FAAC Rises, Infrastructure Crumbles in States

Nigerians are increasingly frustrated by the deplorable state of infrastructure at the state level despite the surge in federal allocations  from fuel subsidy savings that were meant to improve their lives, report Festus Akanbi

In Nigeria, the dearth of adequate infrastructure is still a major issue, and a recent World Bank report, which confirmed this categorically, stated that the country requires an estimated $3 trillion over the next 30 years to bridge this gap.

Analysts said the current state of infrastructure amidst the dramatic increases in federal allocations to the states is reminiscent of the President Goodluck Jonathan era, when the sharing of the savings from excess crude sales was frittered away by state governments instead of using the same to build durable infrastructure.

During the Jonathan administration, the Nigerian Governors’ Forum, led by then Rivers State Governor Rotimi Amaechi, mounted intense pressure on the federal government to share the funds accumulated in the Excess Crude Account (ECA), arguing that the savings belonged to all tiers of government.

 In 2011, the ECA had a balance of about $20 billion, but due to persistent demands from the governors, citing constitutional rights and fiscal autonomy, the federal government yielded and began disbursing the funds. By 2014, the ECA had dwindled to less than $2 billion.

Despite the massive disbursements, amounting to billions of dollars shared among the 36 states, there was little to show in terms of enduring infrastructure, as many governors either mismanaged or diverted the funds to unproductive ventures, recurrent expenditure, or political campaigns. Consequently, the country was left with a depleted reserve, mounting debts, and poor infrastructure, highlighting a failure of fiscal responsibility at the subnational level.

Tales of Woes from States

Today, while a few state governors are deploying the additional revenue to put in place infrastructure, which will in turn spur economic development,  many others appear to have gone to sleep or simply decided to use the funds for personal gain.

Many governors now engage in an obscene display of wealth, while their citizens wallow in poverty. Today, infrastructure challenges vary across Nigerian states, reflecting regional neglect and poor governance. In Oyo, many rural communities suffer from impassable roads that cut them off from markets and healthcare.

Lagos faces chronic traffic congestion and overstretched drainage systems, resulting in frequent flooding. The healthcare system is inadequate, and the free Medicare promised by the government is a mirage, as patients buy most of the drugs prescribed at general hospitals from pharmacies nearby. In some areas, roads are still a challenge.

Until recently, Ogun has been plagued by dilapidated intercity roads and poor waste management. Kano grapples with water scarcity and outdated healthcare infrastructure. In Imo and Enugu, bad roads and epileptic power supply hinder economic activity and public safety. Zamfara struggles with basic amenities like clean water, schools, and healthcare, worsened by insecurity. These examples highlight the urgent need for targeted infrastructural intervention at the state level.

One continues to wonder why, despite the rising fortune of these states, they still find it difficult to implement the N70,000 minimum wage, with outstanding pension liabilities unresolved.

Money Laundering

Last week, the Chairman of the Economic and Financial Crimes Commission, (EFCC) confirmed the speculation about the diversion of state funds by some governors, thereby denying the states the opportunity of reaping from the increased revenue stream.

The EFFC boss revealed that politically exposed persons (PEPs) in Nigeria are using internet fraudsters, popularly known as ‘yahoo-yahoo boys,’ to launder billions of naira in stolen public funds into offshore accounts.

EFCC chairman, who disclosed this at a briefing in Abuja, said the involvement of politicians in these illicit activities highlights systemic corruption within Nigeria’s political and governance systems. He said investigations had uncovered how PEPs collaborate with fraudsters to open cryptocurrency wallets and transfer stolen funds abroad to purchase luxury items, such as cars and houses.

Olukoyede stated:  “When they (politically exposed persons) steal money in billions, they give it to these boys, they open crypto wallets, and from there, the money goes abroad.”

Deepening Poverty

The widening infrastructure gap in Nigeria has deepened poverty, slowed economic growth, and worsened living conditions across the country. Despite increased federal allocations, many states have failed to prioritise or deliver critical infrastructure such as good roads, schools, hospitals, and water supply. This negligence fuels youth unemployment, discourages investment, and pushes citizens to fend for themselves in areas where the government should take the lead. The result is a growing sense of frustration and disillusionment with state leadership.

Infrastructure refers to those facilities, structures, and institutions whose inadequacies and incompleteness lead to the limitation of the productive forces of a society. This includes, among others, scientific and technological institutions, educational institutions, basic industries, energy, transport, communication networks, and financial institutions, among others.

In Nigeria, unfortunately, public discourse on governance often tilts toward the federal government, but analysts insist that the most glaring failures in delivering essential services and public accountability are unfolding at the subnational level.

Little to Show for Higher Allocations

This is because, despite a significant increase in revenue since the removal of fuel subsidies and the unification of the exchange rate, state governors have largely failed to translate the windfall into tangible improvements in the lives of their citizens.

After the fuel subsidy was scrapped, Nigeria began saving hundreds of billions of naira monthly, and this naturally boosted FAAC disbursements to states. For example, in 2023, the 36 states of the federation shared N1.5 trillion in the first half of the year. In 2024, the figure increased to N1.88 trillion in the first half of 2024 and ballooned to N2.2 trillion by April this year.

Analysts said with more money, citizens should expect better roads, hospitals, schools, and water systems, not excuses.

They argued that infrastructure is a core responsibility of state governments, and so roads, healthcare, education, housing, and water supply largely fall under state-level jurisdiction. They added that when governors blame the federal government, it’s often a diversion from their inaction or mismanagement.

Today, public data shows which states are meeting capital expenditure targets and which are underperforming. Some states like Rivers, Delta, Lagos, and Osun have been praised for delivering projects and meeting Capex goals, so citizens in other states have every right to demand the same level of commitment and result.

The monthly allocation, particularly to states and local governments, is meant to fast-track track execution of viable economic and social infrastructure development projects at the grassroots.

According to reports analysed by the Foundation for Investigative Journalism (FIJ), despite receiving increased allocations from the Federation Account Allocation Committee (FAAC) in 2024, at least 30 states in Nigeria failed to meet their capital expenditure (Capex) targets and project delivery expectations. Statutorily, these reports must be published within four weeks after the end of a quarter or fiscal year. Most states met this requirement, publishing their BPRs between January 28 and January 31.

At the time of filing this report, there was no publicly available data for 2025 on how many of Nigeria’s 36 states have achieved their capital expenditure (CapEx) targets and project completion expectations. The latest confirmed data is for 2024, where eight states met or beat CapEx targets.

While revenue allocations to states are rising, infrastructural projects are not significantly improving, indicating a potential misallocation of funds or other systemic issues. There is the argument that while states may be receiving more money, a shift towards recurrent expenditure and debt servicing is observed, potentially diverting funds away from capital projects. This leads to delayed or stalled infrastructure development, impacting essential sectors like roads, healthcare, and education.

As usual, state governors have outlined ambitious plans to boost capital expenditure in their states to address the infrastructure deficit in their various domains. The governors have earmarked N17.51 to fund capital projects in their 2025 budgets. In 2024, they had set aside N11.34tn to fund similar projects, but at the end of the day, they recorded a deficit of N3.98tn.

Citizens at the state level must therefore rise to their responsibility of holding governors accountable for the provision of critical infrastructure, especially in light of the sharp increase in federal allocations following the removal of the fuel subsidy.

With more funds at their disposal, state governments have no excuse for the continued decay of roads, schools, hospitals, and other public utilities.

The people must demand transparency, question budget implementation, and ensure that these resources are used to improve their lives and not squandered or diverted.