26 States Lean on FAAC as Wage Bills Outstrip IGR

…BudgIT Report Reveals N747bn Gap as Federal Allocations Outpace Internal Revenue Growth

At least 26 state governments could not generate enough internal revenue to cover their personnel costs in 2025, as they continue to depend on allocations from the Federation Account despite a significant improvement in their overall finances .

CDA News Nigeria reports that only eight of the 34 states covered by a new BudgIT report generated Internally Generated Revenue higher than their personnel expenditure during the year. The eight states were Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia and Anambra . The remaining 26 states generated approximately N1.16 trillion internally but spent about N1.91 trillion on personnel, leaving a gap of roughly N747 billion .

CDA News Nigeria gathered that the findings are contained in BudgIT’s 2026 report titled ‘Nigeria’s Economic Reforms: What Has Changed Across Nigeria’s States? An Analysis of State Finances in the Post-Subsidy Years’. The report analysed actual figures contained in states’ full-year budget implementation reports for 2022 and 2025. Akwa Ibom and Rivers were excluded because of incomplete or unavailable data .

The figures do not imply that states are expected to finance salaries exclusively from IGR, as statutory allocations are a legitimate source of government revenue. However, they show the extent to which many states would struggle to meet even their personnel obligations without funds distributed through the Federation Account Allocation Committee .

According to BudgIT, aggregate FAAC allocations increased from N3.43 trillion in 2022 to N11.38 trillion in 2025, representing a 232.06 per cent increase. IGR also increased from N1.57 trillion to N4.15 trillion over the same period, but its 165.01 per cent growth lagged the expansion in FAAC receipts. Consequently, FAAC accounted for 68.7 per cent of aggregate state revenue in 2022 but increased to 73.3 per cent in 2025, while IGR’s share fell from 31.4 per cent to 26.7 per cent .

A state-by-state comparison showed wide disparities between personnel expenditure and IGR. Yobe generated only N15.42 billion internally but spent N76.34 billion on personnel, leaving a shortfall of about N60.91 billion, with its wage bill almost five times its IGR. Taraba, Sokoto, Adamawa, Jigawa, Benue, and Kogi were among states with similar severe gaps .

BudgIT stated that “despite improvements in domestic revenue mobilisation, many states remained heavily reliant on transfers from the Federation Account,” stressing that strengthening domestic revenue mobilisation would be critical to improving states’ long-term fiscal sustainability .

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Tags: #StateFinances #FAAC #IGR #BudgIT #FiscalSustainability #NigeriaEconomy #StateGovernment

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Source verification: Original reporting based on BudgIT’s 2026 report and analysis of states’ budget implementation reports.

Editorial Policy: CDA News Nigeria is committed to accurate and balanced reporting on governance and fiscal matters.

Byline: By CDA News Nigeria Correspondent

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