But behind the noise lies a silent crisis, one that the Nigeria Extractive Industries Transparency Initiative (NEITI) says is draining the lifeblood from state development.

NEITI’s latest Policy Brief, “Beyond Federal Allocations: The Cost of Borrowings and Debt Servicing at State Level in Nigeria”, reads like both a warning siren and a call to action.

Its findings are stark: Kaduna, Ogun, Bauchi, and Cross River are diverting between one-tenth and nearly one-third of their monthly Federation Account Allocation Committee (FAAC) inflows to service debts.

For Kaduna, the picture is particularly sobering. In 2024 alone, 32.06% of its gross allocation, a hefty ₦51.2 billion out of ₦159.73 billion, never reached its people. Instead, it went straight to creditors.

Ogun followed with 27%, Bauchi 26%, and Cross River 24%.

In these states, the roads that could have been built, hospitals that could have been equipped, and schools that could have been staffed remain stalled, sacrificed to past borrowing.

“Debt, when managed efficiently, can be a tool for financing development at the grassroots,” said Dr. Ogbonnaya Orji, NEITI’s executive secretary. “But when servicing obligations consume up to a third of monthly revenues, it becomes a threat to the future of public service delivery and economic stability.”

The agency’s research, grounded in its statutory mandate under the NEITI Act 2007 and aligned with global EITI Standards, lays bare the hidden costs of poor fiscal discipline.

It shows how heavy deductions at source shrink the “fiscal space” available for grassroots investment, a phenomenon NEITI describes as a “silent fiscal emergency.”

The contrast between high-debt and low-debt states is telling. While Kaduna battles with a third of its funds gone before arrival, states like Borno (2.63%), Jigawa (2.74%), and Anambra (4.54%) retain over 95% of their allocations for direct development, thanks to prudent borrowing and tighter fiscal controls.

Beyond the numbers, NEITI’s brief warns of contractual landmines, debts linked to opaque public-private partnerships, such as ₦6 billion in Ogun and ₦7.73 billion in Ondo, which could lock states into long-term deductions with little public scrutiny.

In contrast, 18 states, including Abia, Adamawa, and Akwa Ibom, report zero such deductions, demonstrating that caution, or strategic timing, can avert future fiscal traps.

The report also shines a light on inequalities in Nigeria’s revenue-sharing formula. In 2024, Delta State received ₦581.27 billion, more than five times Nasarawa’s ₦108.32 billion.

For smaller-allocation states already saddled with high debt servicing, this imbalance threatens to widen the gap in infrastructure, jobs, and public welfare.

To avert a deeper fiscal crisis, NEITI recommends bold measures:

• Establish Debt Management Offices in all states.
• Enforce real-time debt reporting and quarterly public disclosures.
• Tie federal bailouts to improvements in internally generated revenue and transparency.
• Cap contractual deductions and publish full borrowing terms.
• Revise the revenue allocation formula to correct vertical and horizontal imbalances.

“This is not a name-and-shame exercise,” Dr. Orji insisted. “It is a mirror to reflect fiscal realities, and a map to guide states toward resilience, transparency, and equitable growth.”

In the end, NEITI’s message is clear: Nigeria’s states cannot afford to let debt dictate their destiny. The choice is stark, embrace fiscal discipline now or face a future where the bulk of public funds serve creditors instead of citizens.

The full Policy Brief has been shared with the Presidency, National Assembly, state finance commissioners, and the Governors’ Forum,  and is now in the public domain.

Whether it sparks reforms or fades into another unread policy file will determine if this silent crisis becomes an economic landslide.

Data from the Nigeria Extractive Industries Transparency Initiative (NEITI) from its latest Quarterly Report on Federation Account Revenue Allocations for Q2, indicated that the federal government received N1.102 trillion, representing 33.35%  of the total allocation.

Besides, the 36 states received N1.337 trillion or 40.47 per cent of the entire monies, while the 774 local government councils shared N864.98 billion or 26.18%.

The Executive Secretary of NEITI, Dr. Ogbonnaya Orji, announced in the report released at NEITI House, Abuja, according to a statement by the Assistant Director of Communications & Advocacy, Chris Ochonu.

In addition, nine oil-producing states received N169.26 billion as their derivation share from mineral revenue.

A comparison with the previous quarter showed that the federal government’s allocation decreased by N41.44 billion (3.76%), while state governments saw an increase of N58.13 billion (4.29%), and local government councils experienced a rise of N30.82 billion (3.57%).

The Nigeria Upstream Petroleum Regulatory Commission (NUPRC), the Federal Inland Revenue Service (FIRS), and the Nigeria Customs Service (NCS) were identified as the main revenue-generating agencies for the Federation Account.

