The Subnational Question: How States Can Turn the FAAC Surge into Development

Nigeria’s states have received a fiscal windfall, but the country’s poverty figures make clear that the money cannot be treated as business as usual. The National Bureau of Statistics found that 133 million Nigerians, or 63 percent of the population, live in multidimensional poverty. The rate ranges from 27 percent in Ondo to 91 percent in Sokoto, while rural poverty stands at 72 percent, compared with 42 percent in urban areas.

Those measures cover health, education, living standards and work, areas that Nigeria’s constitutional system places largely under state and local government responsibility. In that sense, the poverty index is also a scorecard for subnational government. The new allocation figures make that scorecard harder to ignore. Combined state and local government allocations climbed from ₦5.14 trillion in 2022 to ₦13.22 trillion in 2025, a 157 percent increase.

The rise reached every state. Lagos increased from ₦307 billion to ₦996 billion, Kano from ₦204 billion to ₦561 billion, Katsina from ₦148 billion to ₦406 billion, Jigawa from ₦132 billion to ₦352 billion, and Enugu from ₦105 billion to ₦275 billion. Between 2023 and 2025, states and local governments received ₦29.04 trillion, compared with ₦17.01 trillion during the previous four years. That represents an additional ₦12.03 trillion, or an average of ₦334 billion per state.

Nigeria has seen allocation booms before. Earlier oil windfalls helped drain the Excess Crude Account, and falling prices left many states unable to pay salaries by 2015. The same lesson returned in 2020. The present pattern is already familiar: payrolls and appointments expand with revenue, overheads rise with income, and capital budgets are only partly delivered. Projects are often selected for visibility rather than effect.

Local government remains another concern. Allocations totaling ₦11.45 trillion over three years still pass through state-controlled structures, despite the Supreme Court’s July 2024 judgment granting financial autonomy to the 774 councils. Clearing arrears, paying the ₦70,000 minimum wage and retiring costly debt may stabilize public finances, but the article distinguishes stabilization from development. Bayelsa, described as a long-standing high per-capita recipient, is presented as the warning against confusing money with progress.