More revenue, more hunger: Where is Nigeria’s fiscal dividend?

Nigeria’s worsening food crisis has exposed an uncomfortable contradiction at the heart of the country’s economic reforms: government revenues are rising, yet millions of Nigerians remain unable to afford adequate food.

An estimated 36.3 million Nigerians are facing crisis-level food insecurity or worse, according to the latest Food Security Monitor by the Alliance for a Green Revolution in Africa. The figure places Nigeria among the countries carrying the heaviest food-security burden on the continent. The assessment points to insecurity, displacement, disrupted agricultural production, weak purchasing power and restricted access to markets as major drivers of the crisis.

That figure should force a difficult question across Nigeria’s three tiers of government: what is happening to the additional fiscal resources now available to them?

The question is especially relevant because Nigeria’s revenue position has changed considerably following the Federal Government’s economic reforms.

The Federation Account Allocation Committee reported gross federation revenue of ₦4.501 trillion for June 2026. Of that amount, ₦2.551 trillion was distributed among the Federal Government, states and local governments. States received ₦838.208 billion, while local governments received ₦591.390 billion.

This is a very different fiscal environment from the one many states operated in before the reforms.

Nasarawa State provides perhaps the clearest illustration. Governor Abdullahi Sule recently said the state’s monthly allocation from the Federation Account had increased from about ₦4.5 billion to approximately ₦16 billion. According to the governor, the additional resources have enabled the state to undertake about ₦90 billion worth of infrastructure without resorting to bank borrowing.

That is a substantial improvement in fiscal capacity. It also illustrates the central promise behind the Federal Government’s reforms: painful adjustments would eventually create greater resources for government and provide the states with more room to invest in development. The question now is whether Nigerians are seeing a commensurate improvement in their welfare.

This is not an argument that states should spend every additional naira on food distribution. Governments have legitimate obligations to build roads, hospitals, schools, water systems and other infrastructure. Nasarawa’s investment in infrastructure, for instance, cannot simply be dismissed as irrelevant to welfare. Roads can connect farmers to markets. Water infrastructure can improve public health. Schools and hospitals strengthen human capital.

The problem arises when the increase in government resources is measured primarily through allocations and projects while the welfare outcomes remain stubbornly poor.

A government can build more roads and still have millions of citizens unable to afford three nutritious meals a day. It can report higher revenue while farmers remain unable to reach their farms safely. It can spend more on agriculture while poor storage and transportation systems continue to drive food losses and high prices. This is why Nigeria’s food crisis needs to be understood as more than an agricultural problem.

The country does not simply need to grow more food. It needs to make food production safer, cheaper and more productive. Farmers need access to their farms. Rural roads must function. Irrigation and storage facilities must be available. Agricultural extension services must work. Produce must reach markets efficiently. Households must have enough purchasing power to buy what farmers produce.

Security is particularly important. A farmer driven from his land by violence cannot benefit from a government allocation merely because the allocation has increased. Neither can a consumer benefit fully from increased agricultural production if insecurity, transport costs and inefficient markets continue to push food prices beyond household incomes. This is where the distinction between revenue and results becomes critical.

Nigeria’s states now have a stronger financial position in many cases. That creates an obligation to demonstrate what the additional money is achieving.

The evidence from Ekiti State offers a useful warning. Its Federation Account allocation reportedly increased by 136 per cent between 2021 and 2025, from ₦39.5 billion to ₦93.2 billion. Its internally generated revenue also rose substantially, from ₦12.5 billion to ₦51.8 billion over the same period. Yet analysis by Dataphyte found that spending and implementation across important social sectors did not consistently increase in proportion to the state’s growing revenue. This is the problem Nigeria must confront nationally.

For years, governments have rightly complained that states lack the resources to meet their responsibilities. Now that revenues are increasing, the argument must evolve. The question can no longer be simply whether governments have enough money. It must also be whether they are using available resources effectively.

The temptation will be to point to the growing number of capital projects as evidence of progress. But the size of a project is not necessarily the same thing as its social value. A government should be able to explain how its spending improves the lives of citizens and, crucially, demonstrate those improvements through measurable outcomes. Food security provides one of the clearest measures.

If a state has received substantially more money, has agricultural production increased? Have farmers gained better access to land and markets? Have rural roads improved? Are irrigation schemes functioning? Has storage capacity expanded? Are agricultural extension services reaching farmers? Have nutrition programmes reached vulnerable households? Are food prices becoming more affordable relative to household incomes? These are the questions that matter.

The Federal Government has made a strong case that its reforms were necessary to restore Nigeria’s fiscal and economic foundations. There is merit in that argument. The old model of expensive subsidies, weak revenue mobilisation and heavy dependence on oil earnings was increasingly unsustainable. But a successful fiscal reform cannot end at the point where governments receive more money. The purpose of creating fiscal space is to use it.

And the ultimate test is not how much money the Federation Account distributes each month. It is whether the resources translate into better schools, functioning healthcare, safer communities, productive farms, reliable infrastructure and households with enough purchasing power to live with dignity. Nigeria cannot celebrate higher revenues while treating mass hunger as someone else’s problem.

The Federal Government must demand greater accountability from the states and local governments benefiting from increased allocations. States, in turn, must become more transparent about how their revenues are spent and what those expenditures achieve. Citizens should be able to follow the money from allocation to project and, ultimately, to measurable improvement in their communities.

The current moment presents an opportunity. Nigeria has more fiscal resources than many states had only a few years ago. If properly deployed, that money can strengthen agricultural production, improve infrastructure, expand social protection and reduce the vulnerability of millions of households.

But the opportunity will be wasted if increased revenue simply produces larger budgets, more contracts and more impressive announcements without corresponding improvements in living standards.

The reforms have created fiscal space. The next challenge is turning that space into a welfare dividend. With 36.3 million Nigerians facing severe food insecurity, the country cannot afford to wait indefinitely to see whether that dividend arrives.