Fiscal Prudence At Subnational Level: The Missing Link In Nigeria’s Development

Nigeria’s economic future does not rest solely in Abuja; it lies equally, if not more, in the fiscal discipline and economic vision of its 36 states and 774 local governments. Yet, while the federal government often dominates conversations around budgeting, revenue, and debt, the real test of national development is unfolding in state capitals, where fiscal recklessness, bloated recurrent spending, and misplaced priorities continue to stifle growth and deepen poverty.
The reality is sobering. Despite receiving trillions of naira from the Federation Account Allocation Committee (FAAC) since 1999, most states remain trapped in a cycle of dependency. Many spend over 70 per cent of their revenues on salaries and administrative costs, leaving little for capital projects or social investments. A number of states survive largely on federal allocations, unable to generate sufficient internally generated revenue (IGR) to sustain their economies. This fiscal fragility is not just a local issue; it’s a national economic risk.
Fiscal prudence at the subnational level must begin with a shift in mindset. States must start treating governance like enterprise management, with a focus on efficiency, return on investment, and sustainability. Governors should not see FAAC allocations as entitlements, but as enablers to build independent, productive economies. The practice of borrowing to fund recurrent expenditures or political projects is not only unsustainable but economically self-destructive.
Transparency and accountability are at the heart of fiscal prudence. Too many states still operate opaque budgeting systems that conceal the true picture of public finances. Budgets should be participatory, data-driven, and open to public scrutiny. Citizens deserve to know how much their states earn, how funds are allocated, and whether projects deliver measurable outcomes. Fiscal responsibility laws must be enforced with seriousness, not as political ornaments, but as binding rules to prevent waste and corruption.
Equally crucial is the need for states to broaden their revenue bases intelligently. Over-reliance on taxes and levies imposed on already struggling citizens or small businesses is counterproductive. Instead, states should focus on unlocking economic value from agriculture, solid minerals, tourism, and manufacturing. For instance, states with fertile land should invest in agro-industrial clusters; those rich in minerals should formalise and regulate mining activities; and those with strategic locations should leverage logistics and trade.
Fiscal prudence is also about prioritisation. It is senseless for state governments to pour billions into vanity projects, airports with no flights, monuments with no visitors, or stadiums that generate no income, while basic infrastructure, healthcare, and education languish. Capital spending should be directed toward projects that create jobs, attract investors, and expand the tax base.
At a time when Nigeria faces rising debt, weakening revenue, and currency pressure, the role of prudent subnational governance cannot be overstated. The federal government’s fiscal reforms such as harmonising taxes and tightening expenditure controls will achieve little if states continue to run deficit-driven budgets without accountability.
Ultimately, the path to sustainable development in Nigeria begins with the fiscal rebirth of its subnationals. A state that spends prudently, invests strategically, and manages transparently will not only prosper on its own but contribute meaningfully to national stability. The call is clear: Nigeria’s governors must govern less like politicians and more like economic stewards, disciplined, visionary, and accountable.
If Nigeria is to rise, its states must first learn to stand on the firm ground of fiscal prudence.