The 2025 fiscal year is expected to usher in a defining moment for Nigeria’s economic policies at the state level, with Lagos, Niger, and Rivers emerging as the top three Nigerian states with the largest budget in 2025.
These states have introduced unprecedented fiscal plans that not only set new records in financial allocation but also reflect deeper strategic ambitions for governance, fiscal sustainability, and long-term development.
While the headline figures of N3.005 trillion for Lagos, N1.5 trillion for Niger, and N1.188 trillion for Rivers grab attention, a closer look reveals their unique approaches to addressing critical challenges and leveraging opportunities for growth.
Lagos State 2025 budget: Sustaining Urban Resilience
Lagos State, Nigeria’s economic hub, unveiled a groundbreaking N3.005 trillion budget, titled the “Budget of Sustainability.” Having increased by 33.6%, it aims to keep its status as the financial hub, Lagos State has seen its economy grow significantly. The city’s Gross Domestic Product (GDP) has grown from N27 trillion to N41 trillion within four years of Governor Babajide Sanwo-Olu’s administration, making Lagos the seventh largest economy in Africa. This growth indicates that Lagos contributes about 20% to Nigeria’s GDP.
The budget allocates 59% (N1.766 trillion) to capital expenditure and 41% (N1.239 trillion) to recurrent costs, focusing on infrastructure, housing, transport, and services. Capital spending has consistently exceeded recurrent costs. Lagos funds over 70% of its budget through internally generated revenue (IGR), reducing reliance on federal funds. This allows for significant investments despite national economic changes. However, the city’s wealth mainly comes from high-income urban areas, leaving rural regions underfunded. The strategy emphasizes long-term urban growth, but it raises issues about equity and the immediate needs of vulnerable groups.
Niger State 2025 Budget: A Bold Leap for Transformation
Niger State’s “Budget of Hope for Sustainability and Food Security” leaps to N1.5 trillion in 2025, up 154.1% from last year. Allocating 87% (N1.362 trillion) to capital projects and 13% (N196.33 billion) to running costs, focusing on infrastructure, education, and health. Specific funds are N437 billion for infrastructure, N90.9 billion for education, and N85.6 billion for health. But with only 37.7% IGR in Q3 2024, Niger depends on external funds, raising concerns about fiscal stability.
This risky strategy aims for quick change but needs effective execution and stakeholder backing, given past governance issues. Niger State, with an economy valued at ₦4.58 trillion, stands out as one of the top 10 biggest economies in Nigeria and is notably the only state from the North to achieve this status. Its economic strength places it alongside traditionally wealthier southern states, a status largely attributed to its vast agricultural potential and substantial natural resources.
Rivers State 2025 Budget
The approved budget for Rivers State in 2025 is N1.188 trillion. This budget, termed the “Budget of Inclusive Growth and Development,” was presented by Governor Siminalayi Fubara to the Rivers State House of Assembly. It was signed into law on January 2, 2025.
The 2025 budget, valued at N1.188 trillion, underscores the states government commitment to fostering economic growth and societal development through strategic investments in critical sectors. A notable allocation of over N63 billion to education aims to enhance school facilities, improve access to quality education, and address gaps in teacher training and curriculum development.
Similarly, the states health sector has been allocated N97.75 billion, focusing on upgrading healthcare infrastructure, increasing access to medical services, and reducing mortality rates. Additionally, the significant allocation of N195 billion to infrastructure highlights an ambitious plan to boost economic activities by improving transportation networks, energy projects, and housing developments, laying a foundation for long-term growth. This focus reflects an approach to inclusive development, targeting areas critical to human capital growth, public welfare, and sustainable economic progress.
Revenue Analysis (How is the state budget funded?)
The 2025 budgets of Lagos, Niger, and Rivers States rely on a mix of opening balances, Internally Generated Revenue (IGR), and federal allocations. Lagos plans to fund its N3.005 trillion budget primarily through its strong IGR, using loans sparingly to cover any gaps. The state focuses on improving IGR to reduce dependence on borrowing.
Niger’s N1.5 trillion budget leans heavily on federal allocations due to weak IGR, which stood at 37.7% in Q3 2024. The state aims to fill funding gaps through loans or grants and must prioritize boosting local revenue.
Rivers State’s N1.188 trillion budget combines IGR growth strategies, opening balances, and potential borrowing to fund its budget. The state’s IGR has increased from N12 billion to N27 billion monthly, further rising to N100 billion, showcasing a significant enhancement in revenue generation without additional borrowing.
Exploring Nigeria’s lowest state budgets For 2025
Yobe State has a budget of N320.8 billion, with N176.8 billion (55.11%) going to capital projects and N144 billion (44.89%) for recurrent costs. Yobe State has a small economy, heavily dependent on federal funds, where agriculture is the mainstay, involving over 80% of the population in small-scale farming. Gombe State, with a budget of N320.1 billion, allocates N209.02 billion (65.3%) to capital expenditure and N111.09 billion (34.7%) to recurrent.
Balancing Ambition with Realities
While the proposed financing strategies hold great promise, the success of Lagos, Niger, and Rivers states depends on their ability to address longstanding challenges. Persistent revenue shortfalls and systemic inefficiencies pose significant risks. Moreover, the rising cost of debt servicing could limit their capacity to allocate funds effectively towards developmental priorities.
To mitigate these risks, it is essential for these states to strengthen their governance frameworks and enhance transparency in budget execution. Regular budget performance reviews, coupled with active citizen engagement, can help foster trust and accountability. This approach will not only improve fiscal discipline but also ensure that resources are directed toward impactful projects.
Conclusion
The ambitious fiscal strategies adopted by Lagos, Niger, and Rivers present an opportunity to reshape state level governance in Nigeria. If implemented effectively, these budgets could serve as a blueprint for leveraging subnational governance to drive economic growth and improve the quality of life for citizens. Success in this endeavor could redefine the role of state governments as key players in Nigeria’s developmental trajectory, setting the stage for a more prosperous and inclusive future.
