Lagos State recorded N1.77 trillion in Internally Generated Revenue (IGR) in 2025, leading all other states and the Federal Capital Territory (FCT) in fiscal performance. According to recent data from the National Bureau of Statistics (NBS), the total IGR for all states and the FCT reached N5.15 trillion for the period.
The NBS report indicates a wide disparity in revenue collection across the federation. While Lagos continues to command a dominant share of the sub-national revenue pool, other states struggled to match these levels, relying heavily on different revenue streams to fund their operations.
The findings show that the economic capacity of Nigerian states remains unevenly distributed, with a few commercial hubs driving the bulk of the country’s non-oil revenue. This concentration of wealth suggests that the fiscal strength of the federation is heavily tied to the industrial and commercial activities of specific urban centres.
The breakdown of the revenue reveals that states achieved their highest and lowest returns from different channels, specifically distinguishing between direct taxation and other government-sourced revenues. This variation points to differing levels of tax administration efficiency and the presence or absence of robust local economic activities within various jurisdictions.
Revenue composition and fiscal disparities
The report, which was first reported by Channels Television, shows that the composition of IGR varies significantly between states. Some states rely predominantly on tax-based income, while others derive the majority of their local revenue from non-tax sources, such as fees, fines, and other government-related charges.
This trend reflects the diverse economic structures of the various states. Commercial and industrialised states, such as Lagos, tend to have more sophisticated tax collection systems and a larger base of taxable individuals and businesses. In contrast, states with more agrarian or resource-dependent economies often find it more difficult to implement effective tax frameworks, leading to a greater reliance on other forms of government revenue.
The ability of states to increase their IGR is a critical component of Nigeria’s broader economic strategy. As the federal government seeks to reduce the country’s vulnerability to global oil price fluctuations, there is increased pressure on state governors to expand their local tax bases. A higher IGR enables states to fund essential services such as healthcare, education, and infrastructure without being entirely dependent on the monthly Federation Account Allocation Committee (FAAC) disbursements.
However, the N5.15 trillion total reveals the challenges faced by many sub-national governments. States with low IGR levels remain fiscally vulnerable, often forced to borrow to meet budgetary obligations or provide basic public services. The reliance on non-tax sources in several states may also indicate a lack of formalised economic activity or a struggle to capture revenue from the growing informal sector.
Moving forward, state governments will face growing calls to modernise their revenue collection agencies and improve transparency in how these funds are utilised. The ability to bridge the revenue gap between the top-performing states and the rest of the federation remains a key challenge for Nigeria’s fiscal stability.
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