Connect with us

Business

States to earn over N4tn yearly from VAT reforms

Published

on

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has projected that states could earn more than N4tn annually from 2026, when new Value Added Tax reforms take effect.

Oyedele made this disclosure on Tuesday at the launch of the BudgIT State of States 2025 Report in Abuja, where he delivered the keynote address.

The event also marked the 10th anniversary of the initiative.

He said, “With VAT reforms kicking in from 2026, states’ share will rise to 55 per cent. That could amount to over N4 tn in 2026. The question is: will this money be spent, or will it be invested?”

The fiscal policy expert noted that while recent economic reforms had more than doubled the Federation Account Allocation Committee transfers, from N5.4tn in 2023 to N11.4tn in 2024, many Nigerians were yet to feel any direct relief.

According to him, governments now have more money in their coffers, but households continue to struggle with reduced disposable income.

“States are receiving more money than ever before. But there is a paradox: while governments have more naira, ordinary Nigerians have less disposable income in their pockets,” he said, urging state leaders to channel the extra revenues into projects that tangibly improve citizens’ lives.

The BudgIT report highlighted that 21 states still rely on federal allocations for over 70 per cent of their revenues, a trend Oyedele described as worrying.

However, he pointed to examples of progress, including Enugu’s 381 per cent growth in internally generated revenue and Bayelsa’s 174 per cent rise.

He explained that the new tax laws, which transfer the full proceeds of electronic money transfer levies to states and exempt state government bonds from tax, would help reduce borrowing costs and create fiscal space.

See also  Ardova-led consortium to acquire Powergas

“This is a unique opportunity for states to build resilience, close existing tax gaps, and invest in infrastructure,” he stressed.

The keynote speech also drew attention to the mismatch between spending and outcomes. Oyedele acknowledged that, for the first time in many years, capital expenditure had overtaken recurrent expenditure.

Yet, he warned that implementation in critical areas remained poor.

“States implemented only two-thirds of their education budgets, spending less than N7,000 per citizen. In health, implementation was even lower, at just N3,500 per citizen,” he observed.

On debt, he noted a reduction of N2tn in domestic obligations and a $200m fall in foreign loans, with 31 states lowering their domestic debt stock.

Still, states owe over N1.2tn in arrears to pensioners, contractors, and workers.

“Borrowing is not the problem; unproductive application of debt is,” he cautioned.

According to the 2025 rankings, Anambra topped the fiscal performance table, followed by Lagos, Kwara, Abia, and Edo. Cross River, however, slipped dramatically from fifth position in 2024 to 29th in 2025, raising concerns about governance choices.

Oyedele urged state governments to seize the opportunity provided by upcoming reforms to move beyond survival and ensure shared prosperity.

Also speaking, the Deputy Governor of the Central Bank of Nigeria in charge of Economic Policy, Dr Muhammad Abdullahi, called on state governments to entrench fiscal discipline and transparency as revenues surge under ongoing reforms.

He described the BudgIT report as an annual reference point that has “distilled hard fiscal truths, benchmarked performance, and re-centred conversations on capital investment, social outcomes, and fiscal credibility.”

See also  Economists back US, fault Nigeria’s fiscal transparency

He noted that while reforms in 2024 and 2025 had expanded revenues and pushed capital expenditure above recurrent spending, states must not slip back into a pattern where overheads dominate budgets.

“The challenge is to lock in this fiscal discipline permanently,” he said.

The CBN deputy governor urged states to digitise internal revenue systems, complete Treasury Single Account adoption, and strengthen capital budgeting.

He also called for higher execution of education and health budgets, insisting that implementation must rise above 80 per cent.

Abdullahi warned that subnationals remained highly exposed to foreign currency risks. He disclosed that the CBN was developing an instrument to help them hedge exposures and monetise revenues.

Reviewing the broader macroeconomic environment, Abdullahi said Nigeria had inherited severe distortions, including multiple exchange rates, heavy deficit financing through Ways and Means, and dwindling reserves.

According to him, the apex bank’s response was to return to orthodox monetary policy, normalise the foreign exchange market, and restore credibility.

He concluded that states which prioritise discipline and capital investment, rather than simply relying on higher revenues, would achieve sustainable transformation.

In his goodwill message, the Head of Economic Intelligence at the Nigerian Governors’ Forum, Razaq Fatai, who represented the Director-General, Dr Abdulateef Shittu, said the State of States report had become a valuable tool for guiding governance and promoting fiscal accountability across the country.

