State Budgets vs. Federal Priorities: Aligning Goals for National Development

Introduction

As Nigeria embarks on its fiscal plans for 2025, both the federal and state governments have presented ambitious budgets aimed at addressing economic challenges and promoting development. While the federal government’s ₦47.9 trillion budget focuses on national priorities like infrastructure, education, and debt servicing, state budgets reveal varying priorities tailored to local needs. This article compares federal and state-level budgets, exploring how well these efforts align to achieve national development goals.

Federal Budget Highlights for 2025

The federal budget, presented by President Bola Tinubu, emphasizes growth-oriented spending despite a significant fiscal deficit. Key highlights include:

• Total Expenditure: ₦47.9 trillion.
• Revenue Projections: ₦34.1 trillion, leaving a deficit of ₦13.8 trillion.
• Capital Expenditure: ₦16.48 trillion.
• Recurrent Expenditure: ₦14.21 trillion.
• Debt Servicing: ₦8.25 trillion​​.

Federal priorities focus on infrastructure, social services, and economic reforms to stabilize the nation’s macroeconomic environment and stimulate growth.

State-Level Budget Trends

Several states have also proposed their 2025 budgets, reflecting localized priorities. Here’s an overview:

1. Ondo State:
   • Budget Size: ₦655.23 billion.
   • Focus: Infrastructure, education, and healthcare under the “Budget of Recovery.”
   • Capital Expenditure: 60% of the budget, emphasizing developmental projects​.
2. Niger State:
   • Budget Size: ₦1.56 trillion.
   • Focus: Security, agriculture, and education under the “Budget of Hope for Sustainability and Food Security.”
   • Capital Expenditure: Over 65%, reflecting a strong commitment to development​.
3. Lagos State:
   • Budget Size: ₦3 trillion.
   • Focus: Infrastructure, transportation, and social services, with capital expenditure accounting for 59%.
   • Key projects include expansions of road networks, bridges, and public transportation systems​.
4. Akwa Ibom State:
   • Budget Size: ₦955 billion.
   • Focus: Industrialization, agriculture, and education, with capital expenditure making up 68.6%​.

Alignment with Federal Objectives

Infrastructure Development

Both federal and state budgets prioritize infrastructure, with significant allocations to roads, transportation, and energy. The federal government’s ₦16.48 trillion for capital projects complements state-level efforts, creating opportunities for collaboration on large-scale initiatives such as national highways and regional energy grids.

Social Services

The federal government’s spending on education and healthcare aligns with state-level priorities, particularly in states like Ondo and Niger. However, the relatively low national allocations for these sectors may hinder comprehensive progress, requiring states to shoulder a disproportionate burden.

Economic Diversification

Federal efforts to diversify the economy through reforms and infrastructure investments align with states like Akwa Ibom and Niger, which focus on industrialization and agriculture. This synergy is crucial for boosting non-oil revenues and creating jobs.

Challenges to Alignment

1. Revenue Constraints: Both federal and state governments face limited revenue generation capacity, relying heavily on borrowing. This raises concerns about the sustainability of development projects and the ability to meet budgetary commitments.
2. Coordination Gaps: Despite shared priorities, coordination between federal and state governments remains weak. Overlapping responsibilities and inconsistent policies can hinder the effective execution of projects.
3. Debt Overhang: With the federal government allocating ₦8.25 trillion to debt servicing, states also struggle with debt obligations. This reduces fiscal space for development and necessitates more innovative financing solutions.

Opportunities for Greater Alignment

To align state and federal budgets effectively, the following strategies can be adopted:

1. Integrated Planning: Establishing joint federal-state planning committees can ensure that projects at both levels complement rather than duplicate each other.
2. Public-Private Partnerships (PPPs): Encouraging collaboration with the private sector can help fund large-scale projects without overburdening public finances.
3. Revenue Sharing Reforms: Revisiting revenue allocation formulas to better support states with high developmental needs can foster balanced growth.
4. Capacity Building: Strengthening institutional capacity at the state level can improve project execution and accountability.

Case Studies: Successful Alignments

1. The Lagos-Ibadan Expressway: Joint federal and state efforts to rehabilitate this key transportation corridor demonstrate how collaboration can yield tangible results.
2. The Rural Electrification Agency (REA): Federal initiatives to expand access to electricity align with state-level renewable energy projects, showcasing synergies in energy development.

Conclusion

While Nigeria’s federal and state budgets for 2025 reflect a shared commitment to development, greater alignment is necessary to maximize their impact. Addressing coordination gaps, leveraging partnerships, and fostering integrated planning can help ensure that both levels of government contribute effectively to national growth. With collaborative efforts, Nigeria can achieve its developmental goals and improve the quality of life for its citizens.