The Chairman of the Presidential Fiscal Coverage and Tax Reforms Committee, Mr. Taiwo Oyedele, has urged state governors to borrow solely when it’s to construct infrastructure that drives progress.
In his keynote handle on the official launch of the tenth version of The State of States report by BudgIT Basis in Abuja on Tuesday, Mr. Oyedele mentioned that the extent of money owed owed by state governments is assuming an alarming proportion, including that Lagos and Edo states carry money owed of N100,000 per capita.
He mentioned, “There may be nothing incorrect with borrowing; what issues is what you’re borrowing for? We have to borrow much less for recurrent spending, if in any respect and borrow responsibly for infrastructure and productiveness.”
Whereas expressing concern that many states are nonetheless specializing in recurrent expenditure somewhat than capital, he counseled states like Abia, Enugu, Lagos, Ebonyi, Anambra and Taraba, which he mentioned are spending over 70 per cent of their budgets on capital tasks.
He knowledgeable that the brand new tax legal guidelines that can take impact subsequent yr will reallocate as much as one-third of the Federation’s income to the states.
Oyedele disagrees that the Federal authorities is getting a bigger chunk of the assets and that extra assets must be given to states. In accordance with him, states truly obtain 85 per cent of the assets, whereas the Federal Authorities receives solely 15 per cent.
He mentioned the issue isn’t assigning extra assets to the states; it’s optimising what’s already obtainable and guaranteeing it interprets into worth for residents.
On the way in which ahead, he referred to as for deepening the income reforms and rethinking the nation’s fiscal federalism. He suggested states to harmonise their taxes and tax legal guidelines, digitise tax assortment and spend money on the casual economic system, not looking for to extract tax from susceptible residents.
“We should cease taxing capital and investments, such because the extreme right-of-way levy, enterprise allow, which raises the enterprise danger and price of failure for small companies,” he mentioned.
He mentioned it’s time to shift from spending to funding, particularly in schooling and well being.
He referred to as for higher accountability, particularly on the native authorities stage.
“Whereas we have a good time the windfall in income, the actual check is whether or not states can flip the present income windfall into sustainable progress and utilise these assets judiciously,” he mentioned.
The State of States Report is an annual publication evaluating every state’s long-term fiscal efficiency and sustainability.
The 2025 version, which marks the tenth version of the report, has as its theme “A Decade of Subnational Fiscal Evaluation: Development, Decline and Middling Efficiency”. It lined 35 states, leaving out Rivers State.
The report ranked Anambra because the best-performing state within the federation, whereas Lagos maintained second place. Different states within the high 5 are Kwara, Abia and Edo.
Lagos retained its second place for the second yr in a row, whereas Kwara moved up from 4th within the 2024 version to third in 2025. Edo State, a brand new entrant into the highest 5 group, had been lurking within the high 10 vary for the final 4 reporting durations.
Abia State is the strongest-performing state, having by no means been within the high 10 and now rating fourth within the nation. Akwa Ibom moved up 17 positions from twenty seventh in 2024 to tenth place in 2025, whereas Zamfara moved up 9 positions from twenty sixth in 2024 to seventeenth in 2025. Kogi, Jigawa, Benue, and Yobe ranked lowest, however Cross River, particularly, fell essentially the most, from fifth in 2024 to thirtieth within the 2025 version.
When it comes to internally generated income (IGR) efficiency, in contrast to within the 2024 version, the place Rivers with 121.26 per cent and Lagos with 118.39 per cent have been the one two states that had greater than sufficient IGR to cowl their working bills, Lagos elevated its IGR by 120.87 per cent, whereas Enugu had the best IGR to working expense ratio at 146.68 per cent.
Not like the earlier yr’s report, through which six states generated sufficient IGR to cowl at the very least 50 per cent of their working bills, this yr solely 5 states achieved that feat: Abia, Anambra, Kwara, Ogun, and Edo.
Which means that, amongst different issues, 28 states wanted substantial federal transfers. For perspective, in response to the report, “within the 2024 version, solely six states wanted greater than 5 instances their IGR to cowl their working bills. Within the 2025 version, that quantity has greater than doubled. States within the 2025 report wanted 5 instances their IGR simply to cowl working bills. This suggests that some states struggled with IGR progress within the 2024 fiscal yr.” It additional famous that, as within the earlier reporting interval, when each state within the federation raised sufficient income—consisting of IGR, federal allocations, help, and grants—to totally cowl their recurrent expenditures, the 2025 version noticed that quantity sustained. No state wanted to borrow to cowl its complete working bills.
Concerning capital expenditure prioritisation, Abia State had the best proportion of its complete expenditure allotted to capital objects within the 2025 report, at roughly 77.05 per cent. Alongside Abia, states reminiscent of Anambra, Enugu, Ebonyi, and Taraba all spent greater than 70 per cent of their budgets on Capex.
The 2025 report additionally exhibits that 24 states allotted at the very least half of their complete expenditure to capital objects. Conversely, states like Bauchi, Ekiti, Delta, Benue, Oyo, and Ogun spent over 60 per cent of their complete expenditure on personnel and overheads.
