Nigeria’s latest state finance figures are exposing a growing fiscal divide between Nigerian states. In 2025, the 36 states and the Federal Capital Territory generated about ₦4.15 trillion in internally generated revenue, but Lagos State generated 45% of subnational IGR, highlighting how heavily Nigeria’s domestic revenue base depends on one state.
At the same time, the FCT domestic debt 2026 figure has jumped sharply, raising a different question: are some subnational governments increasing borrowing faster than they are building their own revenue capacity?
Lagos Is Becoming the Exception
Lagos’ dominance is not entirely new. The state has consistently ranked as Nigeria’s strongest IGR performer, supported by its large population, commercial activity and extensive tax base.
The difference is the scale. With Lagos accounting for roughly 45% of the ₦4.15 trillion total, the other 35 states and the FCT collectively generated less than Lagos did.
That creates a major challenge for Nigeria state revenue 2025. Many states have limited formal economic activity and depend heavily on federal allocations to fund salaries, infrastructure and public services.
Lagos has spent years expanding its tax collection systems and widening its taxpayer base. The state said its IGR reached about ₦1.3 trillion in 2024, with IGR funding more than 60% of its budget.
The FCT Debt Jump Tells Another Story
While Lagos demonstrates what stronger internally generated revenue can achieve, the FCT is showing the risks of rapid borrowing.
Debt Management Office data shows the FCT’s domestic debt increased from ₦61.12 billion in March 2025 to ₦389.87 billion in March 2026. That represents a 538% increase in one year.
The wider picture is also significant. Domestic debt across the 36 states and FCT rose from ₦3.86 trillion to ₦4.52 trillion during the same period, even though 26 states reduced their debt stocks.
This means Nigeria’s state debt crisis is not simply about every state borrowing recklessly. Some governments are reducing debt while others are taking on much larger obligations.
What Other States Can Learn
The figures put pressure on state governments to improve internally generated revenue in Nigeria without simply increasing taxes on residents.
Lagos’ experience suggests that better taxpayer registration, digital collection systems and stronger revenue administration can make a difference. The state’s own officials have credited digital tax systems and an expanded tax base for its revenue growth.
But copying Lagos will not be simple. States have different populations, industries and economic bases.
The bigger question is whether Nigeria can develop more states capable of funding a meaningful share of their budgets internally. Until that happens, the country’s subnational finances will remain vulnerable to changes in federal allocations and rising borrowing costs.
The latest numbers therefore tell two stories at once: Lagos State IGR 2025 shows what fiscal independence can look like, while the FCT’s debt surge shows how quickly borrowing can change the picture.
