State Governors’ Spending Spree: Nigeria’s Fiscal Crisis Deepens
A comprehensive analysis of Nigeria’s state budgets for 2024 has revealed a troubling trend: 30 state governments collectively generated N2.8tn in Internally Generated Revenue (IGR) but went on to spend N3.03tn on operational costs—much of it on travel, refreshments, and allowances.
The data, obtained from full-year budget implementation reports, underscores a deepening fiscal crisis at the subnational level, where expenditure patterns suggest that many state governments prioritise non-productive expenses over critical development needs. In addition to overshooting their revenues, states also repaid N1.038tn in debts owed to domestic, foreign, and multilateral creditors.
Cash Windfalls and Waning Fiscal Discipline
The findings come against the backdrop of record federal allocations to states, buoyed by the removal of fuel subsidies and naira devaluation. In 2024, allocations from the Federal Account Allocation Committee (FAAC) to all tiers of government surged by 49.24%, reaching N15.12tn, up from N10.14tn in 2023.
Of this, state governments received the highest share—N5.22tn—accounting for 34.5% of total allocations. Local governments followed with N4.97tn, while the central government received N4.95tn. Compared to 2023, states enjoyed an increase of 45.5%, yet most struggled to rein in excessive spending.
A breakdown of monthly allocations showed steady increases throughout the year, culminating in a peak disbursement of N549.79bn in December. But despite these substantial cash inflows, financial mismanagement remains a key concern, with many states failing to meet revenue targets while racking up expenses far beyond their means.
The Debt Burden and a Growing Deficit
While states set a cumulative revenue target of N2.836tn, the actual amount raised fell short by N24bn. However, the real fiscal deficit stood at N223bn, reflecting unchecked expenditure beyond generated income.
Reliance on federal allocations remains a major weakness, with many states opposing the direct statutory allocation to local governments—a policy that could strip them of up to 32.8% of their FAAC funds. This resistance underscores concerns over the sustainability of state finances, with governors fearing a severe cut in their revenue streams.
Runaway Spending: Where the Money Went
A forensic examination of the expenditure reports highlights troubling spending priorities across Nigeria’s states. Despite a worsening cost-of-living crisis, governments poured billions into travel, hospitality, and political patronage.
Data shows that a staggering N147.79bn was disbursed for refreshments, welfare packages, and sitting allowances—effectively financing luxuries for politicians and bureaucrats at the expense of essential public services. These funds were fully utilised within the year, with large portions going to lavish receptions for government visitors, courtesy calls, and ceremonial functions.
Meanwhile, several states far outspent their revenue base, relying on heavy borrowing to cover deficits. Lagos, Delta, and Plateau were the highest spenders, with recurrent expenditures of N578.74bn, N188.16bn, and N184.6bn, respectively.
Lagos State: Spent N578.74bn on recurrent expenses but generated N1.16tn. It borrowed N58.36bn and paid N93.88bn in debt service.
Delta State: Spent N188.16bn while earning N150.78bn. It serviced debts worth N71.78bn.
Plateau State: Spent N184.6bn, despite generating just N25.42bn in revenue.
Bayelsa State: Surpassed its revenue target, generating N67.91bn against a projection of N61.37bn. However, its operating costs ballooned to N122.56bn, while debt servicing claimed N42.52bn.
Akwa Ibom State: Spent N155.26bn, exceeding its revenue of N67.07bn by N88.19bn.
Meanwhile, a handful of states managed to stay within fiscal limits:
Anambra State: Generated N42.04bn, keeping recurrent spending at N20.67bn.
Ebonyi State: Spent N53.22bn on recurrent expenses while earning N20.97bn. However, it borrowed a staggering N76.88bn.
Gombe State: Spent N61.5bn but generated just N20.2bn, financing the shortfall with N51.42bn in new loans.
Taraba State: Plunged deeper into debt, borrowing N80.11bn to fund its N68.94bn recurrent spending while generating only N13.64bn.
Economic Experts Raise the Alarm
Observers have decried the states’ failure to adopt financial prudence, warning that continued reckless spending could exacerbate Nigeria’s economic fragility.
According to development economist Aliyu Ilias, most states have failed to develop their economies or attract investors, leaving them overly dependent on federal allocations. He urged governors to focus on industrialisation and investment incentives rather than sustaining an unsustainable patronage system.
Similarly, Professor Segun Ajibola of Babcock University criticised state governments for prioritising luxury spending over economic development. He argued that without strict fiscal discipline, many states could soon face an economic crisis worse than the current hardship endured by citizens.
The Central Bank of Nigeria’s Monetary Policy Committee has also flagged excessive government spending as a major challenge to Nigeria’s macroeconomic stability, highlighting its inflationary impact and strain on monetary policy effectiveness.
A Call for Urgent Reform
With Nigeria battling rising inflation, currency devaluation, and worsening economic inequality, state governments are under mounting pressure to rein in wasteful spending. Calls for fiscal responsibility have grown louder, with citizens and economists alike demanding greater transparency, accountability, and efficiency in public financial management.
The challenge now lies in whether state governors will heed these warnings—or continue down the path of unchecked expenditure, deepening Nigeria’s fiscal woes for years to come.
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