Enugu emerges likeliest state to survive independent of FAAC allocations

…Lagos, Abia, Anambra, Kwara complete the top 5

Enugu State has emerged as Nigeria’s most fiscally viable subnational government, according to BudgIT’s 2025 State of States ranking.

The report shows that Enugu State is the most probable state to finance its operating expenses exclusively from internally generated revenue (IGR) and independent of allocations from the Federation Account Allocation Committee (FAAC).

However, whereas Enugu, Lagos, Abia, Anambra, and Kwara are the five top states likeliest to survive independent of FAAC receipts, Yobe, Benue, Jigawa, Kogi, and Imo are ranked as the least viable states presently, the report also shows.

The findings are based on Index A, which measures states’ ability to meet recurrent expenditure obligations using only IGR. The research methodology for Index A was the ratio of operating expenses to the state’s IGR. According to BudgIT, states that rank higher on this index exhibit greater financial autonomy and long-term viability.

“States that perform strongly on Index A have comparatively limited dependence on FAAC allocations and thus possess greater viability if they were to theoretically exist as independent entities,” the report stated.

The rankings show that Enugu State scored 0.68, implying that 68 percent of the state’s IGR would have catered to its operating expenses. The scores of the remaining four of the top five states are Lagos State (0.83), Abia State (1.56), Anambra (1.66), and Kwara (1.73).

In 2024, Rivers, Lagos, Ogun, Anambra, and Cross River made the top five rankings, thus the 2025 report represents for Enugu State a quantum leap in improved revenue collection and expenditure management and a major score for the Governor Peter Mbah-led administration.

Although Mbah met the state’s IGR at N30bn in May 2023, he ramped it up to N37bn by the close of the year and scaled it up to N180.05bn in 2024 by introducing technology, including e-payment, to plug leakages and sharp practices in revenue, as well as by widening the tax net to reduce tax and revenue evasion.

Meanwhile, whereas Enugu and Lagos lead in IGR ranking, fewer states meet the 50% threshold, as BudgIT’s 2025 State of States report shows that the number of states generating enough revenue to cover their operating expenses has reduced compared to 2024.

In 2024, Rivers (121.26 percent) and Lagos (118.39 percent) were the only two subnationals that generated more than enough IGR to cover their recurrent expenditure. Rivers is visibly missing in the 2025 analysis.

Thus, in 2025, this coveted group now includes Lagos (120.87 percent) and Enugu (146.68 percent), with Enugu taking the number one spot.

According to BudgIT, 28 states still depend significantly on federal transfers and other external inflows to fund their operations.

On Index A1, which measures IGR growth, Enugu again leads the ranking, followed by Bayelsa, Abia, Osun, and Kano. These states recorded the strongest momentum in boosting internally generated revenues during the 2024 fiscal year.

At the bottom, Kebbi and Yobe recorded negative IGR growth, while Ebonyi, Bauchi, and Benue also posted weak performances. This represents a notable improvement from 2023, when seven states recorded negative growth.

“While it may be too early to celebrate, as the uptick could partly reflect increased inflows from federation transfers, it is a much better performance than the previous year,” BudgIT noted.

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