Still on Proposed Raise in State Allocations
By Fatima Ikram Abubakar
The news that the Federal Government is reviewing Nigeria’s revenue allocation formula with the intention of increasing the share of states has been received with excitement across the country. Vanguard’s editorial of August 22, 2025, “Proposed raise in state allocations,” rightly described the initiative as a new ray of hope for state and local governments.
For decades, Nigeria’s fiscal structure has been skewed in favour of the federal centre, leaving states and local governments—those closest to the people—struggling to deliver basic services. Governors and policy experts have repeatedly lamented this imbalance. If the reform succeeds, it will not just be a fiscal adjustment; it will mark one of the most consequential steps toward genuine federalism in Nigeria’s history.
President Bola Ahmed Tinubu has branded himself as a reformer willing to make bold, sometimes unpopular choices for long-term national benefit. His earlier decision to sign landmark Tax Reform Bills in June 2025, which increased the distributable share of Value Added Tax (VAT) for states, was a significant milestone. The proposed raise in federal allocations now follows in the same spirit—an attempt to empower subnational governments and reduce their suffocating dependence on Abuja.
If states’ share rises from the current 26.72 percent to between 30 and 40 percent, the effect would be transformative. States that for years have functioned as little more than financial dependents of Aso Rock would suddenly have billions in fresh inflows to fund education, healthcare, roads, power, and industrialization. It could also support states in taking on devolved responsibilities such as local policing, correctional facilities, and even inland waterways regulation—services the federal government is too overstretched to deliver effectively.
The timing is crucial. As constitutional amendments continue to devolve powers in railways, power, and security, states must be financially equipped to carry these burdens. Increased allocations will not only enhance governance but also bring government closer to the people by enabling faster infrastructure maintenance, more effective social interventions, and stronger local institutions.
Yet, greater resources come with greater responsibility. Nigeria has a painful history of squandered opportunities, and many citizens harbour little faith in their state governments. State Houses of Assembly, meant to serve as watchdogs, often fail in their duties, acting as rubber stamps for governors. If this reform is to succeed, accountability must be strengthened. Civil society, anti-corruption agencies, the judiciary, and most importantly, citizens themselves must demand transparency in how these new funds are managed.
History shows that healthy competition among subnational governments can be a powerful driver of development. During the First Republic, regions used their fiscal autonomy to innovate—whether in education, agriculture, or industry. That same spirit must be rekindled. Governors should be challenged to outdo one another in service delivery, not in extravagance or mismanagement.
The proposed review is more than a policy tweak—it is a potential turning point. If harnessed responsibly, it could rebalance Nigeria’s distorted federalism, empower states, and unleash a new wave of development. If squandered, it will deepen cynicism, entrench corruption, and waste a golden opportunity.
For President Tinubu, this is a chance to cement his legacy as a true federalist reformer. For governors, it is a test of leadership and vision. For citizens, it is a call to vigilance. Nigeria’s future will not be shaped by how much money flows into state coffers, but by how wisely it is spent.
Fatima Ikram Abubakar is a Mass Communication student at Afe Babalola University, Ekiti, and an intern with PRNigeria. She can be reached via [email protected]