Their contributions, NEITI said, included oil and gas royalties, petroleum profit tax, company income tax, value-added tax, and import & excise duties.

The report highlighted an upward trend in revenue allocations in the latter months of 2023 and early 2024. Total monthly disbursements increased from N1.094 trillion in January 2024 to N1.098 trillion in February but then declined slightly to N1.065 trillion in March.

On state-by-state allocations, Delta State received the largest share of allocations in Q2 2024, with a gross allocation of N137.357 billion, including oil derivation.   Lagos State followed with N123.282 billion, and Rivers State was third with N108.104 billion. Nasarawa, Ebonyi, and Ekiti States received the least, with N24.735 billion and N25.404 billion, respectively.

Among local governments, Alimosho in Lagos State received the highest allocation at N5.721 billion, followed by Ajeromi/Ifelodun (N4.592 billion) and Kosofe (N4.541 billion). Ifedayo received the smallest share of N661.82 million.

Nine states benefited from 13 per cent oil derivation revenue, with Delta State leading at 40.153 per cent, followed by Bayelsa (38.112%) and Akwa Ibom (36.117 %)

Rivers State recorded a derivation ratio of 27.272 %, while the other oil-producing states had ratios below 20%.

The report also noted that solid minerals-producing states did not receive derivation revenue in Q2 2024 due to insufficient revenue generation from the sector.

Bauchi State recorded the highest debt deductions in Q2 2024 at N6.49 billion, followed by Ogun State. Anambra State had the least deductions at N115.6 million, while Lagos and Nasarawa recorded no debt deductions for the quarter.

NEITI recommended that states take advantage of ongoing reforms in the solid minerals sector to diversify their revenue sources.

“The Central Bank of Nigeria (CBN) should strengthen measures to stabilise the exchange rate and reduce fluctuations in Federation Account remittances. States should adopt realistic budget benchmarks for oil production and exports to minimise fiscal shocks from price volatility.

“The Revenue Mobilisation Allocation and Fiscal Commission (RMFAC) and the Office of the Accountant General of the Federation (OAGF) are encouraged to increase transparency and accountability, particularly in the payment of special revenue accruals like derivation arrears and debt repayment refunds,” NEITI stated.

The NEITI quarterly review is designed to provide timely information on FAAC disbursements and to promote citizen education, advocacy, and accountability in the use of public funds.

The executive secretary, Orji added: “The quarterly review aims to highlight the sources of funds into the Federation Account and the factors affecting the growth or decline in revenues and distributions over time.

“The ultimate goal of this disclosure is to enhance knowledge, increase awareness, and promote public accountability in the management of public finances.”

The NEITI executive secretary urged the citizens and civil society organizations, particularly those involved in revenue and expenditure monitoring, to show interest and strengthen their capacity in budget tracking and monitoring of allocations and disbursements to all tiers of government.

Ogbonnaya Orji, the executive secretary of NEITI, made this known on Thursday in Abuja at a roundtable discussion by BudgIT Foundation, a non-governmental organization, on tracking energy transition costs and transparency in the budgeting.

According to Orji, this was contained in the Transparency Initiative’s most recent report on the oil and gas and mining sectors for 2021.

Orji stated that deliberate investments in the solid minerals sector, gas infrastructure and commercialization, human capital development, and use of low-carbon hydrogen as priority areas of focus in the country’s budgeting to respond to energy transition and climate change.

“These opportunities come at a cost that requires commitment to compute them in terms of human and material resources,” he said.

In addition, the NEITI helmsman reiterated the importance of gas commercialization as an important pathway for Nigeria to mitigate the risks and economic impacts of climate change and energy transition.

“NEITI’s recent report of the oil and gas industry disclosed a total unremitted revenue of gas royalty payments of $559.8 million and another unremitted sum of $828.8 million from unpaid gas flare penalties.

“A close look at these figures indicated that more gas was flared during the period than utilized, thereby posing serious dangers to the global zero emissions agenda,” he added.

He called for a review of the country’s gas commercialization policy to align with Tinubu’s commitments to climate change and green economic solutions.

Orji announced that NEITI, with the support of international development partners like the Ford Foundation, has commenced a research study on the impacts of energy transition on Nigeria’s economy.

The study, he said, would identify specific impacts on revenues, jobs, livelihood, the environment, food security, gender, and control of emissions.

Also speaking, Ishaq Salako, Minister of State for Environment, said that the FG, through the Ministry of Environment, had initiated the National Climate Change Policy and Climate Change Act.

