The World Bank has said that 34 states in Nigeria, except two, recorded fiscal improvements on aggregate in 2024.
The bank disclosed this in its biannual report entitled ‘Building momentum for inclusive growth,’ released recently.
According to the Bretton Woods institution, data compiled from various Budget Implementation Reports (BIRs) showed that a total of 34 states recorded an aggregate surplus of approximately N1.6 trillion (0.6 percent of GDP) in 2024, significantly higher than the N437 billion (0.2 percent of GDP) surplus in 2023 (Figure 1.23)7.
It stated that while most states maintained a near-balanced fiscal position, some, such as Niger and Ebonyi, recorded fiscal deficits, whereas others—mainly oil-producing states like Ondo, Akwa Ibom, and Delta—reported large surpluses.
“The improved fiscal position at the state level in 2024 stems from significantly higher revenues, driven in part by large refunds to states that had been deducted from Federation Account Allocation Committee (FAAC).
“Revenues for the 34 states with available BIRs surged from N7.2 trillion in 2023 (3.1 percent of GDP) to N13.9 trillion in 2024 (5 per cent of GDP),” it said.
The bank explained that the increase was fueled by a rise in oil, value added tax, company income tax (CIT), and customs revenues—distributed to states through the statutory revenue-sharing formula as well as two key FAAC-financed windfalls – i) N1.2 trillion granted by the federal government for infrastructure and security support and ii) N7.1 trillion in oil-related refunds.
Consequently, it said the FAAC revenues to states rose from N4.8 trillion (2 per cent of GDP) in 2023 to N9.5 trillion (3.4 percent of GDP) in 2024.
“The seven oil-producing states—Abia, Akwa Ibom, Bayelsa, Delta, Edo, Imo, and Ondo—benefited the most from the FAAC windfall, accounting for 31 percent of the total revenue increase in 2024,” the report added.
In addition, the World Bank said with the FAAC increase, state internally generated revenues (IGR) grew by 46 per cent, reaching N2.9 trillion (1 per cent of GDP), while grants and aid nearly tripled to N1.5 trillion (0.5 per cent of GDP).
“Given the significant fiscal space created by the surge in revenues, states have substantially increased their spending, primarily on capex,” the report added.
During the period in review, the bank said state expenditures rose from N6.7 trillion in 2023 (2.9 per cent of GDP) to N12.2 trillion (4.4 per cent of GDP) driven almost entirely by higher capex, which more than doubled from N3.3 trillion in 2023 to N7.4 trillion in 2024.
This increase reflects the very large infrastructure gap, which many states suffer from.
“Sectoral data reflect this trend, with capital-intensive sectors such as transport, agriculture, mining, housing, and other industries seeing spending increases of over 100 percent, most of which is devoted to capex.
Equally, the report said social sectors – including social protection, education, and health – saw notable spending growth, albeit at lower rates of 57, 63, and 75 percent, respectively.
