Despite a record ₦17.2 trillion revenue in 2024, 35 Nigerian states remain heavily reliant on allocations from the Federation Account Allocation Committee (FAAC), according to BudgIT’s latest State of States report released on Tuesday.
The civic tech organisation revealed that, while states’ revenues expanded significantly between 2015 and 2025, their financial independence remains alarmingly weak — with most relying on the federal purse to stay afloat.
“Our findings show that many states continue to depend on FAAC for more than half of their total income, despite a sharp increase in allocations,” BudgIT noted.
According to the report, FAAC inflows rose by 110.7 per cent — from ₦5.4 trillion in 2023 to ₦11.4 trillion in 2024 — representing nearly two-thirds of total revenue. Twenty-nine states relied on these allocations for at least 50 per cent of their income, while 21 states derived 70 per cent or more from the same source.
Worryingly, for 31 states, FAAC funds covered over 80 per cent of their recurrent expenditure, exposing the fragile state of their internal revenue generation systems.
BudgIT’s analysis excluded Rivers State, which failed to produce an audited financial statement following the declaration of a state of emergency in the state.
The report also painted a troubling fiscal picture for subnational governments. States’ total expenditure surged by 64.7 per cent to ₦15.6 trillion in 2024, with ₦2.1 trillion — or 26.5 per cent of total spending — devoted to debt servicing.
The cumulative debt stock of the 35 states climbed to ₦10.6 trillion, marking a 6.9 per cent increase from the previous year. Although domestic debt dropped by 36 per cent to ₦3.5 trillion, foreign debt rose by 1.7 per cent to $4.6 billion.
BudgIT warned that foreign exchange volatility poses serious fiscal risks, with 24 states holding more than half of their total debt in foreign currency. Kaduna (97.4%), Jigawa (96.4%), and Ondo (90%) were listed as the most exposed.
On average, state-level debt per citizen rose slightly from ₦40,469 to ₦41,766, with Lagos recording the highest figure at ₦166,253 per resident.
While most states struggled to generate sustainable income, Enugu State recorded the fastest growth in Internally Generated Revenue (IGR), achieving a 381.4 per cent increase.
Lagos State, however, maintained its lead in overall IGR performance, pulling in ₦1.3 trillion — a figure equivalent to the combined IGR of 24 other states.
Speaking during the launch of the 10th edition of the State of States report, BudgIT’s Global Director, Oluseun Onigbinde, described the publication as “a mirror for assessing how states manage public resources.”
He commended improvements in budget transparency among subnational governments but warned that the country faces a “fiscal crossroads” as inflation and debt obligations outpace revenue growth.
“States must move away from overdependence on FAAC, strengthen their local economies, and prioritise investments in education, healthcare, and infrastructure,” Onigbinde urged.
He added that the report should serve as a “wake-up call” for both citizens and governments to embrace transparency, accountability, and people-centred governance.
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