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🇳🇬 Nigeria /Economy & Trade

Nigerian States' Revenue Tripled Post-Subsidy, But Development Lags: BudgIT Report

From ThisDay · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Documents & data Context piece
  • A report by BudgIT indicates that despite a significant increase in fiscal resources for Nigerian states following the petrol subsidy removal, actual development and citizen welfare have remained unimpressive.
  • While aggregate state revenue tripled to N15.53 trillion in 2025 from N4.84 trillion in 2022, much of this increase came from federal transfers rather than improved internally generated revenue (IGR).
  • The report highlights that states spent more on capital projects, but salaries and the cost of governance consumed large portions of funds, with debt repayments also taking a substantial share.

Despite a substantial increase in fiscal resources available to Nigerian states after the removal of the petrol subsidy, actual development outcomes and improvements in citizen welfare have remained notably unimpressive, according to a new report by the civic-tech organization BudgIT.

The report, titled “Nigeria’s Economic Reforms: What Has Changed Across Nigeria’s States? An Analysis of State Finances in the Post-Subsidy Years,” reveals that aggregate revenue across states tripled to N15.53 trillion in 2025, a significant jump from N4.84 trillion in 2022. This represents a compound annual growth rate (CAGR) of 47.48% over the three-year period.

figures showed the extent to which states remained dependent on federal transfers and stressed the need for them to build stronger IGR bases.

— Oluseun OnigbindeExplaining the findings of the BudgIT report on state finances.

However, BudgIT's analysis indicates that this revenue windfall was largely driven by increased federal transfers, rather than a fundamental strengthening of states' capacity to generate their own revenue. Federation Account Allocation Committee (FAAC) receipts surged by 232.06%, accounting for 73.3% of aggregate state revenue in 2025, up from 68.7% in 2022. In contrast, Internally Generated Revenue (IGR) saw a smaller increase of 165.01%, and its contribution to total state revenue fell from 31.4% to 26.7%.

The report further points out that while states did increase spending on capital projects, a significant portion of the available funds was consumed by salaries and the cost of governance. Debt repayments also continued to claim a considerable share of state resources. BudgIT concluded that there has been an expansion in fiscal capacity without a corresponding deepening of fiscal independence, raising questions about the effective utilization of these enhanced resources for tangible development.

the critical issue was no longer simply how much money states received, but how effectively the additional resources were converted into development.

— BudgIT reportHighlighting the core challenge facing Nigerian states regarding resource utilization.
DistantNews Editorial

Originally published by ThisDay in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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