Public sector wage bills are overwhelming Internally Generated Revenue (IGR) across Northern Nigeria, leaving almost the entire region fiscally vulnerable and dependent on federal allocations.
According to BudgIT’s 2026 analysis of the state finances report, Kaduna and Kwara were the only northern states among those covered by the study that generated enough revenue to cover their personnel costs in 2025, while every other state recorded staggering deficits.
Kaduna generated N86.72 billion in IGR against personnel expenditure of N77.63 billion, leaving a positive balance of N9.09 billion. Kwara generated N85.21 billion compared with N65.22 billion spent on personnel, representing a surplus of N19.99 billion.
The performance of other northern states was considerably weaker.
Yobe generated only N15.42 billion in IGR while spending N76.34 billion on personnel, leaving a gap of N60.91 billion. Jigawa recorded N35.27 billion in IGR against personnel expenditure of N92.66 billion, producing a N57.39 billion shortfall.
Kogi generated N36.50 billion against personnel expenditure of N89.20 billion, while Benue generated N29.38 billion compared with N73.94 billion spent on personnel. Adamawa recorded N24.14 billion in IGR against N65.73 billion in personnel expenditure.
Sokoto generated N20.58 billion against N58.65 billion in personnel expenditure, while Kebbi recorded N18.41 billion in IGR compared with N44.82 billion in personnel costs.
Gombe generated N36.36 billion against personnel expenditure of N53.95 billion.
Other northern states, including Bauchi, Borno, Kano, Katsina, Nasarawa, Niger, Plateau and Zamfara, also recorded personnel expenditure above their IGR.
The figures are particularly significant because they come at a time when the debate over fiscal federalism is gaining renewed momentum, with increasing calls for states to take greater responsibility for raising revenue, attracting investment and financing development.
Sani Yau Babura, an economist, said the figures should be viewed beyond the narrow question of whether states can pay salaries from IGR, arguing that the more important issue is the capacity of state economies to generate sufficient resources to finance sustainable development.
For northern states, the challenge is particularly acute because weak IGR means that increased federal allocations can provide temporary fiscal relief without necessarily addressing the structural weaknesses of their local economies.
The BudgIT analysis shows that aggregate FAAC allocations to the states increased from N3.43 trillion in 2022 to N11.38 trillion in 2025, representing a 232.06 percent increase.
IGR also increased during the period, rising from N1.57 trillion to N4.15 trillion. However, the increase in IGR was slower than the growth in FAAC receipts.
As a result, the proportion of aggregate state revenue coming from FAAC increased from 68.7 percent in 2022 to 73.3 percent in 2025, while the contribution of IGR declined from 31.4 percent to 26.7 percent.
For the northern economy, this trend presents a fundamental policy dilemma.
Greater fiscal federalism would ordinarily require states to possess stronger independent revenue bases. But where state governments remain heavily dependent on federal transfers, increased fiscal responsibility without corresponding economic expansion could constrain their ability to provide infrastructure, improve public services and stimulate private-sector activity.
This could also affect the quality and pace of physical development.
A state with a weak revenue base has less fiscal room to consistently invest in roads, water infrastructure, healthcare, education, urban renewal, industrial estates and other productive infrastructure after meeting salaries and other recurrent obligations.
The problem is more pronounced in states where personnel expenditure is rising faster than internally generated revenue.
Jigawa provides one of the clearest examples. Its IGR declined from N59.40 billion in 2022 to N35.27 billion in 2025, while personnel expenditure increased from N52.37 billion to N92.66 billion.
The state therefore experienced the unusual combination of declining internally generated revenue and sharply rising personnel costs.
Sokoto and Ebonyi were also among the three states in the study whose IGR declined between 2022 and 2025. Sokoto’s revenue fell from N23.60 billion to N20.58 billion, while Ebonyi’s declined marginally from N23.89 billion to N23.25 billion.
The challenge, however, is not simply a northern problem. Across the 34 states covered by the BudgIT report, only eight generated enough IGR to exceed their personnel expenditure in 2025.
The remaining 26 states collectively generated about N1.16 trillion internally but spent approximately N1.91 trillion on personnel, leaving a combined gap of about N747 billion.
The figures do not mean that states are expected to finance salaries exclusively from IGR. Statutory allocations remain a legitimate source of government revenue. Rather, the comparison highlights the extent of states’ fiscal independence and the vulnerability of their finances to changes in federal transfers.