The new fiscal space for states
The removal of the petrol subsidy and the alignment of the naira with market forces have created unprecedented fiscal room for Nigerian states. Before 2023, states struggled to pay salaries and pensions, often resorting to borrowing. Today, thanks to these reforms, FAAC allocations have surged.
For context, the total FAAC disbursement to states in 2022 was ₦2.8 trillion, compared to ₦2.49 trillion in just the first seven months of 2026. This explosion in funding has allowed states to meet obligations effortlessly, unlike the pre‑2023 era when artificial FX rates distorted revenues and forced the Federal Government itself to borrow heavily from the CBN, fuelling inflation.
The risks of windfalls
Windfalls, when unplanned, often lead to waste. States risk spending on irrelevant projects or indulging in short‑term populism simply because “the money is there”. Citizens must therefore hold their governors accountable: if infrastructure does not improve, the fault lies with state leadership, not Abuja.
