At least 26 state governments, including Osun, could not generate enough internal revenue to cover personnel costs in 2025, forcing them to depend heavily on allocations from the Federation Account.
This was according to a new BudgIT report, which showed that only eight of the 34 states reviewed generated Internally Generated Revenue higher than their personnel expenditure.
The eight states are Lagos, Enugu, Ogun, Delta, Kaduna, Kwara, Abia and Anambra.
The remaining 26 states generated about N1.16tn internally but spent approximately N1.91tn on personnel, leaving a gap of about N747bn between their combined IGR and wage-related expenditure.
Akwa Ibom and Rivers were excluded from the analysis due to incomplete data.
The report noted that while statutory allocations are a legitimate source of revenue, the figures highlight how many states would struggle to meet salary obligations without FAAC distributions.
This dependence persisted despite a sharp rise in state revenues after petrol subsidy removal and foreign exchange reforms.
According to BudgIT, aggregate FAAC allocations rose from N3.43tn in 2022 to N11.38tn in 2025, a 232.06 per cent increase. IGR also grew from N1.57tn to N4.15tn within the same period, but its growth lagged behind FAAC receipts.
Consequently, FAAC’s share of aggregate state revenue increased from 68.7 per cent in 2022 to 73.3 per cent in 2025, while IGR’s share fell from 31.4 per cent to 26.7 per cent.
BudgIT said the trend showed that “despite improvements in domestic revenue mobilisation, many states remained heavily reliant on transfers from the Federation Account.”
For Osun, the state generated N58.80bn in IGR in 2025 against N87.46bn spent on personnel, leaving a shortfall of about N28.66bn.
Other states with wide gaps include Oyo with N67.51bn, Yobe N60.91bn, Jigawa N57.39bn, Ondo N53.94bn and Kogi N52.70bn.
BudgIT stressed that improving domestic revenue mobilisation would be critical to strengthening states’ long-term fiscal sustainability and reducing dependence on federal transfers.
The post Osun, 25 Other States Rely On FAAC As Personnel Costs Outstrip IGR appeared first on OsunDefender.
