Internally Generated Revenue (IGR) collected by Nigerian state governments increased by 34 per cent to N2.43tn in the first half of 2026, compared with N1.815tn recorded during the corresponding period of 2024.
Analysis of available data showed that 35 states, excluding Rivers State, generated the combined N2.43tn between January and June 2026. Comparable IGR data for many states in the first half of 2025 were unavailable.
The increase highlights the expanding revenue base of state governments at a time when they are under growing pressure to finance infrastructure, social services, workers’ salaries and other recurrent obligations.
However, the rise in state revenues has also renewed concerns over how governments are deploying the additional resources, particularly as states have benefited from increased Federation Account allocations and funds generated from the removal of petrol subsidies.
Scrutiny Over Subsidy Savings
Attention has increasingly focused on the estimated N10.4tn in subsidy savings shared with state and local governments. Stakeholders have called for greater transparency and evidence showing how much of these funds has been converted into projects and programmes capable of improving citizens’ living conditions.
Despite stronger revenue inflows, many states continue to face significant development challenges, including poor infrastructure, inadequate social services, widespread poverty and limited economic opportunities.
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 approximately 140 million people.
The contrast between rising government revenues and deteriorating living conditions has intensified scrutiny of the spending priorities of governors and local government chairmen.
Analysts have criticised some political office holders for maintaining expensive lifestyles while residents contend with rising living costs and declining purchasing power.
Experts argued that increased public revenue must be accompanied by greater transparency, stronger fiscal discipline and increased investment in productive sectors.
According to them, states should direct additional funds towards infrastructure and programmes that stimulate economic activity, create employment, improve productivity and reduce the financial pressure on households.
They also warned that increased Federation Account Allocation Committee revenues and IGR would have limited impact on ordinary Nigerians unless governments improve fiscal discipline and ensure public funds are used efficiently.
States’ Revenue Continues to Rise
The 35 states generated N2.43tn in IGR between January and June 2026, representing a 34 per cent increase from the N1.815tn recorded in the first half of 2024.
Meanwhile, allocations from the Federation Account increased by 26 per cent to N4.54tn in H1 2026, compared with N3.61tn distributed during the corresponding period of 2025.
During the first six months of 2026, approximately 11 oil-producing states shared N321.90bn under the 13 per cent derivation formula.
The distribution was heavily concentrated among a few states, with Delta, Bayelsa and Akwa Ibom receiving approximately 75.4 per cent, or N242.63bn, of the total derivation pool.
Between June 2023 and December 2025, states and local governments reportedly received approximately N10.4tn from the N15.8tn in cumulative subsidy savings, significantly increasing subnational revenues.
The PUNCH previously reported that the 36 states and 774 local governments collectively received N93.216tn from the Federation Account between 2017 and 2025.
Concerns Over Abandoned Projects
Despite the increased revenue available to subnational governments, concerns persist over the implementation of public projects.
BudgIT’s service delivery monitoring platform, Tracka, identified widespread cases of unexecuted, abandoned and poorly delivered government projects across several states in February 2026. The affected projects were valued at approximately N24bn.
According to the report, Benue recorded the highest proportion of completely unexecuted projects 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.
Calls for Greater Accountability
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the benefits of increased state revenues should be visible to citizens.
He argued that the reforms had significantly expanded the fiscal space available to state governments through higher statutory allocations and, in some cases, stronger IGR.
According to Yusuf, the increased resources should translate into greater development efforts, with citizens demanding measurable improvements in areas such as roads, healthcare, public transportation, education, agricultural infrastructure, security, electricity and enterprise development.
He added that increased revenue should produce visible improvements in citizens’ welfare rather than simply fund higher recurrent expenditure or prestige projects.
Similarly, PwC’s Director of Deals Advisory, Wale Olusi, said state governments needed to play a greater role in addressing the country’s rising hardship.
Olusi particularly criticised local governments for their limited contribution to development and called for greater investment in infrastructure, transportation networks that connect farmers to urban markets and security.
He also argued that states should use their resources to promote local economic development and improve living standards.
Purchasing Power Remains a Concern
Professor of International Economics, Jonathan Aremu, offered a different perspective, noting that although states are receiving more money in nominal terms, the real value of those revenues has declined because of inflation and exchange-rate pressures.
According to him, goods and services that previously cost N1m could now cost as much as N3m, meaning that the purchasing power of state revenues has fallen significantly.
He noted that exchange-rate depreciation and the high cost of imported inputs have further reduced the real value of government earnings.
Aremu nevertheless agreed that state governments need to reassess their spending priorities, arguing that citizens should be able to see tangible benefits from the increased resources available to governments.
With state revenues continuing to rise, pressure is likely to increase on governors and local government authorities to demonstrate how additional public funds are being used and whether the spending is translating into meaningful improvements in infrastructure, employment, economic activity and citizens’ welfare.
