Nigeria’s economic reforms have pushed state government revenues to record levels, but the gains have yet to translate fully into better living conditions for millions of Nigerians, according to a new analysis by civic organisation BudgIT.
The report comes shortly after the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said Nigeria’s economy was gaining momentum and remained on track towards the Federal Government’s target of becoming a $1 trillion economy by 2030.
While the federal government points to stronger economic growth, a more stable naira and improving confidence in the economy, BudgIT’s latest report raises a more direct question. That is, whether the huge increase in money flowing into government accounts has made life better for ordinary Nigerians.
BudgIT found that the 34 states covered in its study received a combined N15.526 trillion in revenue in 2025, more than three times the N4.840 trillion received in 2022.
But the organisation warned that bigger government revenues should not automatically be seen as proof that Nigerians are better off.
“Nigeria’s reform dividend cannot stop at stronger fiscal numbers. It has to show up in the things Nigerians actually experience,” BudgIT said in a statement shared on its X handle.
The report, titled Nigeria’s Economic Reforms: What Has Changed Across Nigeria’s States? An Analysis of State Finances in the Post-Subsidy Years, examined how state finances changed between 2022 and 2025 following major economic reforms, including the removal of petrol subsidy and changes to Nigeria’s foreign exchange market.
The report used actual money received and spent by state governments, rather than budget estimates and spending plans.
It covered 34 states, excluding Akwa Ibom and Rivers because their budget implementation reports were unavailable or incomplete as of July 10, 2026.
More money for states, but greater dependence on Abuja
The sharp increase in state revenues was driven mainly by money shared to states from the Federation Account Allocation Committee, known as FAAC.
FAAC allocations to the states rose from N3.427 trillion in 2022 to N11.378 trillion in 2025.
Money generated by states themselves also increased, rising from N1.565 trillion to N4.147 trillion over the same period.
However, BudgIT’s figures show that states became more dependent on money from the Federation Account despite the growth in their internally generated revenue.
The share of state revenue coming from FAAC rose from 68.7 per cent in 2022 to 73.3 per cent in 2025. At the same time, the share coming from money generated by the states themselves fell from 31.4 per cent to 26.7 per cent.
This means that although states were receiving far more money, much of the increase came from Abuja rather than stronger efforts to raise revenue within their own economies.
Lagos remained the country’s largest state economy in terms of revenue, generating N2.63 trillion in 2025.
Enugu recorded the fastest growth in total revenue, while Abia also posted strong growth. Nasarawa recorded the slowest growth.
Three states — Ebonyi, Sokoto and Jigawa — recorded a decline in internally generated revenue during the period.
States spent more, but not enough went to health and education
State governments also spent far more money after the reforms.
Combined spending by the states covered by the report rose from N6.218 trillion in 2022 to N17.880 trillion in 2025.
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A large share of the additional money went into building roads and other physical projects.
Capital spending, which covers spending on projects and long-term public assets, rose from N2.794 trillion in 2022 to N10.845 trillion in 2025.
By 2025, states were spending about 61 kobo out of every N1 on capital projects, compared with about 45 kobo in 2022.
Infrastructure spending rose sharply to N6.166 trillion in 2025 from N1.515 trillion in 2022, with road construction and rehabilitation accounting for 68.7 per cent of infrastructure spending.
But BudgIT found that health and education did not receive a similar share of the growing government budgets.
Education spending increased in actual naira terms to N2.21 trillion in 2025, but its share of total state spending fell to 12.35 per cent from 14.85 per cent in 2022.
Health spending also increased to N1.188 trillion, but its share of total spending dropped to 6.65 per cent from 7.80 per cent.
The report shows that states spent more money overall, but gave a bigger share of their budgets to physical infrastructure while the shares going to education and health declined.
Administrative spending also rose to N2.16 trillion, with the Office of the Governor or Government House receiving 56.33 per cent of all administrative spending in 2025.
Bigger revenues have not ended borrowing
Despite receiving far more money, many states still spent more than they earned.
BudgIT found that 25 states recorded a gap between their revenue and spending in 2025 before taking new loans into account. Only 10 states recorded more revenue than expenditure.
This was worse than in 2022, when 15 states recorded more revenue than expenditure, and 19 spent more than they earned.
Oyo recorded the largest gap in 2025 at N196.98 billion, followed by Lagos at N183.93 billion and Borno at N138.77 billion.
State governments also continued to borrow. Total borrowing by the states rose from N1.24 trillion in 2022 to N2.05 trillion in 2025. Lagos was the largest borrower in 2025, followed by Oyo.
Abia stood out in the report for combining strong revenue generation with spending on capital projects, health and education while keeping its administrative and day-to-day running costs relatively low.
Nigerians not feeling the improvement
BudgIT said the success of the reforms should not be judged only by the size of government revenues or the growth of the economy.
“Food inflation was still 20.31% in July,” the organisation said. “In parts of the country, petrol now sells for about ₦1,345 per litre. In July 2023, it was ₦617.”
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“That difference does not live on a spreadsheet. It shows up in transport fares, food prices, business costs and what is left in a household’s pocket at the end of the month.”
BudgIT said the rise in state revenues did not automatically mean that governments had become stronger financially because inflation, the weaker value of the naira and rising debt payments had increased both the cost of running government and the cost of living.
“Our analysis of Nigeria’s economic reforms found that states received ₦15.5 trillion in revenue in 2025, compared with ₦4.8 trillion in 2022,” BudgIT said.
“But a bigger naira figure does not automatically mean greater fiscal capacity. Inflation, exchange-rate depreciation and rising debt obligations have increased the cost of running government and the cost of living for citizens.”
It stressed, “So the reform dividend cannot be measured only by how much money is now flowing through government accounts. Nigerians cannot eat GDP growth.”
The findings present a different perspective from the recent assessment by Oyedele, who said Nigeria’s economy was gaining momentum following stronger growth in the second quarter of 2026.
Nigeria’s economy grew by 4.43 per cent in the second quarter, up from 4.23 per cent in the same period of 2025 and 3.89 per cent in the first quarter of 2026.
Oyedele said the stronger performance showed that economic growth was spreading across more sectors and that relative stability and the appreciation of the naira were strengthening the economy.
He said the government expected the benefits of the reforms to eventually reach Nigerian households.
“These results underscore the importance of sustaining our reforms and ensuring policy consistency as their benefits begin to reach households across the country,” the minister said.
“The government remains focused on accelerating inclusive growth and translating these macroeconomic gains into shared prosperity for every Nigerian family.”
But BudgIT argued that the real measure of economic progress must be whether ordinary Nigerians can see and feel the difference in their daily lives.
“Economic progress is evident when incomes can stretch further, public services reduce the costs households carry privately, and a financial shock does not push more people into poverty,” the organisation said.
The report therefore highlights the growing gap between stronger economic figures and the reality facing many households.
Nigeria’s reforms have brought more money into government accounts and helped state governments increase spending on roads and other projects. But rising food prices, higher fuel costs and the declining share of state budgets going to health and education raise questions about how quickly the benefits are reaching ordinary Nigerians.
For BudgIT, the next stage of Nigeria’s economic recovery is clear: stronger government finances must now lead to better public services and a lower cost of living.
The organisation said the reform gains must move beyond government accounts and become visible in the everyday lives of Nigerians.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X