Lagos, Rivers, FCT led Nigeria’s N3.63tr IGR in 2024 

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has said the new tax laws made provision for the exemption of over 90 per cent of Nigerian workers from pay-as-you-earn (PAYE).

Meanwhile, the 36 states and the Federal Capital Territory (FCT) generated a combined N3.63 trillion in Internally Generated Revenue (IGR) in 2024, with Lagos alone accounting for more than one-third of the total, according to new data released by the National Bureau of Statistics (NBS), in collaboration with the Federal Inland Revenue Service (FIRS).

Oyedele, during a session at the ongoing 31st Nigerian Economic Summit (NES#31) in Abuja, yesterday, said the exemption would come into operation from January 2026, noting that the new tax laws were targeted at protecting the low income earners or those below the poverty line.

He said: “We cannot tax poverty, about 97 to 98 per cent of Nigerians will no longer pay the PAYE, but the two per cent will pay more as high income earners.”

According to him, it is wrong to hold the perception that the tax reforms is meant to impose higher taxes, insisting that the objective is rather to reduce business risks.

“The tax reforms are not to impose higher taxes. You won’t find that anywhere in the laws. Rather, they are to reduce business risk. I can give you examples. We have companies in Nigeria that are being asked to pay minimum tax on their capital. So the idea is to reduce business risk and make the environment simpler.”

He advised those in the informal sector to formalise their business to enjoy the benefits in the new tax laws.

Acknowledging that the former system created a disincentive to formalisation, he noted that the new law is reversing it. It is the reason we have to take the top rates for personal income tax to 25 per cent. Still lower than 35 per cent in Ghana, 35 per cent in Kenya and 45 per cent in South Africa. We are reducing the corporate tax rate from 30 to 25 per cent, so people no longer have a disincentive to formalisation.”

IGR across the 36 states and FCT rose to a cumulative N10.88 trillion between 2021 and 2024, according to NBS.

The upsurge in IGR is driven primarily by tax revenue, particularly in Lagos and Enugu states.

The report shows that in 2024 alone, the states collectively generated a record N3.63 trillion in IGR – the highest in the four-year period. This represents a 49.7 per cent increase from the N2.43 trillion generated in 2023.

Tax revenue remains the dominant contributor to IGR, accounting for approximately 73 per cent of total state-generated income over the four-year period. In 2024, tax revenue stood at N2.66 trillion, while other sources, such as fees, licences and earnings from state-owned enterprises, contributed N968 billion.

In 2023, states collectively realised N2.43 trillion, made up of N1.95 trillion in tax revenue and N478 billion from other sources. The previous year, 2022, saw a total IGR of N1.93 trillion, comprising N1.47 trillion from taxes.

The lowest IGR figure in the period was recorded in 2021 at N1.90 trillion, with N1.23 trillion coming from taxes.

While Lagos and a few other economically vibrant states are presumed to account for a significant chunk of the revenue, the NBS data underscores an overall national trend towards enhanced sub-national revenue mobilisation.

The report showed that Lagos retained its position as the country’s undisputed economic powerhouse, generating N1.26 trillion – more than the combined total of the next three states, Rivers (N317.30 billion), FCT (N282.36 billion) and Ogun (N194.93 billion).

Lagos’ IGR figure, which represents roughly 35 per cent of Nigeria’s total sub-national revenue, underscores its strong tax base and diversified economy anchored on commerce, manufacturing and services. The performance also reflects ongoing efforts by the state government to expand digital tax administration and improve compliance through its Internal Revenue Service.

Enugu’s strong showing signals improving fiscal reforms and expanding urban economic activities. Analysts say the state’s performance could attract greater investor confidence and strengthen its fiscal autonomy from federal allocations.

Other southern states, such as Akwa Ibom (N75.77 billion), Oyo (N65.29 billion) and Bayelsa (N64.01 billion) also featured prominently among the top half, reflecting stronger internal revenue mobilisation and improved economic productivity.

While Kano (N74.77 billion) and Kaduna (N71.57 billion) ranked ninth and 10th, respectively, most northern states continued to post weak IGR outcomes relative to their population and size. Jigawa (N59.46 billion) was the only other northern state among the top 15.

At the bottom of the ranking, Yobe generated N11.08 billion, the lowest in the federation, followed by Ebonyi (N13.18 billion) and Kebbi (N16.97 billion).

Analysts warn that the concentration of fiscal capacity in a few states poses risks for balanced national development.

Economists argue that unless low-performing states diversify their revenue sources through agriculture, mining and services, the current regional disparities will continue to strain fiscal federalism and limit sustainable growth across Nigeria’s 36 states.