He explained that the NGF had served as a technical partner in refining the report over the past decade, ensuring that governors used the findings to improve decision-making.

According to him, “The essence of State of States is to help guide governance and ensure that governors at different levels take the information provided and make sure it reaches their people.”

See also  Petrol tops Nigeria’s imports with 613.6m litres in one year

Fatai noted that initiatives such as the State Fiscal Transparency, Accountability and Sustainability programme had strengthened budget credibility and debt transparency, while the ongoing State Action on Business Enabling Reforms programme was pushing states to improve the business climate.

He added that the NGF would continue to provide a platform for peer learning and collaboration to entrench transparency and accountability at the subnational level.

Speaking earlier, the Co-founder and Global Director of BudgIT, Oluseun Onigbinde, said the State of States report had become a mirror reflecting the choices made by subnational governments.

Onigbinde noted that what began as an effort to make every kobo traceable had grown into a tool of accountability embraced by both governors and citizens.

“This report began with a simple belief, that every kobo meant for citizens should be traceable, justified, and used to improve lives,” he said.

He added that transparency had become a competitive advantage among states, with more governors publishing budgets and citizens using data to demand accountability.

Onigbinde, however, warned that Nigeria remained at a crossroads, with rising inflation, growing debt, and an overreliance on federal allocations leaving many states unable to build resilient local economies.

He urged states to prioritise education, health, and infrastructure while using transparency as a foundation for public trust and give investors returns on their finances.

punch.ng

FOLLOW US ON:

FACEBOOK

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

TUMBLR

INSTAGRAM

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Revenue boom: World Bank faults states’ spending priorities, read full details

Published

on

The World Bank has criticised the spending priorities of Nigerian state governments, warning that increased revenues following recent economic reforms have not translated into proportionate investments in education, healthcare and social protection.

The global lender observed that although states had increased spending on essential public services, investments in transport infrastructure had grown considerably faster, even in states with poor human development indicators.

A Senior Economist at the World Bank Nigeria Office, Gloria Joseph-Raji, raised the concerns on Tuesday in Abuja during the launch of BudgIT’s 2026 State of States Report, themed ‘From Allocation to Impact: Rethinking State Spending Priorities.’

She said, “Spending on education, health, and social protection has also risen substantially, but it has not kept pace with the rapid growth in transport infrastructure spending, even in states with weaker human capital outcomes.”

Joseph-Raji explained that the bank’s October Nigeria Development Update, which examined budget implementation reports from all 36 states, found that governments had expanded transport infrastructure and reduced their debt burdens, particularly domestic debt, following increased fiscal allocations.

She attributed the revenue growth to petrol subsidy removal, exchange rate unification and improvements in tax administration since 2023, alongside federal intervention funds and the settlement of longstanding obligations to states.

According to her, the additional resources have enabled states to meet salary obligations and created opportunities for improved public service delivery.

However, she warned that excessive dependence on Federation Account allocations continued to expose state finances to fluctuations in federally shared revenue.

“In 2025, federation transfers accounted for more than three-quarters of revenue in all but a handful of states,” she said.

See also  Economists back US, fault Nigeria’s fiscal transparency

She disclosed that federation transfers accounted for 73 per cent of aggregate state revenues between 2021 and 2025, excluding Lagos, while internally generated revenue was sufficient to cover recurrent expenditure in only two states.

Joseph-Raji noted that states received 26.72 per cent of net Federation Account revenues and now received 55 per cent of Value Added Tax revenue under the revised sharing formula.

Meanwhile, BudgIT’s Country Director, Vahyala Kwaga, disclosed that aggregate revenue across the 34 states covered in its comparative analysis rose from N4.99tn in 2022 to N15.53tn in 2025, representing an increase of N10.54tn.

He said FAAC allocations increased by more than 232 per cent, from N3.43tn to N11.38tn during the period.

Despite the revenue growth, Kwaga disclosed that the states had spent only N8.60tn, representing 24.4 per cent of their combined N35.22tn approved budgets, by June 2026.

“We must also examine how effectively they deploy the resources available to them, what they prioritise and whether their spending is delivering the outcomes that citizens need,” he said.

He explained that BudgIT had revised its assessment methodology to place greater emphasis on spending in education, healthcare, agriculture, water and sanitation, alongside revenue performance and debt sustainability.

