Several Nigerian states endowed with substantial mineral deposits, agricultural resources and other economic assets remain at the bottom of the country’s internally generated revenue (IGR) rankings, highlighting the difficulty many subnational governments face in converting natural wealth into sustainable public revenue.
Yobe, Sokoto, Kebbi, Taraba and Ebonyi recorded some of the weakest IGR performances in 2025, according to BusinessDay’s analysis of state budget implementation reports published by BudgIT. The figures show that resource endowments have not translated into commensurate domestic revenue mobilisation, leaving many of the states heavily dependent on the monthly federally distributed revenue to finance government operations and development.
By contrast, Enugu recorded the fastest growth in IGR over the three-year period, with revenue surging from N25.12 billion in 2022 to N406.77 billion in 2025, a 1,519 percent increase. Niger and Abia also recorded sharp increases, with IGR rising 448.06 percent and 335.76 percent, respectively. The divergence suggests that the ability to build an effective revenue system and expand the taxable economic base can matter as much as the natural resources available to a state.
Yobe remained the weakest performer, generating N15.42 billion in IGR in 2025, a slight increase from N9.9 billion in 2022. The state has deposits of gypsum, limestone, silica sand, quartz and granite, alongside agricultural resources including gum arabic, sesame seeds, groundnuts, beans, cotton, millet and livestock.
Taraba generated N17.89 billion in 2025, though higher than the N8.7 billion in 2022. Its resource base includes bauxite, lithium ores, gold, limestone and marble, while its agricultural potential spans tea, coffee, cacao, timber, maize, rice and extensive livestock grazing reserves.
Kebbi’s IGR rose from N10.5 billion in 2022 to N18.40 billion in 2025. The state is rich in iron ore, manganese, kaolin, clay, quartz and limestone and is also known for large-scale commercial rice production, alongside sorghum, maize, groundnuts, sugarcane and riverine fisheries.
Sokoto, despite deposits of limestone, phosphate, gypsum, kaolin, silica sand, gold, potash and high-grade clay, generated N20.58 billion in 2025, down from N23.6 billion in 2022. Its agricultural resources include onions, garlic, rice, sorghum, wheat and livestock.
Ebonyi’s IGR also declined, falling from N23.89 billion in 2022 to N23.25 billion in 2025. The state is known for Abakaliki rice, cassava, yam, oil palm and inland fisheries and has deposits of lead, zinc, limestone, granite, dolerite, baryte and clay.
Kabir Isah, an Abuja-based economist, said the performance points to the need for sweeping fiscal and governance reforms, particularly in domestic resource mobilisation, revenue administration and investment attraction.
He said states must develop sectors where they have a comparative advantage while creating an environment capable of attracting private capital.
‘States need to improve the ease of doing business by improving infrastructure and security, eliminating multiple taxation, strengthening investment promotion, enhancing the enforcement of contracts, and easing land and property acquisition and development,’ Isah said.
He also urged states to improve expenditure efficiency by drastically reducing the cost of governance and creating fiscal space for investment in critical social sectors such as health, education, water, sanitation and hygiene, which he said are major drivers of prosperity, economic growth and development.
According to Isah, the gap between revenue and expenditure has implications for state debt because persistent deficits are often financed through borrowing. States, he said, urgently need to reduce their dependence on federally distributed revenue by significantly improving their capacity to mobilise resources internally.
Thaddeaus Jolayemi, acting head of Open Government and Institutional Partnership at BudgIT Foundation, said low-revenue states should not respond to weak collections simply by increasing tax rates. Instead, they should map their internal economies, identify activities outside the tax net and improve the efficiency of revenue administration.
The central challenge, he said, is understanding why local economic bases remain narrow. Businesses, professionals, property owners and other taxable economic activities could provide a broader revenue base if properly identified and brought into the tax system.
‘For states with lower IGR, the answer is not necessarily higher taxes; it is to better understand the economic activities within their jurisdictions, bring more of them into the tax net and demonstrate a clearer link between revenue collected and services delivered,’ Jolayemi said.
