At least 21 states in Nigeria depend on allocations from the Federation Account Allocation Committee (FAAC) for over 70 per cent of their total revenue, according to a new report by the BudgIT Foundation.
The report also revealed that 29 states rely on FAAC for at least 50 per cent of their total revenue.
Titled “A Decade of Subnational Fiscal Analysis: Growth, Decline and Middling Performance”, the State of States 2024 report was presented on Tuesday in Abuja by BudgIT’s Group Head of Research and Policy Advisory, Vahyala Kwaga.
The report put the gross FAAC receipts for 35 states in 2024 at N6.44 trillion, higher than the N5.4 trillion received in 2023.
Delta (N1.19tn), Bayelsa (N794.43bn), Akwa Ibom (N1tn), Lagos (N670.99bn), and Oyo (N425.6bn) collectively accounted for about 35.93 per cent of the total gross FAAC received by the 35 subnational governments.
Between 2023 and 2024, Enugu, Bayelsa, Abia, Osun, and Kano recorded the highest FAAC growth rates — 381.44 per cent, 173.69 per cent, 129.37 per cent, 98.37 per cent, and 85.90 per cent, respectively.
According to BudgIT, Enugu, Lagos, Abia, Kwara, and Anambra ranked highest on fiscal independence, having limited dependence on FAAC and stronger potential for self-sustainability.
The report showed that 10 states—Borno, Ogun, Nasarawa, Ekiti, Enugu, Zamfara, Bayelsa, Bauchi, Osun, and Niger — recorded over 500 per cent growth in Internally Generated Revenue (IGR) between 2015 and 2024.
Lagos and Ogun collectively generated N1.46 trillion in IGR, nearly equal to the combined IGR of 24 other states.
In contrast, states such as Imo, Kogi, Jigawa, Benue, and Yobe ranked lowest on the fiscal performance index. The report advised them to either improve IGR collection or reduce operating expenses.
Fifteen states grew their IGR by more than 50 per cent, with Enugu leading at 381.44 per cent. Only Kebbi and one other state recorded negative IGR growth.
Tax revenue accounted for 66.58 per cent of the cumulative IGR of all states, while non-tax revenue contributed 33.42 per cent.
Aggregate operating expenses of the states, representing 41.96 per cent of total expenditure, rose by 48.13 per cent—from N4.64 trillion in 2023 to N6.62 trillion in 2024.
The cumulative expenditure of the 35 states increased by 64.69 per cent, from N9.49 trillion in 2022 to N15.63 trillion in 2024. About N2.11 trillion (26.45 per cent) of this amount went into debt servicing.
Personnel costs rose by 23.24 per cent, while overheads and capital expenditure grew by 62.66 per cent and 119.88 per cent, respectively.
The total debt stock of the 35 states increased by 6.87 per cent, from N10.01 trillion in 2023 to N10.57 trillion in 2024. Domestic debt dropped by 35.98 per cent to N3.54 trillion, while 24 states had over 50 per cent of their total debts denominated in foreign currency.
Kaduna, Jigawa, and Ondo had the highest foreign-debt-to-total-debt ratios, 97.39 per cent, 96.42 per cent, and 90.04 per cent, respectively. Average subnational debt per capita rose from N40,469 in 2023 to N41,766.
The report also highlighted outstanding liabilities totalling N1.23 trillion, including N434.87 billion in contractor arrears, N626.8 billion in pension and gratuity arrears, N33.73 billion in unpaid salaries, and N64.44 billion in judgement debts.
Twelve states exceeded the national average debt per capita, with Lagos leading at N166,253.
On sectoral spending, the states collectively allocated N1.31 trillion to health but spent only N816.63 billion, a 61.98 per cent performance rate. Similarly, they allocated N2.4 trillion to education but spent N1.61 trillion, representing 67.08 per cent budget performance.
