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.

By almost every measure, the Nigerian state has never been more ambitious. Why shouldn’t it be? The population has exploded to around 220 million and the country will be the third most populous by 2050.

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.

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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.

Real fiscal capacity has not.

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.

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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.

Nigeria’s missing blueprint

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.

That matters.

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.

The outcome was remarkable.

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.

Dubai, with comparatively modest oil reserves, deliberately positioned itself as a global destination for logistics, finance, tourism and real estate by attracting international private capital through stable regulation, world-class infrastructure and investor-friendly institutions.

In each case, the government accepted the fundamental truth that its role was not to finance every investment but to create conditions that made investment inevitable.

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Nigeria’s untapped advantage

Ironically, Nigeria possesses many of the ingredients global investors seek.

It has Africa’s largest consumer market, a young labour force, vast mineral resources, large agricultural potential and a sophisticated banking sector.

It also has one of Africa’s deepest pension industries, with pension assets exceeding N20 trillion.

What remains inconsistent is the investment environment.

Private capital does not simply chase opportunity.

It prices risk, policy reversals, contract uncertainty, foreign-exchange instability, power shortages, regulatory fragmentation and lengthy approvals.

Each risk increases the cost of investing.

Countries compete for capital not only through incentives but through credibility.

Government’s new role

The next phase of Nigeria’s development requires a different philosophy.

Government should increasingly see itself not as the country’s largest investor but as its chief investment officer.

Its responsibilities become clearer:

Provide macroeconomic stability, strengthen institutions, protect contracts, expand infrastructure where markets cannot, reduce regulatory friction, mobilise pension capital, create bankable projects and crowd in foreign investors.

That is how governments with limited fiscal resources multiply their impact.

Every public naira should aim to unlock several private naira.

The real development challenge

Nigeria’s greatest economic challenge is often described as inadequate revenue.

While that is true, inadequate revenue becomes dangerous only when governments continue designing development strategies that assume unlimited public resources.

The era in which oil revenues could finance national transformation has passed.

The countries now winning the global investment race understand that development is no longer measured by the size of government expenditure but by the amount of private capital the government can successfully mobilise.

Nigeria has reached the same crossroads.

Its future prosperity will depend less on writing larger budgets than on writing better investment stories.

General Gowon’s observation reflected an era when Nigeria believed oil wealth would finance its future indefinitely.

Today’s Nigeria confronts a different reality.

The question is no longer simply how the government spends money.

It is how a fiscally constrained state persuades millions of private investors, both domestic and foreign, to build the future it can no longer afford to build alone.

There’s no doubt that Nigeria’s next growth story will be written by private capital, not public spending. That’s already happening when you consider the sheer economic impact that the Dangote refinery, a $38 billion private investment by tycoon Aliko Dangote, has made. That has been the single biggest game changer for Nigeria in decades, not a government project.