Across Northern Nigeria, state governments find themselves caught in a fiscal paradox of their own making: public wage bills have grown so large that even a 232 percent surge in federal transfers since 2022 has deepened dependency rather than relieved it. Only Kaduna and Kwara, among more than a dozen northern states, can cover their personnel costs from revenues they generate themselves — a quiet measure of how far most of the region's economies remain from self-sustaining vitality. The question economists are now asking is not merely whether states can meet payroll, but whether the structura
Northern Nigeria's fiscal crisis: Only Kaduna, Kwara cover wage bills from own revenue
Federal transfers became the only thing keeping government functioning.
Mark
So only two northern states can actually pay their workers from money they raise themselves. That's striking. What does it mean for the region?
Mimi
It means the north is locked into a cycle where federal transfers become the only thing keeping government functioning. Kaduna and Kwara have some economic activity—Kaduna has commerce, industry. But most other states are hollowed out. They can't invest in the things that would actually grow their economies.
Luke
But we should be careful here. The comparison assumes states should cover wages from IGR alone, which isn't how federalism works. Federal allocations are legitimate. The real question is whether these states are using federal money to build capacity or just to survive.
Mimi
That's exactly the problem. When you're spending 70, 80 percent of your budget on wages, there's almost nothing left for infrastructure, education quality, healthcare. You're treading water.
Mark
Jigawa is the worst case—revenue dropped 40 percent while wages doubled. How does that even happen?
Luke
That's the one we need to understand better. Did the state lose economic activity, or did it fail to collect taxes? The source doesn't tell us. It's a real question.
Mimi
Probably both. But the point is the state can't reverse it without federal help, and federal help doesn't fix the underlying economy.
Mark
So what changes this?
Mimi
States would need to actually grow their economies—attract investment, improve services, create jobs. But they can't invest in those things if all their money goes to wages.
Luke
And that's the policy dilemma the source names. Fiscal federalism sounds good until you realize it requires states to have strong independent bases. Most northern states don't have them.
Mark
Is this a northern problem or a national one?
Luke
National. Only eight of 34 states covered can cover wages from their own revenue. But it's most acute in the north because the gap is widest there.
El Pulso
- A fiscal trap is closing around Northern Nigeria: states are spending on wages what they cannot earn, with deficits ranging from N17.59 billion in Gombe to a staggering N60.91 billion in Yobe.
- Federal transfers have tripled since 2022, yet instead of buying independence they have deepened it — states now rely on Abuja for 73.3 percent of their revenue, up from 68.7 percent just three years ago.
- Jigawa captures the crisis in miniature: its own revenue shrank by 40 percent between 2022 and 2025 while its wage bill nearly doubled, a directional collapse that signals structural failure rather than a passing rough patch.
- Across 34 states nationally, 26 cannot cover their wage bills from internal revenue, leaving a combined shortfall of roughly N747 billion — but northern states bear the weight most severely.
- Economists warn that governments consuming most of their budgets on salaries have almost nothing left for roads, schools, hospitals, or the productive investments that might actually grow the economies they govern.
- The looming federalism debate threatens to sharpen the dilemma: if states must finance themselves more independently, those with weak revenue bases face a choice between cutting services and deepening dependence — with no clear path to the underlying fix.
Across Northern Nigeria, state governments find themselves caught in a fiscal paradox of their own making: public wage bills have grown so large that even a 232 percent surge in federal transfers since 2022 has deepened dependency rather than relieved it. Only Kaduna and Kwara, among more than a dozen northern states, can cover their personnel costs from revenues they generate themselves — a quiet measure of how far most of the region's economies remain from self-sustaining vitality. The question economists are now asking is not merely whether states can meet payroll, but whether the structural conditions exist for these economies to ever generate the wealth that genuine development requires.
A fiscal trap is tightening across Northern Nigeria. State governments are spending far more on public sector wages than they can raise from their own economies, and federal transfers — however large — are not solving the problem. According to BudgIT's 2026 analysis, only two northern states managed to cover their wage bills from internally generated revenue in 2025. Kaduna generated N86.72 billion against N77.63 billion in personnel costs, leaving a modest cushion. Kwara did better, with a surplus of N19.99 billion. Every other northern state fell short.
The deficits were not marginal. Yobe faced a gap of N60.91 billion. Jigawa, N57.39 billion. Kogi, N52.70 billion. Benue, N44.56 billion. Adamawa, Sokoto, Kebbi, Gombe, and more than half a dozen others all reported personnel spending that exceeded what they could raise locally. The pattern was nearly universal across the region.
