26 Nigerian States Rely on FAAC Amid Revenue Shortfalls

A report by BudgIT reveals that in 2025, at least 26 Nigerian states were unable to generate enough internal revenue to cover their personnel costs, relying on allocations from the Federation Account. The analysis indicated that only eight out of 34 states—Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia, and Anambra—generated Internally Generated Revenue (IGR) that surpassed their personnel expenditures.

The remaining 26 states generated approximately N1.16 trillion in IGR but incurred around N1.91 trillion in personnel costs, resulting in a deficit of about N747 billion. The report, titled ‘Nigeria’s Economic Reforms: What Has Changed Across Nigeria’s States?

An Analysis of State Finances in the Post-Subsidy Years’, analyzed budget implementation reports for 2022 and 2025. Despite an increase in FAAC allocations from N3.43 trillion in 2022 to N11.38 trillion in 2025, states' dependence on federal transfers grew, with FAAC accounting for 73.3% of aggregate state revenue by 2025.

BudgIT emphasized the need for improved domestic revenue mobilization for long-term fiscal sustainability.