Nigeria’s Federal Government spent N7.7 trillion on debt interest payments in the first six months of 2026, nearly 11 times the N700 billion recorded as capital expenditure during the same period.
The figures, contained in the World Bank’s October 2026 Nigeria Development Update, reveal a significant imbalance between resources committed to servicing existing financial obligations and spending on infrastructure and other development projects.
For every N1 recorded as capital expenditure between January and June, the Federal Government spent approximately N11 on interest payments alone.
The comparison raises questions about Nigeria’s ability to expand public infrastructure at a time when businesses require more reliable electricity, transportation networks and other facilities to reduce operating costs.
According to the World Bank, federal revenue increased to N6.2 trillion in the first half of 2026 from N3.6 trillion in the corresponding period of 2025, representing growth of approximately 72 percent.
However, the additional revenue did not eliminate pressure from existing debt obligations.
Interest payments increased by 37.5 percent from N5.6 trillion to N7.7 trillion, exceeding total federal revenue by N1.5 trillion.
This means interest obligations alone represented approximately 124 percent of revenue during the six-month period, leaving the government dependent on other financing arrangements to meet its wider expenditure commitments.
Although the interest-to-revenue ratio improved from approximately 156 percent in the previous year, the absolute cost of servicing debt continued to increase.
The World Bank linked the higher interest burden partly to expensive domestic borrowing, which has increased the cost of financing government obligations.
Total federal expenditure reached N16.1 trillion during the period, compared with N14.6 trillion a year earlier, while personnel costs increased to N4.2 trillion from N3.7 trillion.
The combination of interest payments and personnel expenditure amounted to N11.9 trillion, accounting for nearly three-quarters of reported federal spending.
For the private sector, the composition of government expenditure is particularly important because public investment supports economic activities beyond the immediate projects being financed.
Investment in electricity infrastructure can reduce production expenses, while improved roads and transportation systems can lower distribution costs for manufacturers, farmers and retailers.
When reported capital expenditure remains substantially below interest obligations, the government faces greater difficulty expanding these productive assets without additional financing.
However, the N700 billion figure represents reported federal capital expenditure for the period and should not be interpreted as the total value of infrastructure investment undertaken across Nigeria by state governments, public enterprises or private investors.
The fiscal figures also highlight the importance of borrowing costs in Nigeria’s economic outlook.
Reducing the interest burden over time could create additional room for development spending, particularly if government revenue continues to improve.
Achieving that outcome would require a combination of sustainable borrowing, stronger revenue collection and more effective management of existing debt obligations.
Nigeria’s fiscal challenge is therefore not limited to increasing the amount of money collected by the government.
It also involves determining how much of that revenue can ultimately be directed towards investments capable of supporting economic growth, employment and long-term productivity.
The World Bank’s findings suggest that while revenue reforms are delivering measurable gains, the cost of existing debt remains a major constraint on the Federal Government’s ability to translate those gains into capital investment.
