Don’t be fooled, states are not richer, by Dele Sobowale

Most Nigerians are being fooled right now, as they often are, by the Federal Government; with regard to the monthly allocations to states. Unfortunately, because the hands of many of the State Governors are not clean, they are allowing the FG to blame them unjustly for overall poor performance. Granted, there are a few outstanding performers – Lagos, Abia, Adamawa and Zamfara – but the rest of them have little to show for the increased revenue allocations. The fault is not entirely their own. The laws of economics don’t respect governments and their propaganda machines.

What’s true about monthly allocations

“Truth is constant.”

Promoters of FG propaganda are stretching a simple truth beyond breaking point. Nobody disputes the fact that the reforms embarked upon by President Tinubu will ultimately yield positive results if faithfully executed for the long-term. The benefits of such reforms are never immediate – even if early reports point in the right direction.

States and the Federal Capital Territory, FCT, now collect a greater share of the monthly allocation. But, with the possible exception of Lagos State, the states are definitely not rich now. Virtually all of them are struggling to pay their bills – even now.

The reason is simple. Everybody is paying more for goods and services than ever before. The FG and States of Nigeria are not exempted from the ravages of inflation. Mischief makers, encouraged by the FG, are exploiting the ignorance of the masses to instigate Nigerians against their state governments. Unfortunately, the Governors are uniformly gutless. They can’t even defend themselves from the wrong accusation.

Ignorance and mischief collide

“It aren’t the things you don’t know that cause the problem; it’s things you think you know that aren’t so.” Ralph Waldo Emerson, 1803-1882

Subscribers to the narrative, actively promoted by the FG, that states now have more money and should do more, fall into two categories – economic illiterates and mischief makers. The former are being duped by the latter in order to achieve the dubious goals of official misinformation. Every government, from time immemorial, employs truth benders. It would be unimaginable that this government or the next will be an exception.

One character, a few weeks ago, sent out a piece, forwarded to me. He listed five African countries indebted to the International Monetary Fund, IMF. The punch line of that story? Nigeria no longer owes the IMF. To economic illiterates, that was a positive sign of progress. 

What the prankster failed to reveal points in a different direction. In reality, what the FG has done was to borrow at higher interest rates to pay off low interest IMF loans. Today, Nigeria’s debt burden is N160tn; more than when IMF was paid off. That is not progress. That is financial blunder. But purveyors of falsehood never allow facts to stand in their way.

This article addresses only the economic illiterates – who can still be educated.

Importance of purchasing power

“Purchasing power is the real world value of money defined as the quantity of goods and services that a single unit of currency can buy.”

Purchasing Power is the relevant applicable concept in this regard. To put the matter into context, it is necessary to go back a bit in our history. In 1974, the Marketing Manager of a multi-national company was paid N630 a month when the exchange rate was N0.70/US$1. Today, a Manager, in the same position, would have to be paid N1,260,000 a month to reach parity. Anything less would amount to a reversal of fortunes. 

Price inflation, over the years, has eroded the value of the Naira, such that even N900,000 per month, paid to the Manager is not an improvement in real purchasing terms. A new Mercedes Benz 250 went for less than N30,000 in 1983. With that as background, we can now ask if Nigerian States are richer today than in 2022.

Why FAAC monthly allocations don’t tell full story

“FG releases barely 5% of N54.93tn road budget”. Report, June 17, 2026.

In addition to releasing barely five per cent of the road budget in three years, it is now on record that the FG released less than seven per cent of the capital expenditure budget for health and defence Ministries. Was it because monthly allocations have been dropping that the FG is failing in its responsibilities? Certainly not. Allocations kept on increasing every year since 2023; but, Purchasing Power also kept on declining.

Inflation, which averaged about 25 per cent per annum; fuel prices, phone call charges, electricity tariffs to over 300 per cent   the rates in May 2023, have devalued the increased monthly allocations. One example will illustrate the point.

Lagos-Abuja airfares, economy class, just last year January, were ranging from N70-80,000. Today, they average N160-190,000 one way. Fuel, electricity bills, cement and other building materials have also experienced upward surges in price. State Governors might be dictators in their states; but, they are not gods. In every state, just as in Nigeria, state governments are discovering that they are powerless to control the prices of commodities. Yet, in each state, the government is the largest single consumer of goods and services whose prices are going up steadily.

Furthermore, debt-servicing costs have also escalated in the last three years, putting more strain on state government finances. Again, these are costs over which states have no control. The Central Bank of Nigeria, CBN, dictates interest rates; and states, like everyone else can only adjust.

For some states, unintended expenditures made to address the heightened insecurity nationwide is drilling a big hole in the public purse. No Governor is totally in control of the situation in his state.  

Obviously, the monthly FAAC allocations don’t tell the full story. The attempt by the FG to shift blame to state governments is therefore totally unjustified. It amounts to blaming the victims of measures taken at Abuja with adverse consequences for the states.

Rising poverty and its economic consequences

“Poverty threatens 79% of Nigerians despite reforms – World Bank”.  

Report, July 16, 2026.

Rising poverty nationally will always affect citizens at local and state levels most. The steady increase in the percentage of Nigerians living in poverty is already putting pressures on state governments to provide more funds than before for school children; as more parents withdraw their children from private to public schools.

Physician heal yourself

“Leadership by example” has been the favoured method of managing any enterprise – including government. The FG is also collecting higher revenue as the states. Yet, the higher income has not translated into improved service delivery. Period.

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