Nigeria Lagos and Rivers: The Only States Not Dependent on FAAC, Says BudgIT

BudgIT's 2024 State of States Report reveals that only Lagos and Rivers can cover their operating costs without relying on the Federation Account Allocation Committee. The report highlights significant dependency on federal funding, with 34 states relying on FAAC for 62% of their recurrent expenditures.

In a recent report by BudgIT, it has been revealed that only Lagos and Rivers states in Nigeria can independently cover their operating costs without depending on revenue from the Federation Account Allocation Committee (FAAC). The findings were disclosed during the launch of the 2024 State of States Report in Abuja on Tuesday.

According to the report, while Lagos and Rivers excel in generating sufficient Internally Generated Revenue (IGR) — with ratios of 121.26% and 118.39% of their operating expenses, respectively — several other states fall short. Ogun, Anambra, Cross River, Kwara, Kaduna, and Edo states manage to generate enough IGR to cover at least 50% of their operational costs but still rely on federal transfers for the remainder.

The report highlighted that 34 states in Nigeria depend on FAAC receipts for 62% of their recurrent expenditures, demonstrating a significant reliance on federal funding. Furthermore, it noted that 32 states rely on FAAC for at least 55% of their total revenue, with 14 states depending on it for a staggering 70%.

In terms of overall financial growth, BudgIT reported that the total revenue for all 36 states in Nigeria surged by 31.2% in the 2023 fiscal year, rising from N6.6 trillion in 2022 to N8.66 trillion. However, the continued reliance on federal allocations poses questions about the financial sustainability of many states and their ability to foster self-sufficiency in the long run.

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