He noted that this would provide a comprehensive policy framework and roadmap for the country’s national climate action, as he emphasized the importance of transparency in climate budgeting.

The minister announced that a National Green Bond Programme has been launched to pioneer the issuance of sovereign green bonds in Africa to finance projects that reduce greenhouse gas emissions and promote sustainable development.

“So far Nigeria has issued two sovereign green bonds, raising a total sum of N25.69 billion to finance 39 projects cutting across afforestation, renewable energy, transportation, agriculture, and water resources.

“The process for the issuance of the third sovereign green bond is ongoing and has reached an advanced stage,” Salako said.

This is coming on the heels of calls by a non-governmental organisation for a probe of several monies allegedly owed to the Federation by the national oil company.

NNPC Ltd states that the claims by the NGO were baseless, considering the fact that NEITI itself had dismissed many of the allegations in the said 2021 report, following a series of engagements with NNPC Ltd.

NNPC Ltd states that at the outset of President Bola Ahmed Tinubu’s administration, it was made to sell Premium Motor Spirit (PMS) imported into the country at one third of its value, a development that gave rise to an average of N400bn monthly subsidy bill, which subsequently put a strain on its revenues and finances.

The company further states that, “that subsidy bill accumulated to up to N3.736trillion as of May 31st 2023.”

With respect to gas-to-power debts, the non-payment of NNPCL’s share of upstream joint venture gas supplied to the government-owned plants had led to the accumulation of indebtedness of N174.07 billion by the Federation.

Similarly, the receivables due from the federation to NNPC Exploration & Production Limited (NEPL) as of 31st May 2023 amounted to $712million (equivalent to N309.07 billion at N434.08/US$1) for revenues not remitted to NEPL but paid into the Federation account.

While the Federation owed NNPCL the sum of N4.207trillion as net indebtedness, the Company was only indebted to the Federation in the sum of N2.852 trillion, made up mainly of outstanding Good and Valuable Consideration (GVC) in respect of government upstream divestments, royalties and Petroleum Profit Taxes (PPT).

“We would like to also use this opportunity to clarify that over the years, our relationship with NEITI has been very cordial, as seen in August 2020 when we became an EITI supporting company in 2020, joining a group of over 65 extractives companies, state-owned enterprises (SOEs), commodity traders, financial institutions and industry partners committed to observing the EITI’s supporting company expectations.

“Indeed, aside being a signatory to several EITI’s global ethics and standards, NNPC Ltd had on the sidelines of the United Nation’s General Assembly (UNGA) in Washington DC, in September this year, signed up to the United Nations Global Compact on human rights, labour, environment, and anti-corruption, thereby becoming the first state-owned oil company to join the global initiative.

“NNPC Ltd’s book remains open to all our stakeholders as we remain committed to delivering value to Nigerians with integrity and as espoused in our principles of Transparency, Accountability and Performance Excellence (TAPE), the bulwark of the Mele Kyari leadership of the company.

In response to this underperformance, NEITI has launched a strategic plan for 2022–2026 aimed at revitalizing the sector through increased investments, transparency, and capacity building.

Dr. Ogbonnaya Orji, the Executive Secretary of NEITI, emphasized the long-standing neglect of the solid minerals sector and highlighted its potential to contribute more than 60% to Nigeria’s GDP if properly developed.

Speaking at the launch of NEITI’s 2022–2026 Strategic Plan in Abuja, Dr. Orji emphasized the need for immediate action.

The strategic plan addresses various challenges, including the global energy transition, contract transparency, and government partnerships.

It outlines three primary objectives: enhancing governance reforms through policy research, stakeholder engagement, communication, and collaboration among agencies; prioritizing national and international reporting standards; and achieving operational excellence through professionalism, innovation, technology adoption, resource management, and capacity building.

Dr. Orji underscored the vast potential of the solid minerals sector and its capacity to outperform the oil industry, stating, “Our projection is that if the solid mineral sector is opened up for investment, it could contribute more than 60% to the nation’s GDP. This would surpass the contributions of the oil sector.”

He further emphasized the need to tap into this potential, citing NEITI’s comprehensive study on the sector’s prospects.

He also highlighted the stark contrast in revenue generation between the solid minerals sector and the oil and gas sector, with a total of N624.1 billion ($1.4 billion at the current exchange rate) earned over 13 years compared to the substantial $394 billion generated in just 10 years from oil and gas.

Dr. Orji expressed concern over the negligence of the solid minerals sector’s immense potential and reaffirmed NEITI’s commitment to promoting transparency, accountability, and trust among stakeholders through the disclosure of government revenues and responsible management of solid mineral resources.