agenda it continues to announce. Its ambitions increasingly resemble those of a wealthy state, while its finances increasingly resemble those of a cash-strapped municipality.

General Yakubu Gowon famously remarked during Nigeria’s oil boom that “Nigeria’s problem is not money but how to spend it.”

Half a century later, history has rewritten the quote.

Nigeria’s problem is now both money, and how to spend the little it has.

The illusion of bigger budgets

On paper, Nigeria appears richer than ever.

The federal budget has ballooned from N4.48 trillion in 2012 to more than N54 trillion for 2025.

Government revenues are also reported in trillions of naira.

But the naira has become a deceptive measuring stick.

A government pays for imported medical equipment, power turbines, railway locomotives, aircraft, defence hardware and digital infrastructure largely in foreign currency. As the naira has weakened, the international purchasing power of public finances has shrunk dramatically.

Nominal revenues have risen because inflation and currency depreciation have inflated naira values. Nigeria has gone from recording $70 billion in revenues in 2011 to less than $16 billion in 2025.

Former Finance Minister, Wale Edun, disclosed to lawmakers that actual federal revenue for 2025 is expected to come in at only about N10.7 trillion, against the N40.8 trillion originally budgeted, a shortfall of roughly N30 trillion driven largely by weaker-than-expected oil-related revenues.

The numbers tell a sobering story.

Even before allocating resources to new infrastructure, government must first pay salaries, pensions, statutory transfers and debt service.

Development spending comes last.

Years ago, former Budget Office Director-General Ben Akabueze warned that Nigeria’s infrastructure requirements were “way beyond the means available to government,” noting that recurrent expenditure had consistently consumed the overwhelming share of public spending for more than a decade.

That warning has only become more relevant but the worrying question is who will bell the cat?

Nigeria is a country with first-world ambitions and third-world fiscal capacity.

Nigeria faces one of the world’s largest infrastructure deficits, estimated to require $100 billion of financing every year by the Africa Development Bank (AfDB).

The World Bank also estimates that the country requires hundreds of billions of dollars over coming decades to close gaps in transport, electricity, water, housing and logistics.

Government cannot finance that investment alone. Nor should it attempt to. It can’t afford to.

The arithmetic simply does not work.

Every kilometre of highway, every modern port, every transmission line, every industrial park and every airport competes against debt servicing, education, healthcare, security and public-sector wages.

The result is predictable. Projects are announced faster than they are completed.

Budgets become wish lists rather than financing plans and citizens grow accustomed to unfinished infrastructure.

This fiscal constraint makes one omission particularly striking.

Nigeria currently lacks an active long-term national development framework.

The National Development Plan 2021–2025 reached the end of its implementation period in 2025, and no successor strategy of comparable scope has yet replaced it.

Development plans are more than government documents.

They provide investors with long-term policy direction.

They identify priority sectors, sequence reforms and coordinate public and private investment.

Perhaps most importantly, they tell capital where a country intends to go over the next decade rather than the next budget cycle.

Without that roadmap, investment decisions become more uncertain.

The countries that accepted reality

History suggests that countries facing limited fiscal resources rarely transformed themselves through public spending alone.

Instead, they redesigned the relationship between government and private capital.

Vietnam offers one of the clearest examples.

Following the Đổi Mới reforms beginning in 1986, Vietnam recognised that government resources were insufficient to industrialise the country.

Rather than attempting to finance development directly, policymakers focused on creating conditions that attracted multinational manufacturers.

The state invested selectively in industrial zones, infrastructure, trade agreements and regulatory stability while encouraging private investment to finance factories, supply chains and exports.

According to the latest data by the United Nations Conference on Trade and Development, Vietnam attracted roughly $38 billion in registered foreign investment in 2024, helping transform the country into one of the world’s leading electronics manufacturing centres.

Companies such as Samsung, Intel, LG, Foxconn and Lego established major operations not because Vietnam was wealthy, but because it became investable.

Indonesia followed a similar path after the Asian financial crisis.

Unable to rely solely on public finances, successive governments improved macroeconomic stability, strengthened investment regulations and expanded public-private partnerships in infrastructure.

The United Arab Emirates offers another lesson.

Its transformation was never financed solely by oil revenues.