By Daniel Nduka Okonkwo
Since fuel subsidies ended in May 2023, federal allocations to Nigeria’s 36 states have risen by trillions of naira a year. An examination of official financial disclosures, state budget records, and public accountability findings raises important questions about where the money went and how much translated into tangible benefits for Nigerians.
In May 2023, President Bola Ahmed Tinubu told Nigerians that the decision would free substantial public resources for national development and improve government finances. The consequences for ordinary households were immediate: petrol prices increased, transportation became more expensive, food distribution costs rose, and the prices of essential goods and services followed. State governments, however, subsequently gained access to substantially increased federal allocations. More than three years after the policy change, an important public-interest question remains: how much of the additional revenue available to state governments has translated into measurable improvements in the lives of the people who have borne the economic consequences?
The scale of the financial changes is reflected in official disclosures. Figures attributed to the Federal Ministry of Finance show the 36 state governments receiving ₦2.06 trillion from the Federation Account in 2022, ₦4.18 trillion in 2023, and ₦8.93 trillion in 2025. Federation Account distributions also reflect other revenue streams, including oil receipts, exchange-rate gains, and value-added tax. An August 2026 presentation by the Federal Ministry of Finance estimated that ₦15.8 trillion in subsidy savings accrued to the Federation between June 2023 and December 2025. Of this amount, approximately ₦6.52 trillion was allocated to state governments and ₦3.88 trillion to local governments, bringing the combined subnational share to approximately ₦10.4 trillion. These are estimated shares of subsidy savings, distinct from the larger additional FAAC allocations received over the same period.
The Federal Ministry of Finance’s reform scorecard provides another important dimension to the investigation. Against the pre-removal monthly allocation baseline, state governments received approximately ₦9.17 trillion in additional FAAC allocations between June 2023 and December 2025, while local governments received an additional ₦6.66 trillion. These figures represent additional allocations above the estimated pre-removal revenue run-rate, not a separate account containing identifiable subsidy proceeds. The distinction matters because the money entered the existing federation allocation and public finance system. Consequently, establishing how much each state received requires examining its individual FAAC statements, while determining how the money was spent requires reconciling those inflows with actual expenditure records, audited financial statements, and procurement disclosures.
The Federal Government also introduced a separate palliative intervention in August 2023, approving a ₦5 billion package for each state and the Federal Capital Territory to support food procurement and distribution. The arrangement comprised a 52 percent grant and a 48 percent interest-free loan, rather than an entirely non-repayable grant. On September 1, 2023, Finance Minister Wale Edun confirmed that an initial ₦2 billion had been released to each state. The intervention was intended to support the procurement of food items, including rice and maize, alongside fertilisers and other agricultural inputs. This was a separate intervention from the increased monthly FAAC allocations and should be accounted for independently. The distinction raises a further accountability question: where are the complete procurement records, expenditure statements, quantities purchased, and distribution records showing how the initial releases were utilised across the states?
Governors have defended the use of increased revenues by pointing to improvements in public finances, salary payments, pension obligations, debt reduction, and infrastructure development. In June 2026, Nigeria Governors’ Forum Chairman and Kwara State Governor AbdulRahman AbdulRazaq argued that increased federation revenues had strengthened state finances, citing an approximately 40 percent reduction in Kwara’s debt burden. State administrations have also attributed their ability to implement the ₦70,000 national minimum wage, settle outstanding obligations, and finance public projects to improved revenue inflows. These are significant claims that deserve examination against independently verifiable financial records. The appropriate test is not simply whether a governor announced a debt repayment or a new infrastructure project, but whether the state’s debt profile, audited accounts, payment records, and actual budget implementation figures substantiate the claim. Kwara offers a first test. The Debt Management Office’s records put the state’s domestic debt at ₦109.16 billion at the end of December 2023 and at ₦62.99 billion, on provisional figures, at the end of December 2025, a fall of about 42 percent. That is consistent with the governor’s claim, although it covers domestic debt only and measures the change in the debt stock, not how much of the fall came from repayments out of higher allocations rather than other adjustments.
However, a review of available state Budget Implementation Reports has revealed another important area requiring public scrutiny: the cost of maintaining executive administrations. An analysis of available first-half 2026 budget records, reported by Punch in August, found that 33 state governments spent at least ₦512.10 billion on Government Houses, Governors’ Offices, related executive administration, travel, and transport between January and June 2026. Of this amount, ₦420.01 billion was recorded under Government House, Governors’ Office, and related administrative expenditure, while ₦92.09 billion was allocated to travel and transport. The analysis covered 33 states for which comparable records were available; Edo, Osun, and Rivers were excluded because comparable data could not be obtained. Although the combined expenditure represented an 8.19 per cent decrease from the ₦557.80 billion recorded during the corresponding period in 2025, its overall scale raises legitimate questions about executive spending priorities at a time when households continue to face significant economic pressures. These figures reflect reported expenditure under the identified budget headings and should not automatically be interpreted as spending by governors personally. Indeed, some state governments have disputed such interpretations. The Plateau State Government, for example, maintained that the reported ₦10.11 billion in travel and transport expenditure between January and June 2026 was not spent exclusively by the governor or Government House but covered travel across the wider public service.
The financial records also require closer examination of the balance between administrative expenditure and essential public services. State governments have constitutional and statutory responsibilities in areas including healthcare, education, rural infrastructure, water supply, and social protection. If additional revenue has strengthened their fiscal capacity, citizens are entitled to examine whether that improvement is reflected in increased actual expenditure on primary healthcare facilities, public schools, rural roads, and other services. Approved budgets alone cannot establish delivery. The relevant evidence lies in actual releases, expenditure reports, audited financial statements, procurement records, and project-specific disclosures. A state that approves billions for healthcare but records substantially lower actual expenditure must explain the difference. Equally, expenditure recorded against a capital project should not automatically be treated as proof of its completion or its benefits to the intended community.
