States’ IGR jumps 34% to N2.43trn despite rising hardship

The Internally Generated Revenue (IGR) of 35 Nigerian states rose by 34 per cent to N2.43tn in the first half of 2026, despite worsening economic pressures and rising living costs across the country.

The figure, based on an analysis of state revenue data, represents an increase from the N1.815tn generated by the states in the first half of 2024. Rivers State was excluded from the latest calculation because comparable data were unavailable.

The increase means state governments are collecting significantly more revenue at a time when they are also receiving higher allocations from the Federation Account and additional funds linked to the removal of petrol subsidy.

FAAC allocations to states increased by 26 per cent to N4.54tn in the first six months of 2026, compared with N3.61tn in the corresponding period of 2025.

States have also benefited from the distribution of subsidy savings. Between June 2023 and December 2025, states and local governments received about N10.4tn from the N15.8tn saved through the removal of petrol subsidy.

The stronger revenue position has, however, raised questions about whether the additional funds are translating into better living conditions for Nigerians.

Despite increased government earnings, many communities continue to face poor roads, inadequate healthcare facilities, unemployment, insecurity and limited economic opportunities, while households struggle with high food prices and declining purchasing power.

A World Bank report cited in the analysis indicated that the proportion of Nigerians living below the poverty line increased from 56 per cent in 2023 to 61 per cent in 2024 and 63 per cent in 2025, representing about 140 million people.

The widening gap between rising public revenue and persistent hardship has consequently intensified scrutiny of how state governments spend their resources.

The concerns are reinforced by findings from BudgIT’s Tracka platform, which reported in February 2026 that about N24bn worth of public projects across several states were either unexecuted, abandoned or fraudulently delivered.

Benue recorded the highest proportion of projects that were not executed at 40 per cent, followed by Ondo at 32.4 per cent, Kwara at 30.4 per cent, Akwa Ibom at 27.3 per cent and Sokoto at 25.6 per cent.

Economists and public policy experts said the growing revenues should be reflected in improved infrastructure, stronger social services and increased economic opportunities for citizens.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the increase in state revenues had created greater fiscal space for governors but should also come with stronger accountability.

“States have more to do with all the resources going to them now. We should hold them more accountable,” Yusuf said.

He urged states to channel the funds into roads, healthcare, public transportation, education, agricultural infrastructure, security, power and support for businesses.

Yusuf warned that higher revenues should not merely finance increased recurrent expenditure or prestige projects, stressing that citizens must be able to see measurable improvements in their communities.

Similarly, PwC’s Director of Deals Advisory, Wale Olusi, called for greater involvement of state and local governments in driving economic growth.

He said states should prioritise infrastructure that connects farmers to markets, improve security and invest in projects capable of expanding economic activity.

“States should invest the money they are getting in infrastructure, in transport to move farm produce from rural areas to urban centres, in security to protect the people,” Olusi said.

However, Professor of International Economics, Jonathan Aremu, cautioned that the increase in nominal revenue does not necessarily mean states have become financially stronger in real terms.

According to him, inflation and exchange-rate pressures have significantly reduced the purchasing power of government revenues.

“What they were using N1m to get before costs N3m today. The exchange rate has gone up, and things are very expensive,” Aremu said.

He nevertheless argued that state governments must review their spending priorities, saying citizens should feel a greater impact from the additional resources available to governments.

The revenue increase also comes against the backdrop of a sharp rise in total Federation Account distributions. Between 2017 and 2025, the 36 states and 774 local governments shared a cumulative N93.216tn from the Federation Account.

In the first half of 2026 alone, about 11 oil-producing states received N321.90bn under the 13 per cent derivation formula, with Delta, Bayelsa and Akwa Ibom accounting for about 75.4 per cent, or N242.63bn, of the amount.

With state governments now controlling larger revenue streams, analysts said the focus should increasingly shift from how much governments receive to what citizens get in return.

They argued that the additional funds should be converted into productive investments capable of creating jobs, reducing household costs, improving public services and expanding the economic base of the states.

The growing IGR, therefore, presents both an opportunity and a test for Nigeria’s subnational governments: whether increased public resources will translate into visible improvements in citizens’ lives or remain largely reflected in government accounts without a corresponding improvement in service delivery.