Since the reintroduction of multiparty democracy in 1999, the federal and state governments in Nigeria have embarked on a series of major educational reforms. These are intended to achieve universal basic education and improve the quality and relevance of post basic education. Faced with large rural-urban, gender, and regional disparities in enrollment and generally poor learning outcomes, the Federal Government of Nigeria introduced the Universal Basic Education (UBE) Program in 1999, with the aim of providing nine years of free, compulsory basic education comprised of six years of primary and three years of junior secondary education to all children in the country by 2015. The UBE law, which was passed in 2004, sets out the key roles and responsibilities of public agencies at all levels of government. Despite significant efforts during the past eight years, much remains to be done in the education sector, including attainment of the education for all (EFA) and education Millennium Development Goals (MDGs). The Federal Ministry of Education (FME), along with all other major stakeholders, recognizes that the education sector in Nigeria is in a state of crisis and that nothing less than major renewal of all systems and institutions is required. To this end, the government launched a major education reform program in 2006, which stresses the importance of institutional reforms to improve the efficiency and effectiveness of service delivery at all levels of education. The second volume of this report addresses in depth the level and pattern of public expenditure on education in Nigeria. The first two chapters review objectives, methodology, data sources, and limitations and provide an overview of the country and the sector. The third chapter is on the costs and financing of education, and Fourth chapter on efficiency, analyzed available data on how public resources are allocated and used within the education sector. The fourth chapter also examines equity in public spending and household expenditures on education. The fifth chapter provides a conclusion and offers policy recommendations.