The 36 States and the FCT now generate more IGR
According to the latest data from the National Bureau of Statistics (NBS), Nigeria’s subnational governments recorded a strong improvement in revenue generation in 2024, signalling progress in fiscal management and greater efficiency in tax collection. The Internally Generated Revenue (IGR) of the 36 states and the Federal Capital Territory (FCT) rose significantly to ₦3.65 trillion, up from ₦2.43 trillion in 2023. This represents an impressive ₦1.22 trillion increase, or 50.54% growth year-on-year, underscoring the success of various state-level initiatives such as enhanced digital tax systems, automation of revenue collection, and improved compliance among taxpayers.
The report attributes this surge primarily to the integration of technology into revenue administration, as many states have adopted digital platforms to plug leakages and promote transparency. These reforms have made it easier for individuals and businesses to remit taxes, resulting in higher efficiency and accountability. The increase also reflects growing awareness among citizens about the importance of tax compliance, as well as stronger enforcement mechanisms by state revenue agencies.
State revenues are broadly classified into tax revenues and revenues from Ministries, Departments, and Agencies (MDAs). Taxes remain the largest contributor to subnational revenue, comprising various categories such as Pay-As-You-Earn (PAYE), Direct Assessments, Road Taxes, Stamp Duties, Capital Gains Tax, Withholding Taxes, Other Taxes, and Local Government (LGA) revenues. Among these, Lagos State maintained its position as Nigeria’s economic powerhouse, generating a record ₦1.26 trillion in IGR. Rivers State followed with ₦317.30 billion, while the Federal Capital Territory (FCT) ranked third with ₦282.36 billion. On the other end of the spectrum, Yobe (₦11.08 billion), Ebonyi (₦13.18 billion), and Kebbi (₦16.97 billion) recorded the lowest revenues, reflecting persistent disparities in economic activity and fiscal capacity across the federation.
A breakdown of the tax components shows that PAYE alone contributed ₦1.88 trillion, accounting for nearly 70% (69.96%) of total tax revenue. This dominance underscores the heavy dependence on the formal employment sector for state revenue. In contrast, Capital Gains Tax yielded just ₦10.57 billion, indicating the underutilisation of wealth and asset-based taxation. Overall, tax revenues represented about 73.50% of total IGR in 2024, revealing that most states remain insufficiently diversified and highly vulnerable to employment shocks and fluctuations in formal sector earnings. The low contribution from the informal sector continues to limit revenue resilience, as millions of small businesses and self-employed individuals operate outside the tax net.
The gap between the highest and lowest revenue-generating states highlights deep fiscal inequality within the federation. While states like Lagos and Rivers continue to leverage industrial capacity and strong private sectors, less-developed states still depend heavily on federal allocations from the Federation Account Allocation Committee (FAAC) to fund their budgets. Bridging this divide will require targeted reforms, including creating an enabling environment for private investment, improving ease of doing business, and attracting Foreign Direct Investment (FDI) to stimulate economic growth at the state level.
Looking ahead, states that wish to sustain and expand their revenue base must broaden their non-PAYE tax sources, strengthen the performance of MDAs, and deepen automation across all revenue streams. Investing in digital governance, strengthening institutional capacity, and promoting transparency will help build a more stable and self-reliant fiscal structure. By reducing overdependence on federal transfers, states can enhance their financial autonomy, boost infrastructure investment, and foster inclusive economic development across Nigeria. (Source: National Bureau of Statistics)
