World Bank: Only Lagos and Enugu Cover Recurrent Costs with Own Revenue
A World Bank report highlights that most Nigerian states rely on federal allocations, with only Lagos and Enugu generating enough internal revenue to meet their day-to-day spending needs.
A World Bank report highlights that most Nigerian states rely on federal allocations, with only Lagos and Enugu generating enough internal revenue to meet their day-to-day spending needs.
· Updated
The World Bank has identified Lagos and Enugu as the only Nigerian states capable of covering their recurrent expenditures through internally generated revenue (IGR) in 2025. This finding underscores the ongoing reliance of most state governments on federal allocations for their operational needs.
While states have shown improvements in revenue collection, their IGRs collectively covered only about 50 percent of recurrent costs between 2024 and 2025, a slight increase from the 40 percent average between 2021 and 2023. Lagos generated revenue equivalent to 160 percent of its recurrent spending in 2025, while Enugu achieved a ratio of 377 percent.
Enugu state experienced significant IGR growth, with its total IGR increasing by 732 percent in real terms between 2023 and 2025, rising from N25 billion to N209 billion. This growth was driven by an expanded tax net, capturing previously unregistered informal businesses and landlords, alongside systemic and digital reforms in revenue collection.
The World Bank warned that the fiscal vulnerability of states unable to finance recurrent spending from their own revenue sources poses a significant risk, particularly if federal allocations were to decrease. The report also noted that improvements in tax administration, including the adoption of automation and digital technologies, have boosted IGRs across many states.
FAQ
What is the average percentage of recurrent costs covered by IGR for most states?
On average, state governments' internally generated revenue covered approximately 50 percent of recurrent costs between 2024 and 2025.
