Capital expenditure by Federal Government ministries, departments and agencies has remained severely constrained over the past three fiscal years, despite rising retained revenues and expanding budgetary allocations, according to findings by The PUNCH.

An analysis of data from the Budget Office of the Federation’s Medium-Term Expenditure Framework and Fiscal Strategy Paper for 2023, 2024 and the January to July period of 2025 showed that capital votes for MDAs were consistently underfunded, resulting in a cumulative funding gap of N15.21tn within the three-year period.

Although headline capital budgets increased year after year, actual releases and utilisation failed to keep pace, underscoring persistent structural pressure on public finances driven largely by escalating debt service obligations.

Over the three years under review, capital expenditure categorised as “Capital Expenditure (MDAs + Others)” amounted to N27.33tn on a comparable basis, including a pro rata adjustment for 2025.

However, actual capital expenditure traceable to these votes stood at N12.13tn, leaving a funding shortfall of N15.21tn across the period.

In percentage terms, MDAs were able to access only 44.37 per cent of the capital funding appropriated to them, implying that more than half of planned capital projects were either unfunded or only partially implemented.

The shortfall was evident in each of the three years reviewed.

In 2023, the Federal Government budgeted N5.31tn for capital expenditure under MDAs and others, but actual spending at the end of the year was N3.25tn.

This resulted in a funding gap of N2.06tn and a performance ratio of about 61.15 per cent.

Although 2023 recorded the strongest relative performance within the three-year window, it still meant that nearly two-fifths of planned capital spending was not delivered.

The funding gap widened significantly in 2024.

Capital expenditure under MDAs and others was budgeted at N11.21tn, more than double the provision in 2023, reflecting ambitious infrastructure and service delivery targets.

However, actual capital expenditure in 2024 amounted to N5.81tn, leaving a deficit of N5.40tn and a performance rate of roughly 51.85 per cent.

In absolute terms, the capital shortfall recorded in 2024 alone exceeded the entire capital budget allocated to MDAs in 2023.

By 2025, the fiscal squeeze became more pronounced.

The full-year budget for MDAs’ capital expenditure stood at N18.53tn, which translated to a pro rata expectation of N10.81tn for the January to July period.

Actual capital expenditure for MDAs and others within the first seven months of the year was only N834.80bn.

This represented a pro rata shortfall of N9.98tn and a performance rate of about 7.72 per cent during the period reviewed.

The Medium-Term Expenditure Framework document for 2026 to 2028 highlighted the weakness in capital budget implementation.

It stated that “Capital expenditure implementation was notably weak. Only N834.80bn had been released to Ministries, Departments, and Agencies out of the pro-rata capital budget of N10.81tn, indicating less than 10 per cent performance at the review period.

“The low capital expenditure is mainly due to the effort to meet the 2024 capital budget, which was extended to December 2025. Overall, the total capital expenditure reached N3.60 trillion as of July 2025, representing a shortfall of 73.7 per cent of the target for the first seven months.”

The three-year actual capital expenditure figure of N12.13tn includes a N2.23tn capital development fund recorded in 2025 for projects approved under the 2024 budget but financed in the subsequent year.

While this rollover funding provided limited relief for stalled projects, it did not materially change the broader picture of persistent underfunding.

Even after accounting for this adjustment, the funding gap remained substantial, illustrating the scale of delayed or abandoned capital projects across MDAs.

This capital squeeze contrasted sharply with trends in Federal Government retained revenues and debt service obligations over the same period.

In 2023, the Federal Government’s retained revenue, excluding government-owned enterprises, stood at N10.29tn, surpassing the budget projection of N8.63tn.

However, debt service payments for the year amounted to N8.56tn, meaning that about 83.15 per cent of retained revenue was used solely for servicing debt.

In practical terms, for every N100 earned by the Federal Government in retained revenue in 2023, approximately N83 was spent on debt service.

This left limited fiscal space for other obligations, including capital expenditure.

MDAs’ capital expenditure in 2023 amounted to N3.25tn, representing about 31.54 per cent of retained revenue.

Despite this seemingly sizeable share, debt service absorbed more than twice the proportion of revenue allocated to capital projects.

The pressure intensified in 2024, even as retained revenue expanded significantly.

Federal Government retained revenue in 2024 stood at N19.88tn, compared with a budget estimate of N23.02tn.

Debt service payments, however, surged to N12.63tn, far exceeding the budgeted N8.27tn.

As a result, approximately 63.54 per cent of retained revenue in 2024 was spent on servicing debt.

During the same year, MDAs’ capital expenditure amounted to N5.81tn, equivalent to about 29.25 per cent of retained revenue.

This marked a further decline in the share of revenue devoted to capital projects compared with 2023, despite widening infrastructure deficits and growing development needs.

Figures for January to July 2025 suggest that the imbalance between debt service and development spending remains severe.

Federal Government retained revenue during the first seven months of 2025 stood at N12.36tn, against a pro rata expectation of N22.18tn.

Debt service over the same period amounted to N9.81tn, exceeding the pro rata benchmark of N8.35tn.

This meant that about 79.39 per cent of retained revenue between January and July 2025 was spent on debt service.

In contrast, MDAs’ capital expenditure of N834.80bn represented just 24.80 per cent of retained revenue during the period.

In effect, debt service consumed more than three times the amount spent on MDAs’ capital projects within seven months.

