The Digest:
State governments across Nigeria are preparing for 2026 with ambitious spending plans, but weak internal revenue is forcing heavy reliance on federal allocations, borrowing, and grants. Many states project that less than half of their budgets will be funded by internally generated revenue, raising concerns about the sustainability of their capital projects and long-term fiscal health.
Key Points:
- Lagos State’s record N4.237tn budget will lean on bonds and loans despite high IGR
- Abia State faces a N409bn deficit, with 40% of its budget unfunded by projected revenue
- Ogun, Enugu, and Delta states show significant dependence on federal transfers and external financing
- Experts warn that over-reliance on volatile oil-linked revenues discourages local economic ingenuity
- Fiscal analysts urge states to develop local revenue streams and public-private partnerships
- Many state budgets are vulnerable to national economic shocks and federal disbursement delays
- Only a handful of states have budgets closely aligned with guaranteed recurrent income
Sources: Sunday PUNCH
