The Federal Government has urged state governments to aggressively expand their internally generated revenue (IGR) and reduce dependence on monthly allocations from the Federation Account to build sustainable and resilient economies.
The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, gave the charge on Monday in Owerri, Imo State, while declaring open the 2026 National Council on Finance and Economic Development retreat.
Oyedele said the increase in monthly federal allocations to more than N2 trillion, from an average of about N300 billion under previous administrations, should not encourage states to rely solely on federation revenue.
The three-day retreat is themed, “Strengthening Fiscal Federalism for Equity, Sustainable Development and Economic Resilience in a Volatile Global Economy.”
The minister said states needed to use the additional resources available to them to strengthen their productive capacity, attract investments, create jobs and expand their revenue bases.
He warned that higher allocations alone could not guarantee prosperity without strategic investments in infrastructure, human capital, local productivity and basic public services.
“Ultimately, the federation cannot share its way into prosperity,” Oyedele said.
He urged state and local governments to look beyond monthly oil revenues and develop sustainable sources of income capable of shielding their economies from volatility in global markets.
According to him, states should transform into active economic platforms that attract private capital, support businesses and create employment opportunities rather than remain dependent on federal transfers.
Oyedele also called for an urgent review of the nation’s revenue allocation formulas to ensure greater equity across the 774 Local Government Areas, while strengthening fiscal responsibility and debt sustainability frameworks.
The minister said the Federal Government’s economic reforms, including the removal of fuel subsidy and the unification of the foreign exchange market, had significantly increased government revenues.
He said the reforms contributed to a record N2.8 trillion federation allocation in June 2026, compared with the much lower allocations recorded under previous administrations.
Oyedele noted that the increased revenue had helped improve the ability of states to meet their salary obligations, saying that unlike in previous years, no state currently struggled with salary payments under the new revenue arrangement.
However, he stressed that the improvement in revenue distribution should serve as a foundation for economic transformation rather than an excuse for states to delay reforms to their own revenue systems.
He also disclosed that the Federal Government had expanded targeted interventions, including cash transfers to 15 million vulnerable households and the NG-CARES programme, to cushion the effects of economic reforms on vulnerable Nigerians.
Speaking on behalf of Imo State Governor, Hope Uzodimma, his deputy, Mrs Chinyere Ekomaru, said the pressure on states and local governments made it necessary to strengthen fiscal federalism and improve revenue mobilisation.
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“States must be empowered to generate revenue. Allocations must be equitable and must be built with resilience through diversification and prudent management of available resources,” she said.
Earlier, the Permanent Secretary, Federal Ministry of Finance, Mr Raymond Omachi, said the retreat was designed to generate practical solutions to Nigeria’s fiscal and economic challenges.
The forum brought together stakeholders including the Revenue Mobilisation Allocation and Fiscal Commission, Office of the Accountant-General of the Federation, state ministries of finance, the Central Bank of Nigeria and NNPC Ltd.
Participants are expected to develop recommendations on revenue mobilisation, fiscal responsibility, debt sustainability, economic diversification and improved resource allocation.
The outcome of the retreat is expected to shape a new fiscal direction focused on productivity, accountability, equity and shared responsibility among the federal, state and local governments.
