October 31, 2024/CSL Research
The National Bureau of Statistics (NBS) recently released its 2023 Internally Generated Revenue (IGR) report, covering Nigeria’s 36 states and the Federal Capital Territory (FCT). According to the report, these states and the FCT collectively generated ₦2.43 trillion in IGR for 2023, marking a y/y increase of 26.03% from the ₦1.93 trillion recorded in 2022.
The total IGR was classified into two main categories:
1. Taxes – including Pay As You Earn (PAYE) taxes, direct assessments, road taxes, stamp duties, capital gains tax, withholding taxes, and revenues from Local Government Areas (LGAs).
2. Revenue from Ministries, Departments, and Agencies (MDAs).
Among tax revenues, PAYE was the largest contributor, generating ₦1.24 trillion, or 63.83% of the total taxes collected. In contrast, capital gains tax contributed the least, with ₦5.91 billion. Overall, taxes accounted for approximately 80% of the total IGR nationwide.
Lagos State led revenue generation in 2023, recording ₦815.86 billion, or 33.6% of Nigeria’s total IGR for the year. This represents a 25% y/y increase from ₦651.15 billion in 2022, underscoring Lagos’s role as the country’s commercial hub. Following Lagos, the FCT, Rivers State, Ogun State, and Delta State ranked second through fifth, generating ₦211.10 billion, ₦195.41 billion, ₦146.87 billion, and ₦90.91 billion, respectively. At the lower end, Taraba State recorded the least IGR with ₦10.86 billion, followed closely by Yobe State at ₦11.19 billion, Kebbi State at ₦11.73 billion, and Gombe State at ₦15.17 billion. Regionally, the southwest zone generated the highest IGR, totalling ₦1.1 trillion, with Lagos contributing 73% of this amount. The south-south zone followed with ₦468.7 billion, while the remaining zones reported as follows: ₦142.9 billion for the southeast, ₦206.2 billion for the northwest, ₦387.6 billion for the north-central, and ₦104.3 billion for the northeast.
The growth in IGR recorded in 2023 reflects improved revenue mobilization efforts across many Nigerian states. Leading the growth in revenue generation were Katsina, Ebonyi, and the FCT, with four-year compound annual growth rates (CAGRs) of 33.5%, 33.1%, and 29.7%, respectively. However, the report also highlights persistent revenue collection challenges, particularly in northern states, where IGR collection has been lower than optimal. Over time, many state governments have relied heavily on monthly allocations from the Federation Accounts Allocation Committee (FAAC), often overlooking viable local revenue-generating initiatives. According to BudgIT’s 2023 State of States Report, the cumulative dependency on federal transfers by states rose from 58.4% in 2021 to 61.45% in 2022. Some states, including Taraba, Katsina, Bayelsa, and Zamfara, required over seven times their IGR to cover their operating expenses in 2022. Additionally, five states—Abia, Imo, Yobe, Zamfara, and Plateau—did not generate enough revenue from combined IGR, federal allocations, and grants to meet their recurrent expenditures that year. To ensure economic viability and self-sufficiency, it is crucial for sub-national governments to continue strengthening their internal revenue mobilization efforts.
