The Internally Generated Revenue (IGR) of Nigerian states increased by 34 per cent to N2.43 trillion in the first half of 2026, compared with N1.815 trillion recorded during the corresponding period of 2024.
The increase came despite persistent economic difficulties affecting households and businesses across the country.
Data showed that 35 states, excluding Rivers State, collectively generated N2.43 trillion in IGR between January and June 2026. Comparable IGR figures for many states in the first half of 2025 were unavailable.
The rise in internally generated revenue has expanded the financial resources available to state governments as they contend with responsibilities including infrastructure development, social services, workers’ salaries and other recurrent expenses.
However, the increase has also heightened concerns about how the additional funds are being utilised, particularly as states are simultaneously receiving larger allocations from the Federation Account and benefiting from savings generated by the removal of petrol subsidies.
Stakeholders have specifically called for greater accountability over an estimated N10.4 trillion in subsidy savings allocated to states and local governments, demanding evidence that the funds are being used for projects and programmes that directly improve citizens’ welfare.
Despite stronger revenue inflows, analysts noted that many states still face significant challenges, including inadequate infrastructure, weak social services, widespread poverty and limited employment opportunities.
A World Bank report cited in the assessment indicated that the proportion of Nigerians living below the poverty line increased from 56 per cent in 2023 to 61 per cent in 2024 and 63 per cent in 2025, representing about 140 million people.
The contrast between growing government revenues and difficult living conditions has therefore raised questions about the spending priorities of state and local government authorities.
Experts said increased public revenue should be accompanied by greater transparency, stronger fiscal discipline and more investment in productive sectors.
They urged state governments to direct additional funds towards projects that can stimulate economic activity, create jobs, improve productivity and reduce financial pressure on households.
Rising State Revenues
The 35 states generated N2.43 trillion in IGR during the first six months of 2026, representing a 34 per cent increase from the N1.815 trillion recorded in the first half of 2024.
Meanwhile, FAAC allocations increased by 26 per cent to N4.54 trillion in H1 2026, compared with N3.61 trillion received in the corresponding period of 2025.
About 11 oil-producing states shared N321.90 billion under the 13 per cent derivation formula during the first half of 2026.
The funds were largely concentrated among three states, with Delta, Bayelsa and Akwa Ibom receiving about 75.4 per cent, or N242.63 billion, of the total derivation pool.
Between June 2023 and December 2025, states and local governments received approximately N10.4 trillion out of N15.8 trillion in cumulative savings from petrol subsidy removal.
The PUNCH also reported that the 36 states and 774 local governments collectively shared N93.216 trillion in Federation Account revenue between 2017 and 2025.
Abandoned Projects
Concerns over the use of public funds have also been reinforced by findings from BudgIT’s Tracka service delivery monitoring platform.
Tracka reported in February 2026 that about N24 billion worth of public projects across several states were either unexecuted, abandoned or fraudulently delivered.
The highest proportions of completely unexecuted projects were recorded in Benue State at 40 per cent, Ondo at 32.4 per cent, Kwara at 30.4 per cent, Akwa Ibom at 27.3 per cent and Sokoto at 25.6 per cent.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said citizens must see tangible benefits from the additional resources available to state governments.
He urged Nigerians to demand measurable improvements in areas such as roads, healthcare, public transportation, education, agricultural infrastructure, security, electricity and enterprise support.
Yusuf warned that higher revenues should result in visible development and improved welfare rather than simply funding increased recurrent expenditure and prestige projects.
Similarly, Wale Olusi, Director of Deals Advisory at PwC, called on states and local governments to play a stronger role in addressing economic hardship.
He particularly urged local governments to invest more in infrastructure, transportation systems that can move agricultural produce from rural communities to urban centres, and security.
Olusi also said states should use resources generated from taxes and subsidy reforms to create better living conditions for residents.
However, Professor of International Economics, Jonathan Aremu, cautioned that higher nominal revenue does not necessarily mean states have greater purchasing power.
He explained that rising prices and exchange-rate pressures have significantly reduced the real value of government earnings, noting that goods that previously cost N1 million could now cost as much as N3 million.
Aremu nevertheless agreed that state governments need to change their spending patterns, arguing that citizens should be able to feel the impact of increased government revenues.
He criticised what he described as excessive spending by some states and stressed that public resources should be redirected towards projects capable of improving the welfare and economic prospects of residents.
