The recent submission of 31 public proposals to Nigeria's House Committee on Constitution Review, advocating for the creation of new states, raises serious economic and administrative concerns. While proponents argue that new states would enhance representation and governance, a closer examination of Nigeria’s fiscal realities suggests otherwise.
Existing States Struggle to Survive
Many Nigerian states are already unable to meet their financial obligations. The 2025 federal budget has ballooned to ₦54.2 trillion, with ₦15.8 trillion—nearly half of the expected revenue—earmarked for debt servicing. This indicates that even the federal government is grappling with financial constraints. Meanwhile, state governments depend overwhelmingly on federal allocations to stay afloat, as Internally Generated Revenue (IGR) remains dismally low in most states.
For instance, in 2023, 33 out of 36 Nigerian states could not generate enough revenue to pay salaries without federal allocations. This means that most states are essentially bankrupt, surviving on handouts from Abuja. If existing states are struggling to fund basic services, how would additional states survive?
The High Cost of New States
The creation of a new state requires massive spending—a new government house, new state legislature, new judiciary, civil service, infrastructure, and public services. Each new state would demand billions of naira in recurrent expenditure alone.
Yet, despite these realities, some proposals are already moving forward. The bill for Orlu State in the Southeast has passed its first reading, while Etiti State is advancing through the legislative process. If approved, these new states will add even more financial burdens to an already struggling economy.
The Tax Reform Dilemma
The recent tax reform bill further exposes the financial fragility of Nigerian states. Many state governments lack the capacity to generate revenue internally, leading to heavy reliance on federal allocations. The new tax reforms propose raising VAT to 12.5% by 2026, a move that some experts believe could worsen inflation and disproportionately impact consumers.
If states are unable to fund their own budgets under current conditions, would breaking them into smaller, even less economically viable units solve the problem? Or would it simply increase government inefficiency and waste?
Priorities Before Politics
At a time when Nigeria is borrowing heavily to fund its budget, and most states cannot generate enough money to sustain themselves, the idea of creating more states seems more political than practical. Instead of fragmenting the country further, lawmakers should focus on improving economic policies, increasing state-level revenue generation, and ensuring financial sustainability.
Before we create more states, let’s ask: Can we afford them?
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