26 STATES DEPEND ON FAAC AS WAGE BILLS OUTPACE IGR

At least 26 Nigerian states were unable to generate enough Internally Generated Revenue to cover their personnel costs in 2025, highlighting their continued dependence on allocations from the Federation Account.

An analysis based on BudgIT’s 2026 report showed that only eight of the 34 states reviewed generated more IGR than they spent on personnel. The states were Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia and Anambra.

The remaining 26 states generated a combined N1.16tn in IGR but spent about N1.91tn on personnel, leaving a shortfall of roughly N747bn.

The report noted that the states’ finances had improved significantly since 2022, with aggregate FAAC allocations rising from N3.43tn to N11.38tn in 2025. IGR also increased from N1.57tn to N4.15tn during the same period.

Despite the increase in internally generated revenue, FAAC allocations accounted for 73.3 per cent of aggregate state revenue in 2025, up from 68.7 per cent in 2022.

Lagos remained the strongest performer, generating N1.85tn in IGR, while several states recorded substantial gaps between their revenue and personnel costs.

BudgIT said stronger domestic revenue mobilisation would be essential for improving the long-term fiscal sustainability of states and reducing their dependence on federal transfers.

The findings come amid calls for states to attract more investment, expand their revenue base and create jobs rather than rely heavily on federal allocations.