The broader fiscal picture makes the situation starker. Federal allocations to states surged 232 percent between 2022 and 2025, climbing from N3.43 trillion to N11.38 trillion. States' own revenues also grew, but far more slowly. The result was the opposite of fiscal maturity: dependency on federal money rose from 68.7 percent of aggregate state revenue in 2022 to 73.3 percent by 2025, while states' own contributions fell from 31.4 percent to 26.7 percent.
Jigawa illustrated the trap most starkly. Its internally generated revenue collapsed by 40 percent over the period while its personnel expenditure nearly doubled. Sokoto and Ebonyi also saw their own revenues decline — not temporary dips but directional shifts pointing to structural weakness.
Economist Sani Yau Babura framed the deeper concern: the question is not just whether states can meet payroll, but whether their economies possess the capacity to generate resources for sustainable development. A government that must direct most of its money toward wages has little left for roads, water, schools, hospitals, or the investments that might actually expand the economy. As debates over fiscal federalism intensify, northern states with weak revenue bases face a narrowing choice — cut services or deepen dependence — with neither option addressing why their economies are not generating sufficient wealth in the first place.
Across Northern Nigeria, a fiscal trap is tightening. State governments are spending far more on public sector wages than they can raise from their own sources—a gap so wide that federal transfers, no matter how large, cannot close it without addressing the underlying problem: the region's economies are not generating enough wealth to sustain themselves.
According to BudgIT's 2026 analysis of state finances, only two northern states managed the basic arithmetic of covering their wage bills from internally generated revenue in 2025. Kaduna brought in N86.72 billion while spending N77.63 billion on personnel, leaving a cushion of N9.09 billion. Kwara performed better still, generating N85.21 billion against N65.22 billion in wage costs, for a surplus of N19.99 billion. Every other northern state fell short—some by staggering margins.
Yobe faced a gap of N60.91 billion. Jigawa, N57.39 billion. Kogi, N52.70 billion. Benue, N44.56 billion. Adamawa, N41.59 billion. Sokoto, N38.07 billion. Kebbi, N26.41 billion. Gombe managed a smaller deficit of N17.59 billion. Bauchi, Borno, Kano, Katsina, Nasarawa, Niger, Plateau, and Zamfara all reported personnel spending that exceeded what they could raise locally. The pattern was nearly universal.
The numbers take on sharper meaning when placed against the broader fiscal picture. Federal allocations to states surged 232 percent between 2022 and 2025, climbing from N3.43 trillion to N11.38 trillion. Internally generated revenue also grew, but more slowly—from N1.57 trillion to N4.15 trillion. The result: states became more dependent on federal money, not less. In 2022, federal transfers accounted for 68.7 percent of aggregate state revenue. By 2025, that figure had climbed to 73.3 percent, while the contribution from states' own efforts fell from 31.4 percent to 26.7 percent.
Sani Yau Babura, an economist, framed the issue beyond the immediate question of whether states could meet payroll. The deeper concern, he argued, was whether state economies possessed the capacity to generate the resources needed for sustainable development. For the north, the answer appeared increasingly constrained. When a state depends on federal transfers for three-quarters of its revenue, and when its own revenue is shrinking or stagnant, the fiscal room to invest in roads, water systems, schools, hospitals, and industrial infrastructure narrows sharply. A government that must allocate most of its money to wages has little left for the productive investments that might actually expand the economy.
Jigawa illustrated the trap most starkly. Between 2022 and 2025, the state's internally generated revenue collapsed from N59.40 billion to N35.27 billion—a decline of 40 percent—while personnel expenditure nearly doubled, rising from N52.37 billion to N92.66 billion. Sokoto and Ebonyi also saw their own revenue decline during the period. Sokoto fell from N23.60 billion to N20.58 billion. Ebonyi dropped marginally from N23.89 billion to N23.25 billion. These were not temporary fluctuations but directional shifts, suggesting structural weakness rather than cyclical pressure.
The problem extended beyond the north. Across 34 states covered by the BudgIT report, only eight generated enough internally generated revenue to exceed their personnel expenditure in 2025. The remaining 26 states collectively raised about N1.16 trillion but spent approximately N1.91 trillion on wages, leaving a combined shortfall of roughly N747 billion. Yet the northern states bore the burden most acutely, and the fiscal federalism debate now circling through policy circles threatened to sharpen the dilemma. If states were expected to assume greater responsibility for their own financing and development, those with weak revenue bases faced a choice between cutting services or deepening their dependence on federal transfers—neither of which addressed the fundamental question of why their economies were not generating sufficient wealth in the first place.
Citas Notables
The more important issue is the capacity of state economies to generate sufficient resources to finance sustainable development.— Sani Yau Babura, economist
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