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Despite renewed calls for fiscal autonomy among Nigeria’s 36 states, fresh data analysis shows that only a few subnationals can fund their personnel costs from their Internally Generated Revenue (IGR). This underscores a persistent dependence on federal allocations for recurrent expenditure, nearly a decade after fiscal reforms sought to strengthen state finances.
According to the latest data compiled from state financial statements for 2024, Lagos, Ogun, Enugu, Rivers, and Delta stand out as the only states capable of fully covering their personnel bills with IGR alone. For the rest, the wage burden continues to exceed internally generated income, a trend that questions the sustainability of public finances outside of the Federation Account Allocation Committee (FAAC).
Leading states
With a staggering ₦1.26 trillion in internally generated revenue, Lagos remains Nigeria’s economic powerhouse, covering its ₦952 billion personnel cost and still retaining about a month’s fiscal buffer. Ogun State follows, generating ₦194.9 billion in 2024 against a personnel cost of ₦287.3 billion, giving it roughly one month’s cover before requiring FAAC support.
Enugu, surprisingly, outperformed many oil-producing states, generating ₦180.5 billion in IGR against a personnel cost of ₦107.2 billion, maintaining a rare fiscal surplus at the subnational level.
Rivers and Delta, both oil-rich states, also sustain near balance. Rivers recorded ₦317.3 billion in IGR against ₦361.6 billion in personnel costs, while Delta posted ₦157.7 billion against ₦316.6 billion, placing both within a narrow margin of self-sufficiency.
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This 2024 analysis mirrors a worrying trend previously reported by RipplesMetrics in 2023, where only nine states could fund their personnel costs from IGR. Despite modest improvements in revenue numbers, the fiscal capacity of most states has not improved in real terms, given inflationary pressures and wage adjustments.
For example, in 2020, Lagos’ IGR stood at ₦418.9 billion but has since tripled, reflecting growth in its tax system and economic base. However, states like Katsina, Sokoto, and Benue have seen stagnant or declining IGR growth relative to personnel costs, signaling inefficiencies in local revenue administration.
The Rest: A dependence on FAAC
For the majority of other states, the picture is dire. Over 25 states would exhaust their IGR within five months or less if used to pay salaries alone. This fiscal imbalance reveals a continued dependency on federal oil allocations despite efforts to diversify revenue sources.
For instance, Abia earned ₦40 billion IGR against ₦91.4 billion in personnel costs, only two months of cover; Kogi (₦32 billion IGR vs. ₦145.7 billion cost) can only sustain salaries for five months; and Taraba, Yobe, and Ondo show the weakest fiscal endurance, lasting six to nine months, underscoring their reliance on Abuja. Even Bayelsa, with ₦64 billion IGR, cannot sustain its ₦224 billion personnel cost beyond four months.
The pattern illustrates that states are spending more than they can generate internally, with several northern and north-central states, including Borno, Benue, Sokoto, Kebbi, and Niger, struggling to meet half of their personnel obligations through IGR.
Meanwhile, regional disparities remain stark. The South-West continues to dominate Nigeria’s IGR landscape, accounting for over 50% of all subnational revenues, driven by Lagos, Ogun, and Oyo. Conversely, Northern states, especially those in the North-East and North-West, generate far less, despite large population sizes.
For instance, Yobe generated just ₦11 billion, less than 1% of Lagos’ earnings, yet carries a wage bill of ₦96 billion, the highest fiscal gap ratio in the country.
By: James Odunayo
The post RipplesMetrics: Katsina, Sokoto, Benue have stagnant, declining IGR growth, as states depend on federal allocation to pay salaries (2) appeared first on Latest Nigeria News | Top Stories from Ripples Nigeria.
