Despite record revenue allocations, most Nigerian states are failing to convert fiscal windfalls into better living conditions for citizens, the 2025 BudgIT “State of States” Report reveals.
Despite recording high revenue allocations to Nigeria’s 36 states, millions of citizens still struggle with worsening living conditions.
This is a contradiction highlighted in BudgIT’s 2025 State of States Report, launched in Abuja.
The civic tech organisation revealed that while states collectively received over N11.4 trillion from the Federation Account in 2024, compared to N5.4 trillion in 2023, the fiscal boom has failed to translate into tangible improvements in citizens’ welfare.
Delivering the keynote address at the launch of BudgIT’s State of States 2025 Report in Abuja, Mr Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee revealed that; “While governments have more naira, ordinary Nigerians have less disposable income,”
According to the report themed “Growth Decline and Middling Performance,” 21 states still rely on federal allocations for more than 70% of their income, a sign he described as deepening fiscal dependence.
BudgIT’s data shows that states collectively spent nearly N16 trillion in 2024, with capital expenditure finally outpacing recurrent costs. Yet, key social sectors such as education and health remain chronically underfunded.
Education budgets were executed at only 67%, averaging N7, 000 per citizen, while health spending was even lower at N3, 500 per person.
Oyedele said. “Too many states are still prioritising overheads over classrooms and clinics. No society can prosper if its people are unhealthy and unskilled.”
Debt Declines, Fiscal Discipline Still Weak
Speaking further, Oyedele noted that while 31 states reduced their domestic debt stock, cutting total domestic debt by N2 trillion and foreign debt by $200 million, BudgIT warned that fiscal prudence remains weak.
“Borrowing isn’t the problem; unproductive use of debt is, borrow responsibly for infrastructure and productivity.”
The report revealed that states still owe over N1.2 trillion in arrears to pensioners, contractors, and workers, a drag on fiscal health and citizen trust.
Transparency and Accountability Still Lag
Speaking earlier, the Co-founder and BudgIT’s Global Director, Oluseun Onigbinde, described the report as “a mirror reflecting how governance choices shape citizens’ welfare.”
“Inflation rises faster than earnings, and debt obligations grow faster than reforms,” he said. “The State of States report is not just a document, it’s a call to action.”
While states like Lagos, Anambra, and Kwara were praised for resilience and innovation in internally generated revenue (IGR), Onigbinde affirmed that most others continue to depend heavily on FAAC allocations, showing little progress in fiscal independence.
CBN Calls for Fiscal Responsibility and Human Investment
In his presentation, Dr. Mohammed Abdullahi, Deputy Governor (Economic Policy) of the Central Bank of Nigeria (CBN), urged state governments to demonstrate greater fiscal discipline, transparency, and investment in human capital.
“States are receiving more money than ever before, yet citizens have less disposable income,” he said. “Fiscal abundance must translate into social prosperity.”
Abdullahi commended Enugu, Bayelsa, and Abia for their improved IGR and praised Lagos, Ogun, Kwara, Anambra, and Edo for maintaining fiscal resilience.
He highlighted the coming 2026 VAT reform, which will increase state governments’ share to 55% (about N4 trillion), urging governors to invest the funds productively.
“The next decade will test every state: will you grow, stagnate, or decline? Nigeria cannot afford another decade of mediocrity,” he warned.
Fiscal Health, Human Health
Representing the Bill & Melinda Gates Foundation, Ekenem Isichei linked sound fiscal management directly to citizens’ well-being.
“Fiscal health is human health. When funds reach hospitals and schools, mothers and children benefit directly,” he said.
The Road Ahead
The forum urged states to harmonise taxes, digitise revenue systems, and redirect spending toward human capital and infrastructure.
BudgIT’s top five performing states in the 2025 ranking are Anambra, Lagos, Kwara, Abia, and Edo, while Cross River fell sharply from fifth to 29th place.
They maintained that; “Nigeria cannot afford another decade of middling performance, the time has come for states to rise beyond survival and invest in their people.”
BudgIT also use the event to mark its 10th year anniversary of the initiative.
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