Enugu’s New Financial Architecture

Jeff Ukachukwu

In Nigeria’s federal arrangement, most states have been trained – by habit and by history – to govern with one ear and both hands permanently tuned to Abuja. The month begins, not with an internal reckoning of productivity, but with anticipation: what will the Federation Account Allocation Committee (FAAC), bring? In that culture, budgets can become ceremonies, and “revenue” is often just “allocation.” What is unfolding in Enugu is interesting because it tries to reverse that reflex. It is a deliberate attempt to redesign the state’s fiscal DNA – shifting from an allocation-dependent government to a revenue-governed one.

The headline is dramatic. At a recent press briefing, the Enugu State Internal Revenue Service (ESIRS) disclosed that the state generated N406.774 billion in internally generated revenue (IGR) in 2025—about 80 per cent of its target of N509.947 billion for the year. Compared to the N180.5 billion reported for 2024, this represents a 125 per cent jump in one year. And the longer arc is even more striking: from N26.8 billion in 2022, to N37.4 billion in 2023, to N180.5 billion in 2024, and then N406.774 billion in 2025.

But numbers alone can mislead if we don’t interrogate what sits beneath them. Enugu’s story is not just “more revenue.” It is a new architecture—new rules, new rails, new incentives—built around three hard truths of public finance: you don’t scale what you can’t see; you can’t sustain what citizens don’t trust; and you can’t modernise a state on a revenue system designed for the analogue age.

Start with the composition: in the same 2025 disclosure, Enugu State Internal Revenue Service reported that only N51.5 billion —12.6 per cent—came from tax revenue, while N355.2 billionn—87.4 per cent—came from non-tax revenue. That mix matters. Nationally, the NBS reports that in 2023, states and the FCT generated N2.43 trillionn in IGR, with taxes constituting about 80 per cent of total IGR. Enugu’s 2025 ratio flips the typical Nigerian pattern on its head: the surge is being driven less by squeezing taxpayers and more by recovering, revitalising, and optimising assets and non-tax streams that previously leaked, slept, or disappeared into the fog of fragmented collections.

This is where the phrase “financial architecture” earns its keep. Architecture is not decoration; it is structure. In Enugu’s case, the structure begins with a governing discipline: officials say the administration issued a “matching order” that salaries, pensions, and overheads should be funded internally—pushing the bureaucracy to treat IGR as the first line of survival, not a nice-to-have. That single instruction is more revolutionary than it sounds. Once a government insists on paying its basic bills from what it generates, it forces a new seriousness: leakages become existential, and idle assets become unaffordable luxuries.

Next is institutional redesign. Governor Peter Mbah’s administration signed a law creating a one-stop shop for taxation and making the revenue service more autonomous—explicitly framed as a consolidation that gives the government “full line of sight” into revenue flows, and professionalises the agency with clearer targets and operational latitude. The same account argues that the revenue gains were driven by widening the tax net, plugging leakages, and deploying technology—not by simply increasing tax rates. In other words, the model being advertised is not “tax people harder,” but “see more, capture more, lose less.”

The third pillar is taxpayer experience – because coercive revenue systems create resistance rather than compliance. Enugu’s “single yearly unified tax payment” via e-ticketing is a practical example: instead of multiple collectors and overlapping levies, informal sector operators pay once a year through an e-ticket platform, with the payment split across relevant MDAs—reducing harassment and making obligations more predictable. For the formal sector, the “Consolidated Demand Notice” approach similarly bundles obligations—so businesses aren’t paying the same state through scattered windows that breed confusion and rent-seeking. This is how you turn revenue from a daily fight into a governable system: simplify, unify, digitise.

There is also an important political-economy point buried in the debate over taxes in many Nigerian states: legitimacy. When people believe the system is arbitrary, they look for ways around it; when they believe it is lawful and fair, compliance rises.

Amid misinformation, Enugu State Internal Revenue Service has publicly anchored its position on legality (e.g., PAYE for formal workers and direct assessment for informal operators) and argued that non-state actors historically undermined informal-sector compliance, claiming that “99%” of informal-sector players were not paying before reforms. Whether one accepts every detail or not, the underlying logic is correct: you cannot grow IGR sustainably if collection is outsourced—formally or informally—to chaos.

Still, Enugu’s numbers also raise the question serious analysts must ask: how repeatable is non-tax revenue at this scale? Asset recoveries, concessions, and one-off optimisations can produce spectacular spikes—but a mature financial architecture distinguishes between windfalls and workhorses. The reassuring detail in the 2025 disclosure is that tax revenue itself grew—from N30 billion in 2024 to N51.5 billion in 2025 (a 72 per cent increase), even if it remains a relatively small share of the total. That matters because tax—especially broad-based personal income tax and consumption-linked levies administered transparently—is typically the most reliable revenue engine over time.

The final—and most decisive—test of this architecture is the social contract: do citizens feel the translation of revenue into public value? ESIRS itself links improving compliance to visible governance outputs— 260 Smart Green Schools, 260 Type 2 Primary Healthcare Centres, transport and other infrastructure, among others — arguing that taxpayers are encouraged when they can “see the impact.” This is the correct theory of democratic taxation: revenue is not simply collected; it is explained, accounted for, and returned as measurable public benefit. Where that loop is credible, IGR becomes self-reinforcing.

Enugu is now projecting IGR of N870 billion for 2026. Targets are easy; credibility is harder. The state’s opportunity—if it wants this moment to become a model rather than a headline—is to publish the architecture as a public system: clearer breakdowns of recurring versus one-off revenue, stronger independent audit visibility, open dashboards where citizens can track what their money built, and a tax culture that protects small businesses from nuisance collections while widening compliance through simplicity and fairness.

If Enugu sustains this trajectory, its most important export will not be the naira figure, however impressive it may be. It will be the lesson that fiscal sovereignty is designed, not wished into existence. And that in a country where too many budgets still begin with Federation Account Allocation Committee expectations, the boldest development strategy may simply be this: build a government that learns to stand on what it generates and then governs as if every naira must be justified to the people who earned it.

.Dr Jeff Ukachukwu is a Public Affairs Analyst and writes from Enugu