Report Shows 26 States Rising FAAC Dependence
At least 26 states could not generate enough internal revenue to cover their personnel costs in 2025, continuing to rely heavily on allocations from the Federation Account despite improved finances.
A BudgIT report titled Nigeria’s Economic Reforms: What Has Changed Across Nigeria’s States? showed that only eight states—Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia and Anambra—generated Internally Generated Revenue (IGR) higher than their personnel expenditure.
The remaining 26 states generated about ₦1.16tn internally but spent ₦1.91tn on personnel, leaving a gap of ₦747bn. Yobe, Taraba, Sokoto, Adamawa, Jigawa, Benue, Kogi, Kebbi and Bayelsa were among the worst affected, with personnel bills up to five times their IGR.
Aggregate FAAC allocations rose sharply from ₦3.43tn in 2022 to ₦11.38tn in 2025, a 232% increase, while IGR grew from ₦1.57tn to ₦4.15tn. Yet FAAC’s share of state revenue increased from 68.7% to 73.3%, showing deeper dependence on federal transfers.
In absolute terms, Oyo recorded the largest gap, generating ₦102.52bn but spending ₦170.04bn on personnel. Yobe followed with a ₦60.91bn shortfall, while Jigawa recorded ₦57.39bn.
Lagos remained dominant, generating ₦1.85tn in IGR—44% of the total across 34 states—against ₦333.67bn in personnel costs.
Finance Minister Taiwo Oyedele urged stronger fiscal federalism and improved revenue mobilisation, warning that dependence on oil and FAAC transfers was unsustainable.
Economists Akpan Ekpo and Muda Yusuf also stressed the need for states to attract investment, rationalise bloated workforces and diversify revenue sources.
The report noted that while some states like Abia, Delta, Enugu and Kwara improved their fiscal positions, others such as Ebonyi and Jigawa regressed. BudgIT concluded that strengthening domestic revenue mobilisation remains critical to long-term fiscal sustainability.