As the World welcomes 2026 with new hopes, and resolutions, it is imperative that Nigerians take stock of the state of our federating units.
A careful examination reveals that many states are merely surviving, rather than thriving, with their very existence heavily dependent on monthly allocations from the Federal Account Allocation Committee (FAAC).
Without these handouts, a considerable number of states would struggle to meet even the most basic operational obligations.
Lagos, as the nation’s commercial hub, boasts the largest population, the highest concentration of businesses, and correspondingly high revenue.
Over the years, only a few states—namely Lagos, Rivers, and perhaps Ogun—have demonstrated a semblance of economic viability based on their internally generated revenue (IGR).
Ogun benefits from its proximity to Lagos, attracting both industrial and commercial spillovers, while Rivers, an oil-rich state, leverages crude production to bolster its finances.
The 2025 State of the States report by BudgIT, a civic technology organisation, provides a sobering picture of fiscal health across Nigeria. While Anambra has displaced Lagos to emerge as the top performer in fiscal management, Lagos remains second, followed by Kwara, Abia, and Edo.
Also, only Enugu and Lagos can fully cover their operational costs from IGR alone, highlighting a stark contrast with the majority of states that remain over-reliant on federal allocations.
For instance, at least 28 states depend on FAAC for over 50 per cent of their revenue, with some states such as Kogi, Jigawa, Benue, and Yobe exceeding this threshold, raising serious concerns about fiscal sustainability.
This dependence on federal allocations has wider consequences. Many states struggle to pay salaries, often falling short of the national minimum wage, and are forced into domestic and foreign borrowing to stay afloat.
While no state reportedly needed to borrow to cover total operating costs in 2025, the debt burden remains a looming concern, particularly as governors continue to prioritise personal or politically motivated projects over structural development.
Beyond fiscal health, the report highlights a persistent crisis of insecurity across the country.
The North-East remains under siege from Boko Haram and ISWAP insurgencies, while bandits and kidnappers terrorise communities in the North-West and North-Central regions. In the Middle Belt, clashes between herders and farmers continue to claim lives and disrupt livelihoods.
The South-East faces separatist agitation, kidnappings, and gang violence, with Abia, Anambra, Imo, and Enugu most affected. South-South states battle piracy, militancy, and kidnapping, while even the South-West, including Lagos, Oyo, and Ondo, contends with general crime, including kidnappings for ransom.
Health infrastructure across the states remains largely inadequate. Many primary health care centres are underfunded, poorly staffed, and ill-equipped. States like Zamfara, despite federal allocations, perform abysmally in basic health care delivery, with northern states particularly affected by shortages of medical personnel.
Only a handful of states, including Lagos, Enugu, and Anambra, demonstrate better outcomes in primary care delivery and health insurance coverage. In 2025, states budgeted approximately N1.32 trillion for health but spent only N816.64 billion, achieving an implementation rate of 61.9 per cent.
Seven states—Yobe, Gombe, Ekiti, Lagos, Edo, Delta, and Bauchi—managed to exceed 80 per cent utilisation of their health budget, a model others could emulate.
Education, the foundation of long-term national development, also presents a mixed picture. Millions of Nigerian children remain out of school, particularly in northern states where infrastructure is inadequate and teachers are scarce.
In contrast, southern states such as Imo, Abia, Anambra, Rivers, Lagos, and Ekiti report higher literacy rates and better educational outcomes. Data from the National Bureau of Statistics shows Imo, Lagos, and Ekiti achieved literacy rates exceeding 95 per cent, with other southern states following closely.
Despite these gains, the average implementation of education budgets remains 66.9 per cent, indicating room for improvement even among better-performing states.
Infrastructure, the backbone of economic development, continues to be a national challenge. Roads are largely dilapidated, rail systems remain underdeveloped, and electricity supply is unreliable. The World Bank estimates that Nigeria will require approximately $3 trillion over the next 30 years to bridge the infrastructure gap. Yet, in 2025, 30 of 36 states fell short of meeting their capital expenditure targets, with a deficit of N3.98 trillion out of the N11.34 trillion budgeted. Some states, however, offer glimmers of hope: Abia allocated 77 per cent of its expenditure to capital projects, while Anambra, Enugu, Ebonyi, and Taraba exceeded 70 per cent, demonstrating fiscal prioritisation and commitment to development.
Personnel and overhead costs continue to consume an excessive portion of state budgets, with Bauchi, Benue, Delta, Ekiti, Ogun, and Oyo reportedly spending over 60 per cent of their total expenditure on salaries and administrative costs.
This imbalance underscores the urgent need for states to adopt more disciplined budgeting practices, prioritising capital projects, social services, and infrastructure over recurrent expenditure.
In sum, the fiscal reality in 2025 paints a concerning portrait of Nigeria’s federating units. Most states remain insolvent, dependent on federal allocations, and grappling with insecurity, weak health systems, poor educational infrastructure, and deteriorating public utilities.
The year 2026 presents a crucial opportunity for governors to embrace fiscal prudence, strengthen internal revenue mechanisms, invest strategically in human capital, and address systemic insecurity.
Without these reforms, the clamour for creating additional states will be difficult to justify, as sustainability and self-reliance remain elusive for the majority of Nigeria’s sub-national governments.
The lessons are clear: economic viability, sound governance, and strategic investment are no longer optional, they are essential for the survival and future prosperity of Nigeria’s states.
It is time for our leaders to act decisively, for the sake of the millions of citizens who depend on the state for their welfare and security.