Nigeria's States: Confronting Economic Dependency and Job Creation

The ₦11.38tn Illusion: Why 26 Nigerian States Still Can’t Fund Their Own Payrolls

Nigeria’s states have seen significant financial growth, with FAAC allocations rising to N11.38tn in 2025 from N3.43tn in 2022. However, 26 states still struggle to cover personnel costs independently, highlighting a reliance on Abuja. The need for job creation and investment is urgent, as true economic stability remains elusive.

Atlantic Post

September 7, 2026

1–2 minutes

Nigerian Economy, State Government Finance

Nigeria’s states have just received a financial windfall that would have looked almost unimaginable three years ago.

FAAC allocations soared to N11.38tn in 2025 from N3.43tn in 2022.

IGR also exploded to N4.15tn from N1.57tn.

Yet 26 states still could not generate enough money internally to cover their own personnel costs.

That is the contradiction at the heart of Nigeria’s subnational economy.

The country appears richer on paper, but too many states remain structurally dependent on Abuja.

And behind that contradiction is a much bigger question: where will the next generation of Nigerian jobs come from if state governments remain better at distributing money than creating economies?

The most shocking comparison is outside Lagos.

Lagos generated N1.85tn in IGR in 2025, around 44 per cent of the combined IGR of the 34 states analysed.

Take Lagos away and the other 33 states generated about N2.30tn while their personnel bill reached roughly N2.56tn.

So much for the idea that Nigeria’s state economy has suddenly become self-sustaining.

The real danger is not that governors cannot pay salaries today.

It is that the next economic shock could expose how little independent fiscal muscle many states actually possess.

That is why Taiwo Oyedele’s recent demand for stronger IGR, investment and job creation should not be treated as another ministerial speech.

It is a warning.

The states that build factories, attract investors, digitise revenue collection, develop agriculture, create functioning cities and grow their private sectors will have a future.

Those that simply wait for the next FAAC disbursement will have a payroll.

A payroll is not an economy.

The opportunity for Nigeria’s entrepreneurs is therefore hiding in plain sight: every state trying to escape FAAC dependence will need businesses capable of generating investment, productivity, employment and taxable economic activity.

That could become one of the country’s biggest business stories of the next decade.

The question is no longer who gets the next allocation.
The question is who can build the next economy.