A recent report by BudgIT has revealed that despite high revenue growth in states across Nigeria, the increased spending has not translated into improved public services or developmental impact for residents. The report, which assessed the 2025 fiscal performance of 35 states, noted that states must transition from celebrating revenue gains to ensuring spending translates into measurable improvements in healthcare, education, infrastructure, and living conditions.
According to the report, Lagos State has emerged as Nigeria's best-performing state in fiscal management in 2026, supported by internally generated revenue (IGR) of N1.71 trillion. This represents a 35.67 percent increase from N1.26 trillion in 2024. Other states, including Yobe, Ekiti, Sokoto, and Osun, continue to grapple with weak revenue mobilization, rising expenditure obligations, and debt-related pressures.
The report, themed 'From Allocation to Impact: Rethinking State Spending Priorities,' assessed the revenue mobilization, expenditure efficiency, fiscal viability, debt sustainability, and spending priorities of states across health, education, agriculture, and water, sanitation, and hygiene. Enugu was identified as one of the country's strongest revenue performers, following a 125.91 percent increase in IGR to N407.76 billion in 2025 from N180.5 billion in 2024.
However, the report cautioned that impressive revenue growth does not necessarily translate into improved public service delivery. The quality of government spending, budget execution, and investment in critical development sectors remain essential measures of fiscal performance. The report adopted a revised methodology that places greater emphasis on the developmental impact of public expenditure rather than relying largely on revenue growth and spending volumes.
Under the new framework, revenue performance accounts for 40 percent of the assessment, fiscal viability 30 percent, debt sustainability 15 percent, and spending on selected critical sectors another 15 percent. Several states recorded mixed outcomes, with Kebbi ranking fifth nationally after recording a 59.54 percent increase in total revenue to N228 billion.
The report also raised concerns about the relationship between expanding government expenditure and actual developmental returns. Lagos recorded total expenditure of N3.16 trillion, representing a 33.24 percent increase, while Oyo's expenditure rose by 118.71 percent to N978.64 billion. BudgIT warned that expenditure growth exceeding revenue expansion in some states could undermine fiscal discipline and weaken their capacity to meet financial obligations.
Debt sustainability remains another major concern, particularly for states carrying substantial foreign-currency exposure and accumulated liabilities. Lagos recorded a total debt stock of approximately N2.90 trillion at the end of 2025, while Ogun's debt reached N538.92 billion, making it the fourth most indebted state in the assessment.
Key points
- States must prioritize translating revenue gains into measurable improvements in public services.
- Lagos State emerged as Nigeria's best-performing state in fiscal management in 2026.
- Several states, including Yobe, Ekiti, Sokoto, and Osun, struggle with weak revenue mobilization and debt-related pressures.
