Lagos Tops Nigeria’s Fiscal Sustainability Ranking as BudgIT Questions States’ Spending Priorities

Lagos, Enugu and Bayelsa have emerged as Nigeria’s three best-performing states in fiscal sustainability, according to the 2026 State of States report released by BudgIT Foundation. However, the report has raised concerns about whether increased government revenues are translating into meaningful improvements in the lives of residents.

The report, titled From Allocation to Impact: Rethinking State Spending Priorities, is the 11th edition of BudgIT’s annual assessment of state-level public finance management. It examines how Nigerian states generate revenue, manage expenditure, control debt and allocate resources to essential sectors.

Lagos secured the first position with a score of 66.97 points, followed by Enugu with 65.45 points and Bayelsa with 64.3 points. Delta and Kebbi completed the top five, while Cross River ranked 36th and last among the states assessed.

According to BudgIT, the assessment considered four major areas: revenue performance, fiscal viability, debt sustainability and spending on selected critical sectors. Revenue performance accounted for 40 per cent of the assessment, fiscal viability 30 per cent, debt sustainability 15 per cent and spending on critical sectors the remaining 15 per cent.

The selected sectors included agriculture, healthcare, education, and water, sanitation and hygiene.

Lagos maintained its leading position partly through its internally generated revenue, which reached ₦1.71 trillion in 2025, representing a 35.67 per cent increase from the ₦1.25 trillion recorded in 2024.

The state’s total revenue also increased by 19.26 per cent, rising from ₦2.25 trillion in 2024 to ₦2.68 trillion in 2025.

Enugu recorded one of the most significant revenue increases among the states assessed. Its internally generated revenue rose by 125.91 per cent, from ₦180.5 billion in 2024 to ₦407.76 billion in 2025.

However, BudgIT noted that non-tax receipts accounted for 90.79 per cent of the absolute increase in Enugu’s internally generated revenue, raising questions about how sustainable the growth would be over time.

The findings also highlighted the wider financial relationship between state governments and the Federal Government.

BudgIT reported that Federation Account Allocation Committee (FAAC) transfers accounted for approximately 73 per cent of state revenues. This dependence raises questions about the ability of states to develop independent and sustainable revenue sources.

The report’s concerns were echoed by representatives of the World Bank and Ford Foundation during its launch in Abuja.

Gloria Joseph-Raji, the World Bank’s Senior Country Economist, said state governments needed to strengthen public financial management and ensure that additional resources translated into tangible development outcomes.

The report also challenged state governments to reconsider their spending priorities, particularly as increased allocations have not consistently produced corresponding improvements in healthcare, education, social protection and other essential services.

For residents, the distinction between revenue generation and actual development is significant. Higher government income does not automatically mean better hospitals, adequately equipped schools, accessible roads or reliable water supply.

A state may record impressive revenue growth while communities within it continue to struggle with poor infrastructure and limited access to essential services.

This is particularly important in a country where many citizens depend on public institutions for healthcare, education and other basic services. The ability of state governments to convert available resources into measurable improvements therefore remains a major indicator of effective governance.

The report also provides an opportunity to examine why states with substantial financial resources may still struggle to deliver development outcomes. Beyond generating more revenue, governments must demonstrate transparency, accountability and a willingness to prioritise sectors that directly affect residents.

Although Lagos, Enugu and Bayelsa lead the latest ranking, their positions do not automatically establish that residents enjoy equally strong public services across every sector.

The larger question raised by BudgIT’s findings is whether Nigeria’s state governments can move beyond celebrating increased allocations and revenue figures towards demonstrating how public money improves people’s everyday lives.

As fiscal resources continue to grow, the responsibility to deliver measurable development becomes increasingly difficult to ignore.