Anambra State has emerged the best-performing state in Nigeria, topping the 2025 edition of BudgIT’s State of States report released on Thursday in Abuja.
The report, which assesses how states generate and manage revenues, ranked Anambra, Lagos, Kwara, Abia, and Edo as the top five states in overall fiscal performance.
Rivers State, which had consistently placed among the top five in the last five years, was excluded from this year’s ranking following the six-month state of emergency declared there in March 2025.
Allocations, inflation and exchange rate shocks
BudgIT noted that 2024 was a turbulent fiscal year, marked by President Bola Tinubu’s removal of the petrol subsidy and unification of the foreign exchange market. These policies pushed inflation to 34.8 per cent by December 2024, while the naira weakened to an average of ₦1,478 to a dollar.
Despite this, total federation transfers to states more than doubled—from ₦5.4tn in 2023 to ₦11.38tn in 2024—driven largely by higher oil receipts and naira depreciation. Lagos, Delta, Bayelsa, Akwa Ibom, and Oyo alone accounted for about 36 per cent of total FAAC allocations.
Expenditure rises, but services lag
States spent a total of ₦15.63tn in 2024, a 64.7 per cent increase from ₦9.49tn the previous year. For the first time in years, capital expenditure outpaced recurrent costs, with ₦7.63tn spent on projects compared to ₦6.37tn on operations.
However, social spending remained weak. Education budgets were implemented at only 66.9 per cent on average, while health sector execution stood at 61.9 per cent. Per capita spending averaged ₦6,981 for education and ₦3,483 for health—figures described by BudgIT as “painfully inadequate.”
Debt slows, Lagos still leads in IGR
BudgIT observed that states’ total debt grew marginally from ₦9.89tn in 2023 to ₦10.57tn in 2024, showing a slowdown compared to previous years. Lagos, Kaduna, Edo, Ogun, and Bauchi accounted for half of all subnational debts.
On internally generated revenue, Lagos and Enugu were the only two states that earned enough to fully cover their operating expenses, with 120.9 per cent and 146.7 per cent IGR-to-expense ratios respectively.
“Twenty-eight states still depend on federal allocations for up to 70 per cent of their income,” the report said, warning that fiscal independence remains elusive.
More funds, same questions
BudgIT said the removal of subsidy and the new VAT sharing formula—which raises states’ share from 50 to 55 per cent from January 2026—could further expand subnational revenues.
“States have more naira than ever before, but the question is how much of that is translating into better lives for citizens,” the report added.
