This finding was part of the 10th an­nual analysis of the fiscal performance of Nigeria’s 36 states, by Nigeria’s leading civic-tech organisation, BudgIT, which re­leased the 2025 edition of its flagship State of States report on Tuesday.

BudgIT’s analysis shows that total subnational debt grew modestly by 6.8%, from N9.89 trillion in 2023 to N10.57 tril­lion in 2024—down from the 36 percent increase recorded the previous year.

Encouragingly, 31 states reduced their domestic debt by at least N10 bil­lion, led by Lagos, Cross River, and Delta, which each slashed over N100 billion.

 Foreign debt also declined by over $200 million, with Lagos, Enu­gu, and Gombe recording the larg­est reductions. Still, Lagos remains the most indebted state externally, with $1.17 billion, accounting for more than a quarter of Nigeria’s total subnational foreign debt.

The top five debtor states—La­gos, Kaduna, Edo, Ogun, and Bau­chi—together account for just over 50 percent of all sub-national debt.

In a notable shake-up of the fiscal rankings, Anambra State emerged as Nigeria’s most fiscal­ly sustainable state in 2025, rising from second position in 2024.

It is followed by Lagos, Kwara, Abia, and Edo, completing this year’s top five.

Themed ‘A Decade of Sub-Na­tional Fiscal Analysis: Growth, Decline and Middling Perfor­mance,’ the 10th edition evaluates the fiscal sustainability of 35 states, ranking them from strongest to weakest based on revenue gener­ation, expenditure efficiency, debt management, and investments in education and health.

Rivers State, a consistent top performer in past editions, is miss­ing from the 2025 report after the declaration of a state of emergency earlier in the year made its fiscal data inaccessible.

Other notable movements in­clude Akwa Ibom, which surged 17 places from 27th to 10th, and Zamfara, which jumped nine plac­es from 26th to 17th. Conversely, Cross River experienced the steep­est fall—from 5th in 2024 to 30th in 2025. At the bottom of the table, Imo, Kogi, Jigawa, Benue, and Yobe remain the weakest performers.

BudgIT’s data show that only Lagos and Enugu generated enough internally to cover their operating expenses without reli­ance on federal allocations—Enu­gu achieving an impressive 146.68 percent IGR-to-operating expense ratio, while Lagos followed with 120.87 percent.

Despite some improvements, fiscal independence remains elusive for most states. Only five states—Abia, Anambra, Kwara, Ogun, and Edo—generated at least half of their recurrent expenditure internally. In contrast, 14 states now require more than five times their IGR to fund operations, more than double last year’s figure of six.

The report reveals that 28 states relied on federal allocations (FAAC) for over 55% of their total revenue, and 21 states relied on it for more than 70 percent, underscoring Ni­geria’s enduring fiscal centralisa­tion challenge.

Between 2022 and 2024, total sub­national recurrent revenue more than doubled from N6.6 trillion to N14.4 trillion, driven largely by record FAAC inflows. States such as Oyo, Delta, Niger, Ekiti, Gombe, and Anambra recorded over 600 percent FAAC growth in the last decade.

However, internally generated revenue (IGR) growth continues to lag. While Lagos averaged N541.35 billion in IGR between 2015 and 2024, the combined average of Ad­amawa, Gombe, Taraba, Kebbi, and Yobe barely reached N41 bil­lion, highlighting Nigeria’s deep fiscal inequality.

The 2025 report also highlights a renewed subnational focus on infrastructure. With Rivers ex­cluded, Abia State led the capital expenditure ranking, dedicating 77.05 percent of total spending to capital projects.

Anambra, Enugu, Ebonyi, and Taraba also exceeded the 70 percent benchmark, while 24 states allocat­ed at least half of their total bud­gets to capital expenditure.

Still, several states—Bauchi, Ekiti, Delta, Benue, Oyo, and Ogun—spent more than 60% of their budgets on personnel and overheads, suggesting persistent inefficiencies and weak fiscal dis­cipline.

Overall subnational expendi­ture rose sharply to N15.63 trillion in 2024, a 64.7 percent increase from N9.49 trillion in 2023. Of this, Lagos accounted for N2.37 trillion (15%), reflecting its outsized role in nation­al fiscal activity.

On social investments, BudgIT observed mixed results. States bud­geted N2.41 trillion for education but implemented only 66.9 percent, spending N1.61 trillion. Edo, Delta, and Katsina were the only states to exceed their education budget allocations, while average per cap­ita education spending stood at a modest N6,981.

In health, states achieved 61.9 percent budget implementation, spending N816.64 billion out of N1.32 trillion budgeted. Yobe, Gombe, Ekiti, Lagos, Edo, Delta, and Bauchi exceeded 80 percent implementation rates, though per capita health spending remained low at N3,483.

Reflecting on the milestone edition, Vahyala Kwaga, BudgIT’s Group Head of Research, described the State of States as “Nigeria’s most authoritative subnational fiscal analysis,” providing a de­cade-long mirror of growth, im­balance, and governance priorities.

“Fiscal sustainability requires that states look inward—improv­ing revenue systems, cutting waste, and prioritising infrastructure and human capital that deliver long-term value,” he said.

BudgIT noted that while subna­tional governments have shown re­silience—none recording negative average IGR growth over the de­cade—the pace of reform remains uneven.

As the report marks ten years of fiscal benchmarking, it calls for greater citizen participation, stron­ger transparency frameworks, and renewed fiscal independence at the state level, urging Nigerians to use the data as a tool to demand ac­countability.

“The State of States has always meant more than just fiscal rank­ings,” BudgIT said. “It is about giv­ing citizens the evidence to hold their leaders accountable and en­suring that fiscal health translates to real improvements in people’s lives.”