Report Reveals That More Than 30 States Depend on Federal Allocations

The 10th edition of the BudgIT State of States Report has revealed that more than 30 states in Nigeria depend heavily on revenue allocations from the Federation Account Allocation Committee (FAAC), resulting in mounting fiscal pressures across the federation.

Titled “A Decade of Subnational Fiscal Analysis: Growth, Decline, and Middling Performance,” the report was presented in Abuja on Tuesday and marks ten years of BudgIT’s assessment of state-level fiscal performance in Nigeria.

BudgIT, a leading civic-tech organisation that promotes fiscal transparency and accountability, highlighted that only a few states — including Lagos, Ogun, and Enugu — generate a significant portion of their revenue internally.

“At least 30 states, excluding Lagos, Ogun, and Enugu, rely on FAAC for over 60% of their recurrent revenue,” a BudgIT executive said during an interview. “In total, 31 states depend on FAAC for at least 80% of their current revenue, which underscores the fiscal vulnerability of most states.”

While Lagos remains an outlier with a strong internally generated revenue (IGR) base, Enugu and Ogun were also praised for their impressive revenue growth. Fifteen states reportedly improved their IGR by over 50%, with Enugu leading the way, while two states — including Kebbi — recorded negative growth.

The report noted that the share of IGR in total recurrent revenue dropped from 25.27% in 2023 to 20.27% in 2024, showing increased dependence on federal transfers. It further stated that in 2023, six states needed more than five times their IGR to cover operating costs, but by 2024, the number had risen to 14.

Only a few states were identified as effectively managing this dependency challenge. Enugu now tops the chart with a 146.68% IGR-to-operating-expense ratio, followed by Lagos at 120.87%, while most others remain heavily reliant on FAAC inflows.

On the debt front, the report offered some optimism. Between 2023 and 2024, 31 states reduced their domestic debt by at least N10 billion, with Lagos, Cross River, and Delta each cutting over N100 billion. This contributed to a total decline of over N2 trillion in subnational domestic debt. Similarly, foreign debt dropped by more than $200 million within the same period, with Lagos, Enugu, and Gombe recording the largest reductions.

Despite these gains, Lagos still holds the highest foreign debt at $1.17 billion, accounting for over a quarter of all subnational external debt, followed by Kaduna, Edo, Cross River, and Ogun.

On expenditure priorities, the report observed a positive shift toward capital projects, noting that total capital spending surpassed recurrent expenditure by roughly N1 trillion. Abia State led this improvement, dedicating 77.05% of its total expenditure to capital development. In all, 24 states allocated at least half of their budgets to capital investments. However, six states — Bauchi, Ekiti, Delta, Benue, Oyo, and Ogun — still spend over 60% of their budgets on personnel and overhead costs.

Reflecting on the findings, BudgIT’s Group Head of Research, Vahyala Kwaga, stressed the need for deeper fiscal reforms.

“Over the past decade, the State of States report has become Nigeria’s most reliable subnational fiscal analysis,” Kwaga said. “This 10th edition not only captures growth and imbalance but also emphasizes the urgent need for structural reform.”

He added that fiscal sustainability will require states to “look inward, strengthen their revenue systems, cut waste, and prioritise investments in infrastructure and human development that create long-term value.”