Presenting the report, BudgIT’s Head of Research and Policy Advisory, Adejoke Akinbode, disclosed that total debt across the 35 states assessed increased by 10.41 per cent, from N10.57tn in 2024 to N11.67tn in 2025.

She identified Lagos as the most indebted state, with N2.9tn, while Osun spent N100.17bn servicing debt, equivalent to 28.6 per cent of its revenue.

See also  No plan to borrow from IMF’s $50bn fund – FG

Akinbode said Lagos ranked first in overall fiscal sustainability, followed by Enugu, Bayelsa, Delta and Kebbi, while Cross River ranked last. Rivers was excluded because of inadequate fiscal data.

She urged states to reduce administrative costs, strengthen revenue collection and link borrowing to productive investments.

In her keynote address, an economist and lecturer at Amadeus University, Abia State, Dr Iboro Nelson, argued that rising government revenues had failed to compensate households for the economic hardship associated with recent reforms.

She disclosed that states collectively budgeted N1.32tn for healthcare in 2024 but spent N816.64bn, while education expenditure stood at N1.61tn against N2.41tn budgeted.

According to her, average annual spending per resident amounted to N3,483 on healthcare and N6,981 on education, equivalent to approximately N290 and N582 monthly, respectively.

“This is actually not fiscal space, but fiscal illusion,” she said.

Nelson blamed weak budget implementation, unrealistic expenditure projections, overlapping projects and excessive recurrent costs for the limited developmental impact of rising allocations.

Also speaking, a Programme Manager at the Ford Foundation’s West Africa Office, Joy Ehinor-Esezobor, urged governments to measure fiscal success by improvements in citizens’ lives rather than revenue growth or rankings.

“The ultimate measure of success should not simply be a better fiscal ranking, but better services and improved living conditions,” she said.

The programme is seeking to establish a framework for developing Nigeria’s underutilised small hydropower resources through private investment and public-private partnerships.

Source: punchng.com

FOLLOW US ON:

FACEBOOK

WHATSAPP CHANNEL

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

INSTAGRAM

Continue Reading

Business

Otti woos US investors to Abia

Published

on

Governor Alex Otti of Abia State has concluded plans to bring investors, business leaders, policymakers, development partners, diplomatic representatives and entrepreneurs to the state to explore investment opportunities and strengthen commercial relations between Africa and the United States.

In a statement he signed and issued to newsmen on Sunday, the Chief of Staff to the Governor, Pastor Caleb Ajagba, disclosed that the Abia State Government had unveiled plans to attract American and other international investors to the state through the 2026 edition of the African Diaspora Conference and Expo, AFRICANDO, scheduled for this month.

Ajagba said, “AFRICANDO is a platform for translating international economic engagement into concrete investments and commercial partnerships. The state government is working with the organisers to ensure that the conference goes beyond speeches and networking to facilitate transactions, business agreements and sustainable investment.”

According to him, the 2026 edition, with the theme, “Deepening U.S.–Africa Commercial Ties in the Era of AfCFTA,” would connect investment opportunities in Abia and other African markets with American capital, technology, expertise and international distribution networks.

He added, “The African Continental Free Trade Area, AfCFTA, presents opportunities for African businesses to expand beyond their domestic markets, while international partnerships could help them improve production capacity and competitiveness.

“Abia is strategically positioned to benefit from the initiative because of its manufacturing and entrepreneurial base, particularly in Aba, which is known for indigenous manufacturing, commerce and craftsmanship.”

Ajagba added that Otti’s administration “is investing in infrastructure, strengthening public institutions and improving the business environment to position the state as a destination for private investment.”

See also  Factories spend N1.3tn on alternative power due to blackouts

He explained that international delegates and prospective investors would be encouraged not only to attend conference sessions but also to visit strategic economic locations, manufacturing clusters, enterprises and government-backed projects to assess investment opportunities firsthand.

He said the approach was intended to give participants a practical understanding of the state’s economic potential and create opportunities for direct engagement with local businesses and relevant government agencies.

“AFRICANDO 2026 is not exclusively an Abia event. It is an international economic platform being hosted in Abia State,” he continued.

He listed agriculture and agro-processing, manufacturing, consumer goods, energy, financial services, healthcare, transportation and logistics, science and technology, artificial intelligence and emerging technologies among the sectors expected to receive attention.

A major feature of the conference, he said, would be a structured Deal Room and Investment Marketplace, where investment-ready projects from Abia and participating businesses would be presented to prospective investors.

