Richer Governments, Poorer People: The Paradox Of Nigeria’s Soaring Allocations & Rising Hardship

By DAVID JOHN-FLUKE

ACROSS Nigeria, citizens are groaning under the weight of economic hardship, even as federal, state, and local governments record their highest revenues in decades. Since 2023, oil earnings, tax receipts, and monetary reforms have boosted Federation Account Allocation Committee (FAAC) disbursements to unprecedented levels. Yet, for millions of Nigerians, life has only grown harsher — a paradox that lays bare the disconnect between public wealth and citizens’ welfare.

Billions Flow, But Not to the People

Federal data shows that from January 2023 to September 2025, Nigeria’s three tiers of government shared a staggering ₦41.8 trillion — ₦8.2 trillion in 2022, ₦10.2 trillion in 2023, ₦15.26 trillion in 2024, and already ₦16.4 trillion by the third quarter of 2025. State allocations alone jumped from ₦3.58 trillion in 2023 to ₦5.81 trillion in 2024, and further to ₦6.7 trillion in just nine months of 2025.

But economists warn that these headline figures disguise an uncomfortable truth: the real value of the funds has been eroded by inflation, currency collapse, and poor fiscal discipline. The removal of fuel subsidy and the floating of the naira may have swelled government accounts, but they also triggered severe inflationary shocks, sending prices — and poverty — skyrocketing.

Reforms with a Human Cost

When President Bola Tinubu announced the end of petrol subsidies and the unification of exchange rates on 29 May 2023, many hailed the move as a bold step toward fiscal sanity. But the aftermath has been brutal. Fuel prices shot from ₦197 to over ₦1,000 per litre. The naira’s value plummeted to as low as ₦1,900 to the dollar at one point. Inflation soared to 34.8% by December 2024 — its highest in 30 years — and although recalibrated to 18% by September 2025, prices remain punishing for most households.

The World Bank estimates that more than 139 million Nigerians now live in poverty, compared to 93.8 million in 2023. This means that despite record inflows to government coffers, citizens are poorer, hungrier, and more frustrated.

Tinubu’s Caution to Governors

Alarmed by the disconnect between rising state revenues and worsening public misery, President Tinubu recently admonished governors to “wet the ground” — a metaphorical call to let citizens feel the impact of governance. At an APC National Executive Committee meeting, he told governors:

“Nigerians are still complaining at the grassroots. You have to give more dividends of democracy. Our people need to feel the impact of government more directly.”

It was a public rebuke that reflected growing concern that many states have little to show despite massive fiscal windfalls.

Experts: Rising Revenues, Declining Value

Economists say the surge in FAAC receipts has created an illusion of prosperity. Dr. Samson Simon of ARKK Economics noted that allocations to states more than doubled in 2024 — from ₦5.4 trillion to ₦11.38 trillion — yet inflation and devaluation wiped out the gains.

“When adjusted for inflation and exchange rates, the real value of the allocations has actually dropped. It’s nominal growth masking real decline,” he said.

Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), echoed similar sentiments.

“The states have more money, but how well are they using it? The nominal growth doesn’t mean they can buy more — inflation has eroded purchasing power. Transparency and efficiency are key,” he warned.

Revenue Without Reform

Analysts agree that Nigeria’s fiscal crisis is not about scarcity of funds but mismanagement and lack of accountability. David Adonri, Vice Chairman of Highcap Securities, argued that only a few states, such as Abia, have demonstrated responsible use of resources.

“Despite increased allocations, social goods remain elusive. Governments have failed to use these revenues to enhance citizens’ well-being,” he said.

Adonri described the situation as one where “governments smile to the bank while citizens queue for bread,” stressing that the purpose of revenue is not to inflate state budgets but to improve lives.

A Windfall with Woes

The former NACCIMA president, Dele Oye, described the fiscal boom as a “revenue illusion” that conceals deep social pain. He said reforms such as subsidy removal and FX liberalization have widened inequality and triggered an exodus of multinationals.

“Our earnings have grown, but so has suffering. Inflation, unemployment, and business closures have all worsened. We must not celebrate fiscal expansion in a time of economic distress,” he said.

Oye urged both federal and state governments to use part of the windfall to reduce debt, support productive sectors, and invest in infrastructure that creates jobs. He also called for independent verification of social protection claims, warning that “cash transfers without accountability are mere political optics.”

Fiscal Indiscipline and Transparency Deficits

For Victor Chiazor, Head of Research at FSL Securities, the continued hardship despite higher revenues points to poor fiscal management.

“Economic reforms have increased allocations, but without fiscal discipline and transparency, the impact is muted,” he said.

He urged governments to prioritize productive spending, cut waste, and publish expenditure details to build public trust.

A Bright Spot: Ekiti’s Example

Not all is bleak. Governor Biodun Oyebanji of Ekiti State insists that his government has used increased allocations prudently, funding infrastructure, healthcare, and utilities without borrowing.

“Every project we’ve executed was funded from our share of the federation allocation. We’ve not taken a single loan,” he said proudly at the commissioning of the Ekiti Revenue House.

Oyebanji credited President Tinubu for ensuring fair distribution of resources, describing the new fiscal regime as “transparent and liberating.”

The Verdict: Accountability or Anarchy

The growing chorus from economists, civic groups, and citizens is clear: Nigeria’s problem is not a lack of money but a lack of management. For the first time in decades, the states and local governments are awash with funds — yet roads crumble, hospitals decay, and food prices spiral.

The question is not how much Nigeria earns, but how responsibly it spends. Until fiscal transparency, prudent management, and equitable investment become the norm, the nation’s fiscal windfall will remain a tragic irony — a story of richer governments and poorer people.