Lagos State has retained its position as Nigeria’s best-performing state in fiscal management, while Enugu recorded a 126 per cent surge in Internally Generated Revenue, the BudgIT 2026 State of States report has shown.
The civic-tech organisation, which promotes fiscal transparency and accountability, on Tuesday launched the 11th edition of its flagship report themed, “From Allocation to Impact: Rethinking State Spending Priorities”.
The report assessed the 2025 fiscal performance of 35 states — Rivers State was excluded for failure to publish audited financial statements and budget implementation reports following the state of emergency declared in 2025.
BudgIT said the new edition adopts a revised methodology that moves beyond revenue growth and expenditure volumes to evaluate the quality of public spending and its developmental impact.
The framework is built on four pillars: Revenue Performance (40 per cent), Fiscal Viability (30 per cent), Debt Sustainability (15 per cent) and Selected Critical Sectors Spending on agriculture, health, education and WASH (15 per cent).
Lagos leads, Kebbi surprises
In the ranking, Lagos secured first place nationally, supported by a diversified revenue base and IGR of N1.71 trillion, up from N1.26 trillion in 2024.
Kebbi emerged as a notable performer, ranking fifth nationally after growing total revenue by 59.54 per cent to N228 billion.
Zamfara ranked 19th despite improvements in IGR and capital spending, as declining aggregate revenue and rising foreign debt weakened its position. Ondo and Oyo ranked 21st and 22nd respectively.
At the bottom, Yobe (25th), Ekiti (26th), Sokoto (27th), Kaduna (29th), Adamawa (30th) and Osun (32nd) showed combinations of weak domestic revenue, spending pressures and debt vulnerabilities.
BudgIT flagged Kaduna’s rising debt burden and Sokoto’s weak revenue mobilisation and critical-sector spending as particularly concerning.
Enugu leads IGR growth, but sustainability questioned
On IGR, Lagos maintained dominance with N1.71 trillion, representing 35.67 per cent growth. Enugu posted the most remarkable growth at 125.91 per cent—from N180.5 billion to N407.76 billion—placing second nationally.
Oyo grew by 112.79 per cent, Gombe by 111.28 per cent, Abia by 64.48 per cent and Akwa Ibom by 45.11 per cent. Kano, the highest in the North West, generated N102.6 billion, up 35.78 per cent.
Despite the improvements, BudgIT noted that revenue growth as a standalone measure does not translate to fiscal strength.
It said in Enugu, non-tax receipts accounted for 90.79 per cent of the absolute increase in IGR, raising questions about sustainability, while states such as Yobe, which generated only N13.35 billion, and Ebonyi, with N21.9 billion, continue to face constraints.
The report further revealed that dependence on Federation Account Allocation Committee (FAAC) transfers remains a defining feature of subnational finance.
While Lagos recorded total revenue of N2.68 trillion, FAAC accounted for approximately 90 per cent of Akwa Ibom’s recurrent revenue, 86.47 per cent in Anambra and 82.90 per cent in Abia. In Kano, statutory transfers accounted for 79.28 per cent of recurrent revenue.
Expenditure rising faster than revenue
On expenditure, Lagos’s total expenditure increased by 33.24 per cent to N3.16 trillion, while Oyo’s rose by 118.71 per cent to N978.64 billion. Enugu recorded an 84.80 per cent increase to N880.57 billion, while Abia’s grew by 44.37 per cent to N458.95 billion.
However, it said the pace of expenditure growth in some states exceeded revenue expansion, raising concerns about fiscal discipline, the sustainability of government operations and the capacity of states to meet their financial obligations.
A closer examination of operating expenses reveals further pressure on state finances.
Lagos recorded operating expenses of N1.29 trillion, representing a 23.89 per cent increase, while Oyo’s operating expenses rose by 88.85 per cent to N372.68 billion.
In Abia, operating expenses nearly doubled, increasing from N64.19 billion to N126.68 billion, driven partly by a 197.07 per cent increase in overhead expenditure to N70.87 billion.
“Consequently, IGR covered only 53.56 per cent of the state’s operating expenses in 2025, compared with 64.28 per cent in 2024,” BudgIT said.
Capital expenditure also jumped. Lagos rose by 46.69 per cent to N1.58 trillion, Enugu more than doubled to N693.88 billion, Akwa Ibom rose by about 85 per cent to N970.83 billion, while Abia and Anambra recorded N319.91 billion and N290.74 billion respectively, and Oyo N423 billion.
But BudgIT warned that higher capital spend does not automatically mean better outcomes.
Debt burden weighs on states
On debt, Lagos had a total debt stock of about N2.90 trillion, Ogun N538.92 billion (fourth most indebted), and Enugu N300.95 billion, up 18.98 per cent, with a fiscal deficit of N110.95 billion.
Abia and Anambra cut debt by 8.86 per cent and 15.49 per cent, but foreign-currency exposure remains high — 76.06 per cent in Abia, 92.73 per cent in Anambra and 93.48 per cent in Ondo.
BudgIT said the burden of debt servicing and accumulated liabilities further compounds fiscal pressures.
Osun’s debt service stood at N100.17 billion, equivalent to 28.60 per cent of its total revenue, while Ebonyi spent N42.51 billion on debt servicing, representing 15.99 per cent of its total revenue.
Ebonyi’s debt service obligations were almost twice its IGR of N21.9 billion. The state also reported N43.32 billion in contractor arrears. Abia recorded combined pension, gratuity and contractor arrears of N41.16 billion, while Kwara recorded N15.96 billion in contractor arrears and N23.87 billion in pension and gratuity arrears.
Commenting on the findings, BudgIT’s Head of Research and Policy Advisory, Adejoke Akinbode, said, “The expansion in public revenue presents an important opportunity for Nigerian states to accelerate development, but the real measure of fiscal performance must go beyond how much money governments receive or spend.
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“Our analysis shows that states are operating with significantly larger revenue envelopes, yet important questions remain about expenditure priorities, budget execution, debt management and the quality of investments in critical sectors.
“The ultimate test of fiscal responsibility is whether public resources are translated into better healthcare, improved education, productive infrastructure and other essential services that directly improve citizens’ lives. States must move beyond celebrating revenue growth and demonstrate measurable developmental returns on public expenditure.”
BudgIT maintained that the current fiscal environment demands greater responsibility from state governments in managing public resources.
The organisation urged states to strengthen domestic revenue institutions, adopt conservative revenue forecasts, improve budget credibility, prioritise high-impact development programmes, and ensure borrowing goes to investments that generate sustainable economic and social returns.
