Paragraph 1: A comprehensive analysis of the 2024 budget implementation reports from 30 Nigerian state governments reveals a concerning fiscal trend: While these states collectively generated N2.8 trillion in Internally Generated Revenue (IGR), their operational costs ballooned to N3.03 trillion, resulting in a N223 billion deficit. This overspending, coupled with a shortfall of N24 billion against their IGR target of N2.836 trillion, raises serious questions about fiscal discipline and the prioritization of public funds. A significant portion of this overexpenditure, N203 billion, was attributed to non-essential items such as refreshments, sitting allowances, travel expenses, utilities, and medical bills, further fueling public scrutiny and controversy surrounding the states’ spending habits. Adding to the financial burden, these subnational governments also allocated N1.038 trillion for debt servicing to local, foreign, and multilateral creditors.
Paragraph 2: Despite these financial challenges, Nigerian states benefited from increased revenue streams during 2024, primarily due to the removal of fuel subsidies and the naira’s devaluation. These factors contributed to a substantial increase in statutory allocations from the Federal Account Allocation Committee (FAAC) to the three tiers of government, reaching N15.12 trillion, a 49.24% rise compared to the N10.143 trillion disbursed in 2023. Of this total, the 36 state governments received the largest share, N5.22 trillion (34.5%), followed by local governments with N4.97 trillion and the federal government with N4.95 trillion. This allocation to states represents a 45.5% increase from the N3.585 trillion they received in 2023.
Paragraph 3: A monthly breakdown of the FAAC disbursements to states reveals a fluctuating pattern throughout 2024, ranging from N379.41 billion in February to N549.79 billion in December. While these increased allocations provided a temporary reprieve, the long-term fiscal health of the states remains precarious. The impending implementation of direct statutory allocations to local governments poses a significant threat to state finances, potentially reducing their share of national revenue by 32.8%. This anticipated reduction could further strain their budgets and disrupt ongoing projects and operations.
Paragraph 4: A closer examination of the individual states’ fiscal performance reveals a stark picture of inconsistent revenue generation and a concerning bias towards non-productive expenditure. While eight states – Rivers, Lagos, Ekiti, Cross Rivers, Delta, Bayelsa, Akwa Ibom, and Abia – surpassed their revenue targets, 19 others achieved between 53% and 99% of their projections. Worryingly, Taraba, Niger, and Jigawa states fell below the 50% mark. An analysis of expenditure reveals that Lagos, Delta, and Plateau states were the highest spenders, while specific examples, such as Abia’s N24.74 billion operational expenditure against N33.14 billion revenue, and Adamawa’s N55.22 billion recurrent expenditure against a meager N13.77 billion income, highlight the widespread fiscal imbalance. Many states, including Bauchi, Cross River, Ebonyi, Gombe, Jigawa, Kebbi, Kogi, and Taraba, resorted to borrowing to cover their budgetary shortfalls, adding further to their debt burden.
Paragraph 5: A particularly alarming aspect of the states’ spending patterns is the significant allocation towards non-essential items. A staggering N147.796 billion was spent on refreshments, welfare packages, and sitting allowances for government visitors and guests, highlighting a misplaced prioritization of public funds. This lavish spending on hospitality, while potentially contributing to short-term political goodwill, diverts crucial resources from essential public services like education, healthcare, and infrastructure development, further exacerbating existing societal inequalities and undermining public trust in government.
Paragraph 6: Experts warn that these unsustainable spending practices pose a serious threat to the long-term economic health of the states. The emphasis on recurrent expenditure, coupled with a lack of fiscal discipline and transparency, hinders economic growth and development. Economists advocate for a shift towards productive investments, urging governors to identify and develop areas of economic strength to attract foreign investment and stimulate local economies. The Central Bank of Nigeria’s Monetary Policy Committee has also expressed concerns about excessive government spending, highlighting its negative impact on monetary policy effectiveness. The findings of this analysis underscore the urgent need for fiscal reforms, increased accountability, and a re-evaluation of spending priorities to ensure the sustainable and equitable allocation of public resources for the benefit of all citizens.
