When President Bola Tinubu declared “Subsidy is gone!” in May 2023, few Nigerians imagined just how deeply those three words would reshape the country’s finances.
Nearly two years later, the 2025 State of States report by BudgIT paints a complex picture: state governments are richer than ever in naira terms, yet poverty and hardship continue to deepen across the country.
Revenue windfall amid economic pain
The data tell a stunning story. Federation allocations to states jumped from ₦5.4tn in 2023 to ₦11.38tn in 2024—a 110 per cent rise—thanks to higher oil earnings and a weaker naira following forex unification.
But inflation, which peaked at 34.8 per cent, quickly eroded those gains. With the naira trading at ₦1,478 to the dollar, what looked like a windfall on paper translated to less real value on the ground.
“Subnationals have more money than ever before,” BudgIT said, “but inflation and poor fiscal discipline are diluting the impact.”
Anambra leads, Rivers missing
For the first time in a decade, Rivers State—one of the federation’s oil powerhouses—was absent from the ranking after the Federal Government declared a state of emergency there in March 2025.
Anambra took the top spot, followed by Lagos, Kwara, Abia, and Edo. Akwa Ibom made one of the biggest leaps, rising 17 positions to 10th, while Cross River fell sharply from 5th to 30th.
The new ranking, analysts say, signals a gradual shift away from oil dependency toward improved fiscal management in some southeastern states.
Big budgets, small impact
States collectively spent ₦15.63tn in 2024—nearly two-thirds more than in 2023. For the first time, capital projects outpaced recurrent costs, a sign of better prioritisation on paper.
Abia led the country by committing 77 per cent of its total expenditure to capital outlays, while Anambra, Enugu, and Ebonyi also crossed the 70 per cent threshold.
Still, the numbers reveal deep inefficiency in service delivery. Only two-thirds of education budgets were implemented, while average per capita spending on health care stood at just ₦3,483. “No state spent up to ₦10,000 per person on health,” BudgIT noted.
Debt slows but inequality grows
States appear to be managing their debts more prudently. Total subnational debt increased by just 6.8 per cent to ₦10.57tn, a sharp slowdown from the previous year’s 36 per cent rise.
Lagos and Edo, however, each owe more than ₦100,000 per resident, and total liabilities—including pensions, contractor arrears, and judgments—stand at ₦1.24tn nationwide.
Despite these obligations, domestic debt actually fell by over ₦2tn in 2024, a positive sign for fiscal discipline.
The federal tie that binds
Yet the larger challenge remains dependence on Abuja. Only Lagos and Enugu generated enough internal revenue to meet their operating expenses. Twenty-one states relied on FAAC for at least 70 per cent of their total income—up from 14 in 2023.
This heavy dependence, economists warn, keeps most states trapped in a cycle of low productivity and weak governance.
Ten years on, citizens still waiting
Marking a decade of its State of States series, BudgIT warned that growing revenues are not translating into better living conditions. Citing World Bank data, it noted that poverty has risen from 40 per cent in 2019 to an estimated 61 per cent in 2025—about 139 million Nigerians.
“The report is more than numbers,” BudgIT said. “It’s a call for accountability and for citizens to ask how their states are using public funds.”
With new tax laws set to raise states’ VAT share to 55 per cent in 2026, the coming years could redefine subnational finances. But for now, the contrast remains stark: Nigeria’s states are richer than ever — yet its people are poorer than before.
