26 Nigerian states depend on FAAC
At least 26 Nigerian states generated less internally than they spent on personnel in 2025, exposing the continuing dependence of state governments on allocations from the Federation Account despite the sharp increase in public revenues following recent economic reforms.
An analysis of state finances contained in BudgIT’s 2026 report shows that only eight of the 34 states assessed generated enough Internally Generated Revenue, IGR, to exceed their personnel expenditure during the year.
The figures show why 26 Nigerian states depend on FAAC to maintain government operations even after internally generated revenues improved considerably.
The eight states whose IGR exceeded personnel expenditure were Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia and Anambra.
The other 26 states collectively generated about ₦1.16 trillion internally while spending approximately ₦1.91 trillion on personnel, leaving a gap of roughly ₦747 billion.
The figures offer a sobering picture of fiscal independence at state level. They do not mean that states are required to finance salaries exclusively from IGR. Federation Account allocations are a legitimate and constitutionally established source of government revenue.
What the numbers reveal, however, is how difficult it would be for many states to meet even their personnel obligations without substantial revenue flowing from the centre.
FAAC revenue surges after economic reforms
The dependence is particularly significant because Nigerian states have received considerably more money from the Federation Account in recent years.
According to BudgIT, aggregate FAAC allocations increased from ₦3.43 trillion in 2022 to ₦11.38 trillion in 2025.
That represents an increase of more than 232 per cent in just three years.
IGR also rose strongly, from ₦1.57 trillion in 2022 to ₦4.15 trillion in 2025. But internally generated revenue did not expand as rapidly as FAAC receipts.
The result is a paradox: states are collecting more money themselves, but many have become proportionately more dependent on federally distributed revenue.
FAAC represented 68.7 per cent of aggregate state revenue in 2022. By 2025, its share had increased to 73.3 per cent.
IGR moved in the opposite direction, declining as a share of total revenue from 31.4 per cent to 26.7 per cent.
That helps explain why 26 Nigerian states depend on FAAC despite the improvement recorded in their overall finances.
Yobe’s personnel bill nearly five times its IGR
The differences become even clearer when individual states are examined.
Yobe generated just ₦15.42 billion internally in 2025 but recorded personnel expenditure of ₦76.34 billion.
Its personnel costs were therefore nearly five times the state’s IGR, producing a shortfall of approximately ₦60.91 billion.
Taraba generated ₦17.89 billion but spent ₦55.60 billion on personnel, while Sokoto recorded ₦20.58 billion in IGR against personnel expenditure of ₦58.65 billion.
Adamawa generated ₦24.14 billion internally but spent ₦65.73 billion on personnel.
Jigawa’s case is also notable. The state generated ₦35.27 billion while recording personnel expenditure of ₦92.66 billion, a difference of about ₦57.39 billion.
Benue generated ₦29.38 billion against personnel expenditure of ₦73.94 billion, while Kogi’s ₦36.50 billion in IGR compared with personnel spending of ₦89.20 billion.
Kebbi generated ₦18.41 billion internally but spent ₦44.82 billion on personnel.
These disparities provide the clearest evidence of why 26 Nigerian states depend on FAAC and why stronger local economies remain important to the long-term financial health of state governments.
Oyo records biggest absolute gap
In absolute terms, Oyo recorded the largest gap among the 26 states.
The state generated ₦102.52 billion internally in 2025 but spent approximately ₦170.04 billion on personnel, producing a gap of about ₦67.51 billion.
Yobe followed with a gap of approximately ₦60.91 billion, while Jigawa recorded about ₦57.39 billion.
Ondo generated ₦45.63 billion in IGR against personnel expenditure of ₦99.58 billion, creating a gap of approximately ₦53.94 billion.
Kogi’s gap stood at roughly ₦52.70 billion.
Bayelsa generated ₦52.15 billion internally but recorded personnel expenditure of ₦98.75 billion, leaving a difference of approximately ₦46.60 billion.
Bauchi, Borno, Cross River, Ebonyi, Edo, Ekiti, Gombe, Imo, Kano, Katsina, Nasarawa, Niger, Osun, Plateau and Zamfara were also among the states where personnel expenditure exceeded IGR.
Lagos remains in a different league
The national picture changes dramatically when Lagos is considered separately.
Lagos generated approximately ₦1.85 trillion in IGR in 2025, compared with ₦656.35 billion in 2022.
Its 2025 IGR alone accounted for about 44 per cent of the ₦4.15 trillion generated by all 34 states covered in the report.
Yet Lagos spent only about ₦333.67 billion on personnel.
Its internally generated revenue was therefore more than five times its personnel expenditure.
This extraordinary revenue base means Lagos heavily influences the aggregate figures for Nigerian states.
Remove Lagos from the calculation and the vulnerability becomes clearer.
The remaining 33 states generated approximately ₦2.30 trillion internally while their combined personnel expenditure stood at about ₦2.56 trillion.
