By Prof. Chiwuike Uba, Ph.D.
Nigeria faces a familiar paradox: billions of naira are budgeted and spent, yet bridges, roads, hospitals, and schools still fail to meet the needs of its citizens. Congested highways choke Lagos, rural towns in Kaduna lack reliable electricity, and conflict-affected regions struggle to rebuild. The question is urgent: can smart financing, disciplined spending, and innovative international partnerships finally turn these promises into tangible infrastructure, human capital, and economic opportunity for millions of Nigerians?
Nigeria’s subnational fiscal landscape reflects a complex interplay of opportunity, constraint, and strategic ambition. States are at different stages of development, yet they share common goals: closing infrastructure gaps, strengthening human capital, and fostering innovation-driven economic growth. Lagos, Africa’s largest megacity with more than 25 million residents, and Kaduna, a major northern hub with over eight million residents, illustrate contrasting but complementary trajectories within Nigeria’s federal system.
Lagos’ rapid urbanization places immense pressure on transport systems, healthcare infrastructure, housing, and energy supply. Millions of daily commuters spend several hours navigating congested highways, while residents in densely populated neighborhoods such as Mushin and Agege often face limited access to primary healthcare services. Kaduna reflects a different development pattern. The state combines urban centers such as Zaria and Kaduna metropolis with large rural communities where agricultural activity dominates economic life. Young entrepreneurs frequently struggle with electricity shortages, poor internet connectivity, and limited access to financing, even though opportunities in agriculture, renewable energy, and small-scale manufacturing remain substantial.
Across Nigeria, similar patterns emerge. Kano faces mounting pressure on industrial and transport infrastructure. Rivers State must manage complex energy and port logistics systems while transitioning toward a more diversified economy. Enugu continues to confront gaps in healthcare capacity and educational infrastructure, while conflict-affected regions such as Borno require sustained reconstruction and human capital investment. These challenges highlight the broader development dilemma confronting Nigeria: how to mobilize sufficient financing while ensuring that spending translates into tangible improvements in infrastructure, services, and economic productivity.
Within this context, the European Union’s Global Gateway Initiative, launched in 2021, represents an emerging opportunity for development financing partnerships. The initiative aims to mobilize up to €300 billion in global investment by 2027, recently expanded toward €400 billion, through a combination of grants, concessional loans, blended finance, guarantees, and risk-sharing instruments. Its investment priorities include sustainable infrastructure in energy, digital connectivity, transport, health, education, and research.
Unlike traditional development financing programs, Global Gateway emphasizes a multi-stakeholder governance model. Public institutions, development finance institutions, private investors, and civil society organizations collaborate throughout project design, implementation, and monitoring. This structure is intended to strengthen transparency, ensure accountability, and guarantee that projects meet high environmental, social, and governance standards.
International experience demonstrates how this model can address structural development challenges. In Namibia, Global Gateway investments have mobilized approximately €1.3 billion in loans and grants to support large-scale green hydrogen and renewable energy projects, helping position the country as a future exporter of clean fuels while potentially unlocking over €20 billion in additional private investment in green industrialization. In Central Asia, including Kyrgyzstan, Global Gateway digital infrastructure programs are financing satellite connectivity, broadband expansion, and data infrastructure designed to integrate remote economies into global digital markets.
In West Africa, partnerships supporting sustainable cocoa value chains in Ghana and Côte d’Ivoire are mobilizing hundreds of millions of euros in blended finance to strengthen farmer incomes, improve supply chains, and promote environmentally responsible agricultural production. Meanwhile, in Southern Africa, the Lobito Corridor transport initiative, supported by roughly €2 billion in combined EU and partner financing, is revitalizing a 1,300-kilometer railway network linking Angola, Zambia, and the Democratic Republic of the Congo, improving regional trade logistics and mineral export routes. These examples demonstrate how Global Gateway blends public finance, private investment, and technical expertise to deliver large-scale development outcomes.