The dominance of debt service is further evident when compared with total capital expenditure.

Between January and July 2025, aggregate capital expenditure across all categories stood at N3.60tn, while debt service alone amounted to N9.81tn.

This implies that the Federal Government spent roughly N2.7 on debt service for every N1 spent on capital projects during the period.

The composition of debt service over the years further illustrates the strain on public finances.

In 2023, total debt service of N8.56tn exceeded the budget provision by nearly N2.00tn, driven largely by higher domestic debt service and interest on ways and means advances.

In 2024, foreign debt service rose sharply, contributing to an overshoot of more than N4.36tn above the budgeted debt service figure.

These trends have had direct consequences for MDAs’ ability to execute capital projects.

With debt service prioritised in cash management decisions, capital releases are frequently delayed, rationed or rolled over into subsequent fiscal years.

The creation of a capital development fund for 2024 projects financed in 2025 highlights the extent to which capital execution timelines have been stretched.

Beyond MDAs, capital expenditure by government-owned enterprises recorded mixed performance.

In 2023, GOEs’ capital expenditure stood at N573.13bn against a budget of N835.39bn.

In 2024, actual GOEs’ capital expenditure declined to N354.99bn, compared with a budget of N820.91bn.

However, in the first seven months of 2025, GOEs’ capital expenditure matched its pro rata expectation at N478.86bn, suggesting that funding constraints were more severe for MDAs than for GOEs during the period.

The broader capital expenditure envelope, which includes grants, donor funding and multilateral or bilateral project-tied loans, also recorded significant shortfalls in 2025.

While the pro rata plan for aggregate capital expenditure between January and July 2025 stood at N13.67tn, actual spending was only N3.60tn.

This left a funding gap of N10.07tn within seven months.

For MDAs, the cumulative effect of these shortfalls has manifested in delayed road construction, unfinished schools and hospitals, stalled water projects and slow progress in security and digital infrastructure.

The persistent gap between budgeted and actual capital spending has also raised concerns about the realism of annual capital plans and the effectiveness of budget execution mechanisms.

The data indicate that while Federal Government retained revenue has grown significantly since 2023, much of the increase has been absorbed by debt service and non-debt recurrent expenditure.

With MDAs facing sustained underfunding, contractors handling federal road projects recently staged protests at the Ministry of Finance, alleging prolonged non-payment for completed and ongoing works.

The protesters, under the aegis of the All Indigenous Contractors Association of Nigeria, demonstrated at the Federal Ministry of Finance over alleged unpaid funds for projects executed in 2024.

The association claimed that the Federal Government owes contractors about N4tn and demanded the immediate release of N760bn, which it said the Minister of Finance, Wale Edun, had earlier pledged to pay in September.

During the protest, contractors placed a symbolic coffin at the entrance of the ministry, saying it represented the hardship and deaths suffered by some members due to prolonged non-payment.

In response to the protests, the Federal Government promised to calm rising tensions among road contractors, assuring that all outstanding payments would be cleared in December.

The Minister of Works, David Umahi, gave the assurance during the reopening of the repaired Keffi Flyover in Nasarawa State.

He said President Bola Tinubu had acknowledged the backlog of debts and approved the constitution of a special committee to verify and settle all outstanding claims.

The PUNCH had earlier reported in August 2025 that the Federal Government may extend the 2025 budget into 2026 due to slow capital project implementation, procurement delays and the shutdown of the cash-planning portal, which left many projects stalled about eight months into the fiscal year.

The possibility of a rollover emerged at a stakeholders’ engagement in Abuja organised by the Office of the Accountant-General of the Federation.

The meeting reviewed progress and challenges in implementing the extended 2024 capital budget and the 2025 capital budget under the Bottom-Up Cash Planning Policy.

By December, President Bola Tinubu asked the National Assembly to approve an extension of the implementation of the 2025 Appropriation Act to March 31, 2026.

He said the proposed amendments would help end the practice of running multiple budgets simultaneously.

The President added that the extension would allow for the full release of at least 30 per cent of capital allocations to MDAs, noting that delayed releases had continued to undermine budget performance.

The PUNCH also exclusively reported that the Federal Government directed MDAs to carry over 70 per cent of their 2025 capital budget into the 2026 fiscal year.

The directive was aimed at prioritising the completion of ongoing projects and managing spending pressures amid weak revenues.

The instruction is contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning and circulated to ministers, service chiefs, heads of agencies and senior government officials.

According to the circular, “MDAs are to upload 70 per cent of their 2025 FGN Budget to continue in FY2026. All such rollover and uploads MUST be in line with the immediate needs of the country as well as government’s development priorities that aligns with the policy direction of the new administration which hinges on National Security, the Economy, Education, Health, Agriculture, Infrastructure, Power & Energy as well as social safety nets, women & youth empowerment.”

Development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, said federal capital spending had become unstable again after several years of progress.

He said the January to December budget cycle “went perfectly” for a few years and helped align government projects with private sector planning.

“Now I don’t know how they are going to manage it,” he said. “Most capital projects are also going to suffer. The normalcy we had achieved in the cycle is already broken.”

Ilias warned that delays of this magnitude disrupt project execution across the economy, particularly in states that structure their fiscal calendars around federal spending.

He added that uncertainty in budget timelines erodes credibility and makes it more difficult for the government to coordinate reforms with expenditure priorities.