The six states of Nigeria's South-West geopolitical zone have collectively proposed an aggregate budget of approximately ₦8.7 trillion for the 2026 fiscal year, with capital expenditure projected to exceed half of total spending at around ₦4.54 trillion. This ambitious fiscal plan was revealed by the Development Agenda for Western Nigeria (DAWN) Commission during its 2026 Economic and Budget Outlook event held recently, where policymakers, economists, analysts, and civil society leaders convened to evaluate strategies for translating national macroeconomic reforms into sustained subnational growth, enhanced competitiveness, and better welfare outcomes for residents.
Presenting the regional outlook, Head of Economic Development and Research at DAWN Commission, Mr. Adesoji Farayibi, highlighted that the ₦8.7 trillion figure underscores a deliberate shift toward productivity-enhancing investments in infrastructure, human capital, and economic diversification. Capital spending, estimated at ₦4.54 trillion, reflects priorities such as road networks, power projects, education facilities, healthcare upgrades, and industrial development—areas deemed critical for boosting regional economic performance and job creation.
Lagos State dominates the regional total, accounting for roughly 51 per cent of the combined budget. The commercial hub's influence is evident in its approved ₦4.444 trillion budget (signed into law in January 2026), which includes significant allocations for capital projects like transportation infrastructure, the Lagos International Financial Centre, security enhancements, and urban renewal initiatives. Lagos's recurrent expenditure stands at about ₦2.052 trillion, with capital outlay at ₦2.185 trillion or higher in some breakdowns, reinforcing its role as the economic engine of not only the South-West but the entire nation.
The other five South-West states—Ogun, Oyo, Osun, Ondo, and Ekiti—contribute the balance, with Ogun and Oyo often featuring among higher spenders in the zone due to industrial growth and agricultural modernization drives. The regional aggregate represents a notable increase from the 2025 combined figure of around ₦6.61 trillion, signaling optimism amid post-reform recovery.
Forum participants, including representatives from state governments, private sector leaders, and development experts, expressed cautious optimism about the proposals but raised concerns over fiscal sustainability. Rising debt levels across states remain a key worry, as borrowing to fund capital projects could strain repayment capacities if revenue targets are missed. Speakers emphasized the need for aggressive internally generated revenue (IGR) mobilization, improved budget implementation efficiency, and greater reliance on public-private partnerships (PPPs) to bridge funding gaps without exacerbating indebtedness.
Global and national factors were identified as shaping the 2026 financing environment. Tighter international monetary conditions, ongoing geopolitical tensions, and surging investments in artificial intelligence and emerging technologies were noted as influencing capital flows, interest rates, and investor sentiment. Domestically, the federal government's ongoing reforms—including fuel subsidy removal, foreign exchange unification, and efforts to curb deficit monetization—have created a more stable but still fragile macroeconomic backdrop. States must navigate inflation pressures, naira volatility, and potential revenue shortfalls from federal allocations.
The DAWN Commission event served as a platform to advocate for stronger regional integration and coordinated policy responses. Recommendations included harmonizing investment incentives across states, joint infrastructure projects (such as rail and power corridors), and collaborative revenue generation strategies to reduce over-reliance on Federation Account Allocation Committee (FAAC) disbursements. The South-West's relatively stronger IGR performance compared to other zones—driven largely by Lagos but increasingly by Ogun and Oyo—was cited as a model, though the region still faces disparities in fiscal capacity.
Analysts at the forum stressed that effective implementation will be crucial. Historical challenges like poor budget performance, project delays, and corruption risks could undermine the capital-heavy focus. Participants called for enhanced transparency, citizen engagement in budget processes, and rigorous monitoring to ensure funds deliver measurable impacts on poverty reduction, employment, and service delivery.
The ₦8.7 trillion proposal positions the South-West as the highest-budgeting geopolitical zone for 2026, outpacing others and reflecting its economic weight in Nigeria. With Lagos's dominance highlighting both strengths and vulnerabilities—if the state underperforms, the regional aggregate could falter—the outlook underscores the need for diversified growth drivers beyond the commercial capital.
As states finalize and implement their 2026 budgets, the focus shifts to execution amid a complex environment. The DAWN Commission's outlook event highlighted actionable pathways: leveraging PPPs for mega-projects, boosting IGR through digital taxation and business-friendly policies, and aligning spending with sustainable development goals. Success in these areas could accelerate the South-West's role as Nigeria's growth pole, delivering improved welfare and competitiveness in a challenging year ahead.
