The 2024 State of States Report by BudgIT, Nigeria’s civic-tech leader in fiscal transparency, highlights a reshuffle in fiscal rankings for Nigeria’s 36 states, underscoring both gains and challenges in healthcare delivery across Nigeria.
The organization launched this year’s edition of its annual State of States Report, themed Moving Healthcare Delivery from Suboptimal to Optimal, on Wednesday in Abuja.
In the report, Rivers State retained the top spot in the fiscal accountability rankings for 2023, while Cross River and Kwara moved into the top five, replacing Ebonyi and Kaduna.
BudgIT noted that the top five states are Rivers, followed by Lagos, then Anambra, Kwara, and Cross River.
Jigawa dropped to 36th place, ranking the lowest on the table. Kebbi State showed the most remarkable improvement, jumping 12 places from 28th to 16th, the organization reported.
Rivers and Lagos were the only two states that generated more than enough Internally Generated Revenue (IGR) to cover their operating expenses, with IGR-to-operating-expense ratios of 121.26% and 118.39%, respectively.
According to BudgIT, “Several other states, including Ogun, Anambra, Cross River, Kwara, Kaduna, and Edo, managed to generate IGR sufficient to cover at least 50% of their operating costs, with the rest relying on federal transfers. In contrast, states such as Akwa Ibom, Imo, Taraba, Yobe, Bayelsa, and Jigawa required over five times their IGR to meet operating expenses, highlighting significant dependence on FAAC revenues and aid and grants. Of note is that all 36 states managed to raise enough revenue—comprising IGR, federal allocations, aid, and grants—to fully cover their recurrent expenditures. This indicates that no state needed to borrow to fund any portion of its recurrent spending.
“In the 2023 fiscal year, the combined revenue of all 36 states in Nigeria increased significantly by 31.2% from N6.6tn in 2022 to N8.66tn. This growth rate exceeded the previous year’s increase of 28.95%, indicating a notable improvement in fiscal performance. Of the total revenue generated in 2023, Lagos State contributed N1.24tn, representing 14.32% of the cumulative revenue of the 36 states. Gross FAAC, which grew by 33.19% from N4.05tn in 2022 to N5.4tn in 2023, contributed to 65% of the year-on-year growth of the combined revenue of the 36 states. This increase indicates the additional revenue accrued to states, albeit moderate, due to discontinuing the petroleum subsidy.”
BudgIT stated that the report assessed states on five key metrics, measuring their ability to meet operating expenses through Internally Generated Revenue (IGR), manage debts, and prioritize capital over recurrent spending. Rivers and Lagos led in IGR strength, each generating over 100% of the revenue needed for operating expenses. Conversely, states like Jigawa and Bayelsa heavily depended on federal transfers, requiring over five times their IGR to cover operating costs.
“We maintained the five metrics for ranking all 36 states, where Index A examines states’ ability to meet Operating Expenses (Recurrent Expenditure) with only their Internally Generated Revenue. Index A1 looks at the percentage year-on-year growth of each state’s Internally Generated Revenue. Index B reviews states’ ability to cover all operating expenses and loan repayment obligations with their Total Revenue (Internally Generated Revenue + Statutory Transfers + Aids and Grants) without borrowing.
“Index C estimates the debt sustainability of the states using four major Indicators. A. Foreign Debt as a % of Total Debt. B. Debt as a % of Revenue. C. Debt Service as a % of Revenue, and D. Personnel Cost as a % of Revenue. Index D evaluates the degree to which each state prioritizes capital expenditure over its operating expenses (recurrent expenditure),” the organization stated.
In the report, fiscal resilience improved overall, with combined state revenues rising by 31.2% year-on-year from N6.6tn in 2022 to N8.66tn in 2023, driven by FAAC growth and subsidy removal. However, the report highlights continued state reliance on federal transfers, with 32 states sourcing over 55% of their revenue from FAAC. Rising debt also poses concerns, reaching a record N10.01tn, influenced by currency devaluation impacting foreign debt obligations.
In healthcare, states collectively budgeted N2.3tn but achieved only 58% spending effectiveness, emphasizing the urgent need for better physical health infrastructure and professional staffing. The nation continues to face severe doctor shortages, especially in Taraba and Bauchi, compounded by rising cases of malaria and other infectious diseases.
However, analysing the report, BudgIT’s Head of Research and Policy Advisory, Iniobong Usen, said that for states to increase their IGR, they must reduce reliance on foreign loans and enhance debt transparency.
“The fiscal viability and long-term sustainability of states heavily depend on their capacity to mobilize revenues internally by effectively leveraging their natural resource endowments, technology, public-private partnerships, human capital, and effective consequence management. This capacity is crucial for financing essential infrastructure, investing in human capital development and social protection, meeting the new minimum wage and its consequential adjustments, and repairing the fractured social contract.
“To achieve debt sustainability, states must also curb their reliance on foreign loans, especially in light of exchange rate volatility and shrinking fiscal space, to minimize exposure to unfavorable exchange rates. Additionally, states should establish robust frameworks for debt transparency and accountability, ensuring that borrowed funds are allocated to high-impact projects with clear economic returns.”
Gabriel Okeowo, Country Director for BudgIT Foundation, stressed that the report focuses on how states manage their resources to improve the lives of their people.
He expressed optimism that the report would be presented to all governors and that it would inspire reforms to improve fiscal governance.
