Thirty-two states got most of their revenue from FAAC – Report

A new report shows that 32 of Nigeria’s 36 states depended heavily on federal government money last year, getting at least 55% of their total income from these allocations.

The report, released by civic-tech group BudgIT, warns that states’ heavy reliance on federal transfers puts them at risk, especially when oil prices change or federal funding shifts.

BudgIT shared these findings in their 2024 State of States report, released Tuesday in Abuja. The report examines how well states can balance their own income against money received from the federal government.

A statement from the report launch stated, “32 states relied on FAAC receipts for at least 55 per cent of their total revenue, while 14 states relied on FAAC receipts for at least 70 per cent of their total revenue.”

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“Furthermore, transfers to states from the federation account comprised at least 62 per cent of the recurrent revenue of 34 states, except Lagos and Ogun, while 21 states relied on federal transfers for at least 80 per cent of their recurrent revenue. “The picture painted above buttresses the over-reliance of the state governments on federally distributable revenue and accentuates their vulnerability to crude oil-induced shocks and other external shocks.”

BudgIT reported that total revenue across all 36 states increased by 31.2%, rising from N6.6 trillion in 2022 to N8.66 trillion in 2023. This boost came mainly from increased federal allocations after the government ended petrol subsidies, freeing up more money to share with states.

However, the report cautions that states’ dependence on federal allocations makes them vulnerable to changes in oil prices and other external factors.

Lagos State led all states in revenue, generating N1.24 trillion, which represents 14.32% of all states’ combined income.

The report found that only Lagos and Rivers states generated enough internal revenue to cover their operating costs. In contrast, states like Akwa Ibom, Bayelsa, and Taraba needed more than five times their internally generated revenue to meet basic expenses, making them heavily dependent on federal support and outside help.