Nigeria has already begun engaging with the Global Gateway framework, although most initiatives remain in early stages. One notable example is the European Union’s €45 million investment supporting Nigeria’s digital infrastructure expansion, particularly through the national “Project Bridge” initiative. The project aims to extend Nigeria’s fiber-optic backbone to approximately 90,000 kilometers, strengthening broadband connectivity, expanding digital inclusion, and supporting the growth of Nigeria’s technology sector.
More broadly, Nigeria stands to benefit from the €150 billion Africa investment package under the Global Gateway Initiative, which targets infrastructure and sustainable development projects across the continent by 2027. This financing envelope focuses on several strategic sectors critical to Africa’s long-term development, including transport and energy infrastructure, digital connectivity, agriculture and health systems, environmental protection, and broader economic growth initiatives. For Nigeria, where infrastructure deficits remain one of the most significant constraints to economic transformation, this partnership offers an opportunity to mobilize large-scale financing while aligning investments with sustainability, climate resilience, and inclusive development objectives.
Complementary EU-Nigeria cooperation programs also support climate-smart agriculture, renewable energy development, health systems strengthening, and educational capacity building. Together, these initiatives form part of a broader “Team Europe” partnership aligning European institutions, development finance agencies, and private investors around Nigeria’s development priorities. However, the effectiveness of such partnerships ultimately depends on the fiscal discipline and implementation capacity of Nigeria’s subnational governments.
Lagos State offers one of the strongest examples of consistent budget execution and capital-driven investment among Nigerian states. Between 2021 and 2025, the state’s approved budget expanded from ₦1.256 trillion to ₦3.367 trillion, while actual expenditure rose from ₦1.077 trillion to ₦2.838 trillion. Budget execution rates remained relatively strong: 85.7 percent in 2021, 72.3 percent in 2022, 88.5 percent in 2023, 87.0 percent in 2024, and 84.3 percent in 2025.
Although the temporary decline in 2022 reflected post-pandemic fiscal adjustments and implementation delays, the subsequent recovery indicates improved fiscal planning and stronger project management systems. Lagos has also maintained a clear strategic commitment to capital investment. Capital expenditure accounted for 59.2 percent of the approved budget in 2021 and increased to 61.6 percent by 2025. Infrastructure consistently receives between 25 and 30 percent of total allocations, while health receives approximately 6 to 7 percent, and science and technology funding remains relatively modest.
The state’s 2026 budget reinforces this infrastructure-driven strategy. Major transport investments include ₦105.25 billion for the Blue Line rail project, ₦48.3 billion for the Red Line rail corridor, and ₦23.8 billion for the Marina, Okokomaiko rail expansion. Urban road rehabilitation and bus rapid transit systems receive ₦24.1 billion, addressing daily congestion challenges faced by millions of commuters.
Water transport initiatives, part of Lagos’ emerging blue economy strategy, receive ₦11.1 billion for ferry terminal development, bathymetric surveys, and the removal of abandoned vessels obstructing navigation channels. Health infrastructure investments include ₦28.93 billion for the Shomolu General Hospital and ₦19.55 billion for the Ojo General Hospital, expanding access to healthcare services for thousands of residents. Energy and climate-related programs, including compressed natural gas fueling stations and low-carbon transport initiatives, further illustrate Lagos’ efforts to align urban development with environmental sustainability.
Kaduna State presents a markedly different fiscal trajectory. The state achieved strong budget credibility in 2021, executing 94.2 percent of its ₦246.67 billion approved budget. However, subsequent budget expansion outpaced implementation capacity. Execution rates declined to 60.6 percent in 2024 and 64.6 percent in 2025, reflecting financing constraints, procurement bottlenecks, and administrative coordination challenges. Capital execution rates also declined sharply, falling from 98.9 percent in 2021 to 52 percent in 2024 and 59.1 percent in 2025. These trends illustrate the challenges many Nigerian states face when fiscal ambition exceeds institutional capacity.