The debt question presents another test of accountability. Governors have repeatedly cited debt repayment as one of the benefits of increased federal allocations. However, the Debt Management Office’s quarterly subnational debt records provide a means of independently examining whether individual states reduced their liabilities or continued accumulating domestic and external obligations. Debt reduction should be established by comparing equivalent reporting periods and distinguishing between principal repayments, new borrowing, exchange-rate effects, and other adjustments. A governor’s statement that debt has fallen by a particular percentage is an important starting point, but it is not a substitute for the underlying debt figures. Equally, an increase in debt stock does not, by itself, establish financial misconduct; the purpose, terms, and utilisation of new borrowing must also be examined.
Beyond debt and infrastructure, the management of palliative funds remains a significant transparency concern. State governments have announced food distribution programmes, subsidised transport schemes, agricultural support, and cash assistance to vulnerable households. Yet announcements of distribution are not the same as independently verifiable evidence of delivery. Public accountability requires itemised procurement expenditure, quantities purchased, prices paid, contractors engaged, distribution dates, beneficiary-selection criteria, and records showing the geographical spread of assistance. In October 2025, the Socio-Economic Rights and Accountability Project (SERAP) called on all 36 governors and the FCT Minister to disclose how they had spent increased FAAC revenues associated with subsidy savings. In December 2025, SERAP filed suit No. FHC/L/MSC/1424/2025 at the Federal High Court in Lagos, seeking disclosure of projects, expenditure details, locations, and completion reports. The suit records SERAP’s allegations and its demand for disclosure. No court has ruled on how the funds were spent.
The difficulty of tracing the money is compounded by the fact that no single consolidated, publicly accessible ledger has been identified showing how all 36 states spent their respective subsidy-related revenue gains. Because increased FAAC allocations entered general state treasuries, expenditure is ordinarily recorded across the relevant ministries, departments, and agencies rather than under a dedicated subsidy-removal account. Nevertheless, the absence of a separate account does not remove the obligation to account for public expenditure. Quarterly Budget Implementation Reports, audited financial statements, state procurement disclosures, FAAC allocation tables, and DMO debt records provide the documentary basis for examining the financial decisions of individual administrations. Where records are incomplete, unavailable, or insufficiently detailed, the gaps themselves become legitimate subjects of public accountability. Citizens should not have to rely exclusively on governors’ speeches, press statements, or political advertisements to establish how public money was spent.
The dependence of state governments on federal allocations also deserves attention. A 2026 analysis by BudgIT, reported by Leadership, found that 28 states received a combined ₦2.64 trillion in FAAC allocations between January and May 2026, exceeding their combined 2025 internally generated revenue of ₦1.387 trillion by approximately 90.5 percent. The analysis underscores the continuing importance of federal transfers to state finances, despite improvements in internally generated revenue in several jurisdictions. It raises questions about whether governors are using the increased fiscal space to strengthen productive economic activity, expand their revenue bases, and improve public services, or whether their administrations remain heavily dependent on monthly federal distributions. Sustainable development requires more than receiving larger allocations; it requires building economies capable of generating employment, supporting businesses, and financing public services without perpetual dependence on revenue transfers.
The economic consequences of the subsidy removal must be considered alongside the resources made available to governments. In its June 9, 2026 Article IV consultation statement, the International Monetary Fund estimated that poverty had reached 63 percent of Nigeria’s population under the national poverty line and that approximately 27 million Nigerians experienced food insecurity in the autumn of 2025. These figures do not establish that state governments caused the poverty or that subsidy savings alone could have reversed the situation. They do, however, demonstrate the difficult conditions confronting households and the importance of examining whether increased public revenues are producing meaningful improvements in living standards. The Federal Government has presented the reforms as necessary to restore fiscal stability, while governors have cited improved allocations as evidence of greater capacity to deliver development. The central accountability question is whether the financial gains recorded in government accounts are being matched by improvements that citizens can actually experience.
The question of how much of the subsidy windfall reached ordinary Nigerians cannot be answered through political declarations or aggregate revenue figures alone. It requires a transparent examination of what each state received, what its government actually spent, what projects were financed, what obligations were settled, and what measurable public benefits resulted. The ₦10.4 trillion estimated to have been shared among state and local governments between June 2023 and December 2025 represents a substantial public financial responsibility. Governors must therefore be prepared to demonstrate, through accessible and verifiable records, how the additional resources strengthened public services and improved living conditions. The removal of fuel subsidies imposed a considerable economic burden on Nigerians. That burden makes transparency, prudent expenditure, and accountability even more important. The public should not be left to finance the consequences of a major economic reform without being able to establish what its governments have done with the resources made available in return.
Daniel Nduka Okonkwo is an investigative journalist, human rights advocate, and policy analyst based in Nigeria. He is the founder and publisher of Profiles International Human Rights Advocate (PIHRA), a platform documenting the courage of human rights defenders and examining issues of governance, accountability, security, and fundamental rights.
His reporting on Nigerian governance, security-sector accountability, public finance, and human rights has appeared in Sahara Reporters, Vanguard, Daily Trust, African Defence Forum, Opinion Nigeria, and Daily Intel.
Read more of his work on the PIHRA website:
https://www.profilesinternationalhumanrightsadvocate.com.ng/
For tips, feedback, or collaboration, contact him at dan.okonkwo.73@gmail.com.