He said states must also reduce leakages between assessment, collection and remittance, while building public trust by demonstrating how tax revenues translate into better services.
He, however, stressed that states should first understand why their revenue base is small rather than simply setting higher revenue targets.
Stronger IGR, Jolayemi said, gives states greater flexibility to finance their budgets, reduces dependence on federal transfers and provides more predictable funding for recurrent and capital priorities. The objective, however, should not simply be to collect more money, but to strengthen fiscal sustainability and improve budget implementation.
The improvement in aggregate state revenue shows the scale of the shift, with combined IGR rising from N1.565 trillion in 2022 to N4.147 trillion in 2025, according to the BudgIT data.
Despite the broad increase, Nigeria’s subnational revenue remains heavily concentrated in a handful of states, underscoring the limited capacity of many governments to generate income from their local economies.
Lagos accounted for N1.845 trillion, or 44.5 percent of the N4.147 trillion combined IGR reported by states in 2025, excluding Akwa Ibom and Rivers.
The concentration highlights the outsized contribution of the country’s largest commercial hub and the difficulty other states face in expanding their tax bases and reducing dependence on federal allocations.
The disparity is particularly striking when compared with states endowed with substantial mineral and agricultural resources. While Lagos benefits from a deep commercial and corporate base, states such as Yobe, Taraba, Kebbi and Sokoto have struggled to convert their natural wealth into comparable domestic revenue.
Enugu recorded the most dramatic increase, with IGR rising from N25.12 billion in 2022 to N406.77 billion in 2025, representing a 1,519 percent increase. Niger followed with growth from N12.11 billion to N66.37 billion, representing a 448.06 percent, while Abia’s IGR increased 335.76 percent from N14.67 billion to N66.86 billion.
Jolayemi attributed the broader improvement in state-level revenue to five key drivers, including modernised revenue administration, digital collection tools, expanded taxpayer registries, stricter enforcement and regional economic expansion.
‘The growth in states’ IGR is encouraging because stronger internally generated revenue gives states greater fiscal capacity and reduces their dependence on federal transfers,’ he said.
He cautioned, however, that higher IGR should not be interpreted simply as an opportunity to impose more taxes. Sustained growth, he said, depends on expanding the tax base and improving collection efficiency.
States that have recorded strong revenue growth should also focus on strengthening their budgets rather than merely increasing spending.
The quality and predictability of expenditure, he said, are critical to determining whether higher revenue produces better fiscal outcomes.
‘There is also a budgetary dimension to this. Citizens need to see a connection between the taxes they pay and the services they receive,’ Jolayemi said, warning that opaque expenditure or poor service delivery could weaken public trust and eventually undermine tax compliance.
Moyowa Amoo, founder and chief executive officer of QLP Capital, said underperforming states should study jurisdictions that have successfully expanded their revenue base instead of developing entirely new approaches.
‘There is no point in reinventing the wheel,’ Amoo said. ‘If an institution or state has done something successfully, go there, understand what has been done, and copy it.’
He said successful models would have to be adapted to local conditions because the economic structures of states differ. Kaduna is not Lagos, just as Zamfara and Cross River are not Lagos, but the underlying model can be studied and customised to local circumstances.
Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise, linked differences in IGR partly to the concentration of corporate activity and the investment environment in individual states.
He said ongoing policy reforms had improved corporate performance nationally, but the fiscal benefits were accruing unevenly because states differ significantly in the number and scale of companies operating within their economies.
‘The point is that the reform has improved corporate performance, which is reported in the IGR of states. But IGR comes from corporate organisations, and it depends on what kind of industries or corporates are in each state,’ Yusuf said.
According to Yusuf, states with stronger commercial bases tend to generate more IGR, while those that create hostile environments for investors struggle to expand their revenue base.
‘Most of the IGR we are talking about comes from states that are highly commercial, like Lagos, Abuja, Port Harcourt, and Kaduna,’ he said. ‘The more investors you are able to attract, the more IGR you will get.’