Nevertheless, Kaduna’s 2026 budget reflects a strong commitment to infrastructure and human development. Health receives ₦144.55 billion, with more than 75 percent allocated to capital investments, including the revitalization of 255 primary healthcare centers, hospital expansions, equipment upgrades, and solar integration for medical facilities. Public works receive ₦179.22 billion to expand road networks, urban transport systems, and water infrastructure.
Investments in innovation and technology amount to ₦4.23 billion, supporting vocational training programs, SME development, tourism infrastructure, and digital governance initiatives. Renewable energy investments, including solar electrification programs and training academies, illustrate Kaduna’s ambition to integrate climate-conscious industrial development into its long-term economic strategy.
Debt dynamics further differentiate Nigeria’s subnational fiscal landscape. Lagos’ domestic debt increased from ₦493.3 billion in 2020 to ₦1.046 trillion in 2025, while its external debt remained stable at approximately USD 1.05 billion. Kaduna followed the opposite pattern: domestic debt declined sharply from ₦72.5 billion to ₦23.1 billion, while external debt increased from USD 569.38 million to USD 658.71 million, increasing exposure to currency volatility.
At the national level, Nigeria’s subnational external debt rose from USD 4.26 billion in 2020 to USD 4.35 billion in 2023, before accelerating to USD 4.81 billion in 2025. Domestic debt rose from ₦4.19 trillion in 2020 to a peak of ₦5.82 trillion in 2023, before declining to ₦4.00 trillion in 2025. Federal borrowing has also expanded significantly. Nigeria’s external debt increased from USD 27.21 billion in 2020 to USD 38.81 billion in 2023, and further to USD 42.17 billion in 2025, exposing the country to global interest rate fluctuations and foreign exchange volatility.
Across Nigeria’s geopolitical zones, these borrowing patterns reveal a persistent debt-productivity paradox. Rising debt levels frequently fail to translate into proportional improvements in infrastructure, economic productivity, or social services. In the North Central region, several states expanded external borrowing while reducing domestic debt, yet infrastructure improvements remained limited. In the North East, reconstruction pressures have driven rapid debt expansion, with Borno’s external debt increasing sharply between 2023 and 2025.
Southern regions exhibit similar patterns. In the South East, external debt rose by 32 percent between 2020 and 2025, yet capital execution rates remained low. Ebonyi executed 46.3 percent of its capital budget, Imo 40.8 percent, and Enugu only 17.5 percent. In the South South, states such as Rivers and Delta increased both domestic and external borrowing, raising fiscal sustainability concerns. These patterns suggest that Nigeria’s development challenge is not simply limited access to financing, but the governance systems that determine how effectively borrowed resources are deployed.
The Global Gateway framework offers potential advantages in this regard. Its financing mechanisms emphasize blended finance, milestone-linked disbursement, and technical assistance, ensuring that funding is tied directly to measurable development outcomes.
States with strong execution capacity, such as Lagos, are well positioned to leverage these instruments for large-scale infrastructure projects. States with weaker implementation systems may benefit from phased financing programs that combine capital investment with institutional capacity building.
The Federal Government plays a crucial coordinating role in this process. National authorities must establish regulatory frameworks, harmonize infrastructure standards, and facilitate collaboration between federal and state governments. Strategic federal investments in highways, electricity transmission networks, ports, airports, and digital backbone infrastructure are essential for enabling state-level projects to succeed.
Ultimately, Nigeria’s development challenge is not simply about borrowing more resources, but about spending existing resources more strategically. Smart financing, disciplined fiscal governance, and coordinated federal-state partnerships will determine whether development financing translates into tangible improvements in the daily lives of Nigerian citizens.
If Nigeria succeeds in aligning fiscal discipline with strategic investment and international partnerships, it could transform its infrastructure landscape while demonstrating how subnational governments in emerging economies can leverage global financing initiatives to achieve inclusive and sustainable development. Only then will Nigeria’s bridges, both literal and economic, truly connect its vast potential to shared prosperity.