By Oluwagbenga Samson Oyebanji
The Nigerian economy is growing, but federalism should be about governance and not rhetoric.
The subsidy removal and floating of the foreign exchange brought an expected hardship to Nigerians, which should have happened at the inception of the Fourth Republic democratic space in 1999.
The Renewed Hope Agenda economic reforms actually brought about macroeconomic advantage, but the microeconomic misalignment is the reason for the wailing at the grassroots. High cost of living and high inflation affected the standard of living of the populace.
The PBAT economic reforms happened at a time Nigeria’s economy was in the pit, and making those economic choices was the saving grace for Nigeria to be on the path of economic prosperity.
The FAAC, which is the Federation Account allocated to the sub-nationals based on the revenue of the government, has increased astronomically. The FAAC increased annually from N3.4T in 2022 to N11.38T in 2025, representing a 232.2% increase, which is a compound annual growth of 50% from 2022 to 2025.
The IGR of the sub-nationals also increased from N1.5T to N4.5T over the same period, representing 165%, which is compound growth of 38.38% between 2022 and 2025.
The economy is growing faster than the population growth, which is very commendable. According to the World Bank and IMF, Nigeria’s economy grew by 4.4%, which is higher than the population growth of 2.1%, which means the economy is on the right path.
According to the latest report by BudgIT for IGR of 34 states based on IGR 2025, eight states out of 34 states were able to meet their wage bills.
FAAC accounts for 68.7% of aggregate state revenue in 2022 and 73.3% in 2025. Lagos accounted for about 44% of the N4.15T generated by the 34 states.
The increase in aggregate IGR shows growth but not balanced. 25% of the states would not need federal allocations to impact their states with real governance, which is the dividend of democracy.
The second-quarter of 2026 Gross Domestic Product figures released by the National Bureau of Statistics looks good macroeconomically. Real GDP grew by 4.4% YOY, up from 3.89% in Q1 and 4.23% in Q2 2025.
Manufacturing grew by 3.42%, Agriculture by 4.39%, Services by 4.6%, while the other 27 sub-sectors grew above 3%.
The annualised Q2 GDP figure released by the government is N447.2T at N1,333.94 to $1 Forex, which makes the GDP to be $375B, according to the Ministry of Finance.
Economists and finance experts have argued that for Nigeria to meet the ambitious $1 trillion economy by 2030, consumption has to increase to $166 billion and investment to $72 billion annually.
The World Bank projected that for Nigeria to rise to the infrastructure gap, the economy needs $3 trillion in infrastructural investment between now and 2050.
The $1 trillion economy by 2030 needs an annual $750 billion in infrastructural investment compared to almost $10 billion in 2025.
The needed investment in the energy sector of the economy by providing 24-hour uninterrupted electricity will increase Nigeria’s GDP to double digits faster than expected and will reduce inflation and unemployment quickly.
World Bank shows that FDI net inflow at 1.4% of the GDP in 2025 is responsible for the growth of the economy, but the grassroots is not properly impacted.
The IMF projects that FDI must be about 20% of the GDP for the Nigerian economy to grow at double digits.
IMF also highlighted that the Naira is undervalued by 25%, which the Ministry of Finance buttressed by stating that the Naira actually appreciated 12% in 2026, which is 17% of the GDP.
The total FAAC distributed from January to July 2026 is hopeful but not translating into the desired expectations of the masses.
The 36 States plus FCT received N5.4 trillion in seven months, while the 774 Local Governments received N3.80 trillion. The combined States plus Local Governments with the 13% Oil Producing States revenue was N9.2 trillion.
The Federal Government got N5.7 trillion. The total FAAC distributed between the FG, States and Local Governments was N15.999 trillion in seven months.
The Renewed Hope revenue distribution has changed the revenue of the States and Local Governments. The revenue increase is expected to translate into better infrastructural development, better Human Capital Development and Social Security Safety Nets.
N9.2 trillion flowing from the Federal Government to States and Local Governments in seven months should reduce the economic hardship, but the financial recklessness of the sub-national leaders is not helping the Renewed Hope Agenda.
With all these revenues, the Renewed Hope Agenda revenue expansion should actually translate into Renewed Hope prosperity at the grassroots. This lag is an economic paradox.
Who should be held responsible for the fiscal irresponsibility of the sub-nationals?
Fiscal Federalism should actually be the anchor of the dividend of democracy, but the pattern witnessed is fiscal misalignment and the grassroots not properly impacted.
The sub-national leaders are not rising up to the expectations of the citizens.
Political and economic education must be done for the grassroots electorate to know that the sub-national leaders are culpable for not delivering the dividends of democracy to the rural areas.
Nigeria’s road network is approximately 200,000 km. Federal roads represent 35,000 km, State roads represent 30,000 km, and Local Government roads represent 130,000 km, using FERMA road data.
82% of Nigerians’ roads are outside the Federal Government’s road responsibilities. Reduction of food prices, inflation and rural poverty rests more with Local Governments.
This is an economic paradox with huge allocations and little results where 70% of Nigerians reside.
The solution, in my humble opinion, is that we need to re-align our Constitution to the reality of the majority of Nigerians to allow the grassroots to feel the impact of the Renewed Hope Agenda’s democratic dividends.
The revenue distributed should be monitored constitutionally to allow the people to own governance.
Democracy is about the people, and this philosophy must be the song on the lips of all the constitutional democrats that believe in democracy.
-Oluwagbenga Samson Oyebanji
Public Affairs Analyst and Convener of the Progressive Youth Mandate
Dear Vows
