Federation transfers to states increase by 110.74% to N11.38trn in 2024 – CBN

…says states must translate revenue surge into tangible development

Federation transfers to state governments surged by 110.74 percent in 2024, rising from ₦5.4 trillion in 2023 to ₦11.38 trillion, according to the Central Bank of Nigeria (CBN).

Muhammad Sani Abdullahi, Deputy Governor (Economic Policy) CBN, who disclosed this on Tuesday in Abuja during the launch of BudgIT’s “State of States 2025” report, described the increase as a result of recent economic reforms, including fuel subsidy removal and foreign exchange unification, which have significantly boosted revenue inflows to subnational governments.

Abdullahi also called on state governments to maintain fiscal discipline and channel the recent surge in revenues inflows into long-term, people-centered development outcomes.

Abdullahi noted that 2024 marked a year of unprecedented fiscal flows for most subnational governments, with federation transfers soaring more than doubling year-on-year.

“The Windfall Year: N11.38 Trillion total Federation Transfers in 2024. A surge from N5.4 Trillion in 2023

“The 2024 fiscal environment was reshaped by the removal of the petrol subsidy and exchange rate unification, leading to unprecedented inflows.

“For the first time in years, capital expenditure at the state level overtook recurrent spending, with capex surpassing personnel and overheads by over N1 Trillion.”

He, however, cautioned that higher inflows must be matched with discipline and efficiency.

“Fiscal discipline, not inflows, will define transformation. The states that will see real progress are not necessarily those with the biggest revenues, but those able to sustain prudent spending and channel funds into pro-poor investments,” Abdullahi said.

Highlighting key findings from the State of States report, Abdullahi noted that for the first time in many years, capital expenditure at the subnational level has overtaken recurrent spending, describing it as a positive and historic shift.

He urged states to lock in this fiscal balance by digitizing internal revenue systems, completing Treasury Single Account (TSA) implementation, and strengthening budget transparency.

He however pointed to persistent execution gaps in budget implementation, especially in education and health, as well as growing exposure to foreign currency-linked debts.

He also said that the bank is developing an instrument to help states hedge against FX risks and manage external obligations more effectively.

Abdullahi also encouraged state governments to raise budget execution in social sectors above 80 percent and compete on measurable outcomes such as education, primary healthcare delivery, and infrastructure quality.

“We must institutionalize performance scorecards that link budgets to service delivery. This is how we move from numbers to impact,” he said

Also speaking at the event, Oluseun Onigbinde, Global Director of BudgIT, said the State of States initiative was never intended to be “transparency for transparency’s sake” but a sustained effort to assess the fiscal health, economic capacity, and service delivery potential of Nigeria’s 36 states.

“When we began this work in 2016, it was almost impossible to find credible data at the state level. We wanted to understand not just how transparent states were, but whether they had the fiscal strength to deliver goods and services for their citizens,” Onigbinde recalled.

He said BudgIT’s data-driven approach has helped make transparency a competitive advantage, as governors, commissioners, and financial institutions now pay close attention to their state rankings and fiscal performance.

“From a time when only five states published budgets to now when most states publish both budgets and performance reports, the culture of openness has deepened, Transparency has moved from obligation to competition,” he said.

He highlighted that while states have recorded remarkable fiscal growth with many doubling or tripling revenues in one year, the real test is how well those funds translate into improved education, healthcare, infrastructure, and livelihoods.

“States are now awash with cash, But the question we must keep asking is whether these windfalls are producing better outcomes for the people,”

The BudgIT director announced several new initiatives to strengthen subnational fiscal analysis, including the State of States Fellowship, which will provide research grants to postgraduate students to generate deeper insights from BudgIT’s decade-long data repository.

Read also: FATF exit a vote of confidence in Nigeria’s financial reforms — CBN

On his part, Razaq Fatai, representing the Chairman of the Nigeria Governors’ Forum (NGF), commended BudgIT for sustaining the State of States report as an independent and credible assessment tool that supports fiscal transparency at the subnational level.

He said the forum remains committed to deepening accountability through ongoing reform initiatives such as the State Fiscal Transparency, Accountability, and Sustainability (SFTAS) programme and the State Action on Business Enabling Reforms (SABER) project, both of which have strengthened fiscal reporting and improved the investment climate across states.

“This dialogue sits at the intersection of policy learning and citizen trust, It reminds us that data, incentives, and collaboration between government and civil society can build stronger, more accountable states,” he said

The 2025 edition of the State of States report, themed “A Decade of Subnational Fiscal Analysis: Growth, Decline, and Middling Performance”, highlights fiscal trends across Nigeria’s 36 states, benchmarking transparency, capital investment, and debt sustainability.