The figures reinforce the conclusion that 26 Nigerian states depend on FAAC, but they also expose the enormous economic differences between Lagos and much of the federation.
Enugu records dramatic IGR increase
Enugu was another standout performer.
Its IGR reportedly increased from ₦25.12 billion in 2022 to ₦406.77 billion in 2025, while personnel expenditure stood at ₦56.40 billion.
That represents an extraordinary increase of about ₦381.66 billion in IGR.
But the figure requires context.
https://ogelenews.ng/26-nigerian-states-depend-on-faac-as-personnel-cost…
BudgIT noted that much of the increase resulted from proceeds collected by the Enugu State Housing Development Corporation following state government intervention in the landed property market.
The organisation raised questions about the classification and potentially cyclical nature of those receipts.
That matters because sustainable IGR should ideally come from a broad and repeatable economic base rather than extraordinary receipts that may not recur at the same level every year.
Ogun also performed strongly, generating ₦237.65 billion against personnel expenditure of ₦151.27 billion.
Delta generated ₦206.44 billion against personnel spending of ₦197.81 billion.
Kaduna recorded ₦86.72 billion in IGR against ₦77.63 billion in personnel expenditure, while Kwara generated ₦85.21 billion against ₦65.22 billion.
Abia generated ₦66.86 billion compared with personnel expenditure of ₦62.26 billion, while Anambra recorded ₦54.24 billion against ₦39.95 billion.
These states demonstrate that the situation is not uniform across Nigeria.
Some states moved backwards
There were also worrying signs in some states.
Jigawa’s IGR declined from ₦59.40 billion in 2022 to ₦35.27 billion in 2025.
During roughly the same period, its personnel expenditure rose from ₦52.37 billion to ₦92.66 billion.
Sokoto’s IGR also declined, from ₦23.60 billion to ₦20.58 billion, while Ebonyi recorded a marginal reduction from ₦23.89 billion to ₦23.25 billion.
There was nevertheless some progress nationally.
In 2022, 28 of the 34 states covered had personnel expenditure higher than their IGR. That number fell to 26 in 2025.
Abia, Delta, Enugu and Kwara crossed from the group whose IGR was below personnel expenditure into the stronger category by 2025.
Ebonyi and Jigawa moved in the opposite direction.
Why FAAC dependence matters
The fact that 26 Nigerian states depend on FAAC is not simply an accounting problem.
The Federation Account receives significant revenues linked directly or indirectly to Nigeria’s oil sector. Heavy dependence on federal transfers can therefore leave state finances exposed to developments outside their immediate control, including oil prices, production levels and changes in nationally collected revenue.
A state with a strong internal revenue base has greater capacity to plan beyond monthly allocations.
But increasing IGR should not simply mean imposing more taxes and levies on already struggling households and small businesses.
Sustainable internally generated revenue ultimately comes from economic activity.
States need productive businesses, jobs, property development, agriculture, manufacturing, technology, tourism and functioning commercial centres that broaden the taxable economy.
That distinction matters.
The objective should not be to squeeze more money from the same narrow group of taxpayers. It should be to enlarge the economic base from which legitimate government revenue can be generated.
Higher FAAC receipts have not ended dependency
Nigeria’s post-subsidy fiscal environment has given states substantially more revenue.
But the new figures suggest that additional federal allocations have not automatically produced greater fiscal independence.
In fact, FAAC’s share of aggregate state revenue has increased.
The World Bank has separately warned that most Nigerian states remain heavily reliant on federally allocated resources, leaving them exposed to oil-market volatility and fluctuations in federal revenue.
This is why the finding that 26 Nigerian states depend on FAAC deserves attention beyond the annual debate over state IGR rankings.
The real measure of financial strength is not merely how much money enters government accounts. It is whether states are building economies capable of sustaining public services, paying workers, investing in infrastructure and surviving periods when federal revenue becomes less generous.
A warning hidden inside rising revenues
For governors, the latest figures carry both good and bad news.
State governments are receiving substantially more money than they did three years ago, and internally generated revenues have also increased.
But the underlying dependence on Abuja remains pronounced.
The finding that 26 Nigerian states depend on FAAC to bridge the gap between their IGR and personnel expenditure should therefore be viewed as a warning about the structure of state economies, not as evidence that those governments are technically insolvent.
FAAC remains a lawful and essential component of Nigeria’s fiscal federation.
The challenge is what states do with the increased revenues now available to them.
If the additional money is invested in infrastructure, human capital and economic activity that expands their revenue bases, today’s higher FAAC receipts could eventually help states become less dependent on the centre.
If the windfall merely finances expanding recurrent obligations without creating new productive capacity, the vulnerability will remain.
The numbers may have improved since 2022, but the central question has not disappeared: how many Nigerian states could sustain essential government operations if the flow of federal allocations were significantly disrupted?
For 26 of the 34 states examined, their 2025 finances provide an uncomfortable answer.