Source: punchng.com

FOLLOW US ON:

FACEBOOK

WHATSAPP CHANNEL

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

INSTAGRAM

Continue Reading

Business

Personal loans hit new high N1.99tn

Published

on

Nigerians’ outstanding personal loans increased by an estimated N58.5bn in the second quarter of 2026, reaching N1.99tn at the end of June, as households faced persistent inflationary pressures and high borrowing costs.

An analysis by The PUNCH of the Central Bank of Nigeria’s Second Quarter 2026 Economic Report showed that personal loans rose by 3.03 per cent from approximately N1.93tn recorded at the end of March.

The development came as total consumer credit increased by 3.26 per cent to N3.17tn from N3.07tn in the preceding quarter, representing an increase of about N100bn within three months.

The CBN stated, “Consumer credit outstanding increased by 3.26 per cent to N3.17tn, from N3.07tn in the preceding quarter. The increase reflected growth in both retail and personal loans, which rose by 4.10 per cent and 3.03 per cent, respectively.”

According to the report, personal loans accounted for 62.87 per cent of total consumer credit, while retail loans constituted the remaining 37.13 per cent.

This means that nearly N63 out of every N100 owed by consumers to financial institutions was classified as personal borrowing, highlighting its dominance in the consumer credit market.

Retail loans also increased by approximately N46.5bn to N1.18tn at the end of June, compared with an estimated N1.13tn in March, representing quarterly growth of 4.10 per cent.

Although retail loans recorded a faster percentage increase, personal loans contributed more to the outstanding stock of consumer credit.

The increase in personal borrowing occurred amid renewed inflationary pressures, which continued to affect household purchasing power.

See also  Petrol tops Nigeria’s imports with 613.6m litres in one year

The CBN reported that headline inflation rose to 15.91 per cent in June 2026 from 15.38 per cent in March, reflecting increases in the prices of essential goods and services.

The report attributed the development largely to higher energy and commodity prices associated with geopolitical tensions in the Middle East, which increased production and transportation costs.

These conditions placed additional pressure on household expenditure, particularly for consumers whose incomes had not increased sufficiently to offset rising prices.

However, the report did not establish whether the increase in personal loans was driven primarily by household financial difficulties, consumption needs or improved access to credit.

The growth in consumer borrowing also occurred despite elevated lending rates in the banking sector.

 

 

According to the CBN, the average prime lending rate declined marginally to 19.01 per cent in Q2 from 19.37 per cent in the preceding quarter.

In contrast, the maximum lending rate increased slightly to 34.37 per cent from 34.34 per cent, indicating that borrowing remained expensive for some categories of bank customers.

Although these rates reflect broader banking sector lending conditions rather than specific personal loan charges, they provide an indication of the financing environment confronting borrowers.

A recent report ‘Enhancing Financial Inclusion & Advancement’ noted that four in every 10 Nigerians borrowing from formal financial institutions now take loans mainly for consumption and coping needs, as rising financial pressures increasingly push credit away from productive activities.

The ‘2026 Access to Financial Services in Nigeria Survey’ revealed that 40.8 per cent of formal borrowers used loans for coping and consumption, up sharply from 31.7 per cent in 2023.

See also  Economists back US, fault Nigeria’s fiscal transparency

The 9.1 percentage-point increase made coping and consumption the largest purpose of formal credit, overtaking productive enterprise borrowing, which fell from 40.2 per cent to 34.3 per cent during the same period.

Borrowing for household assets also declined from 25.2 per cent to 23.4 per cent. The report warned, “Coping/consumption purposes rose from 31.7 per cent to 40.8 per cent; productive purpose fell from 40.2 per cent to 34.3 per cent. We need to ensure that credit builds productive capacity and does not produce distress.”

Formal credit use increased from six per cent of adults in 2023 to 10 per cent in 2026, with about 11.9 million Nigerians borrowing from regulated providers. When informal sources were included, 36 per cent of adults had access to some form of credit.

Credit use among informally employed Nigerians tripled from five per cent to 15 per cent, while borrowing among people aged 18 to 35 rose from four per cent to 10 per cent. Business owners recorded an increase from four per cent to 10 per cent, while farmers rose from two per cent to six per cent.

Source: punchng.com

FOLLOW US ON:

FACEBOOK

WHATSAPP CHANNEL

TWITTER

PINTEREST

TIKTOK

YOUTUBE

LINKEDIN

INSTAGRAM

Continue Reading

Trending