The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has projected that Nigerian states could generate more than ₦4 trillion annually from 2026 once new Value Added Tax (VAT) reforms are implemented.
Oyedele made the disclosure on Tuesday in Abuja at the launch of the BudgIT State of States 2025 Report, where he delivered the keynote address to mark the report’s 10th anniversary.
He stated, “With VAT reforms kicking in from 2026, states’ share will rise to 55 per cent. That could amount to over ₦4 trillion in 2026. The question is: will this money be spent, or will it be invested?”
According to Oyedele, while economic reforms have significantly increased revenue inflows to government coffers—from ₦5.4 trillion in 2023 to ₦11.4 trillion in 2024—many Nigerians still face shrinking disposable incomes.
“States are receiving more money than ever before. But there is a paradox: while governments have more naira, ordinary Nigerians have less disposable income in their pockets,” he said, urging governors to channel the additional funds into impactful projects that directly benefit citizens.
The report revealed that 21 states still depend on federal allocations for over 70 per cent of their revenues, a development Oyedele described as worrisome.
However, he cited progress in states such as Enugu and Bayelsa, which recorded 381 per cent and 174 per cent growth in internally generated revenue, respectively.
He noted that the ongoing tax reforms—which include transferring all electronic money transfer levies to states and exempting state government bonds from tax—would help reduce borrowing costs and improve fiscal sustainability.
Oyedele also highlighted the need for better spending efficiency, noting that although capital expenditure had overtaken recurrent expenditure for the first time in years, implementation remained weak in key sectors.
“States implemented only two-thirds of their education budgets, spending less than ₦7,000 per citizen. In health, implementation was even lower, at just ₦3,500 per citizen,” he observed.
While noting a reduction of ₦2 trillion in domestic debt and $200 million in foreign debt, Oyedele disclosed that states still owe over ₦1.2 trillion in arrears to pensioners, contractors, and workers.
He warned, “Borrowing is not the problem; unproductive application of debt is.”
The BudgIT report ranked Anambra as the top-performing state in fiscal management, followed by Lagos, Kwara, Abia, and Edo. Cross River, however, saw a steep drop—from fifth place in 2024 to 29th in 2025—raising concerns over its fiscal direction.
Also speaking at the event, the Deputy Governor of the Central Bank of Nigeria (CBN) in charge of Economic Policy, Dr. Muhammad Abdullahi, urged state governments to maintain fiscal discipline and transparency as revenues rise under the reforms.
He described the BudgIT report as “an annual reference point that distils fiscal truths, benchmarks performance, and re-centres conversations on capital investment and fiscal credibility.”
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Abdullahi encouraged states to digitise their internal revenue systems, adopt the Treasury Single Account (TSA), and improve capital budget implementation—especially in education and health sectors—by achieving at least 80 per cent execution.
He warned that subnational governments remained vulnerable to foreign exchange risks, adding that the CBN was developing instruments to help states hedge their exposures.
In his goodwill message, the Head of Economic Intelligence at the Nigerian Governors’ Forum (NGF), Razaq Fatai, said the State of States report had become a crucial tool for promoting accountability and guiding policy at the subnational level.
Fatai emphasised that the NGF would continue to promote peer learning among governors to strengthen fiscal transparency and sustainability.
Earlier, BudgIT Co-founder and Global Director, Oluseun Onigbinde, described the report as “a mirror reflecting the choices made by subnational governments.”
He said, “This report began with a simple belief—that every kobo meant for citizens should be traceable, justified, and used to improve lives.”
Onigbinde called for renewed focus on education, health, and infrastructure, stressing that transparency should serve as the bedrock for public trust and sustainable development.