Ogun State, located in Nigeria's southwest geopolitical zone, is one of the nation's emerging industrial and economic hubs. Due to its strategic location, sharing borders with Lagos State, Oyo State, Osun State, and the Republic of Benin, Ogun State has attracted considerable domestic and foreign investment, particularly in manufacturing, agriculture, and services.
As with all Nigerian states, Ogun State receives monthly allocations from the Federation Account Allocation Committee (FAAC) to support its operations, infrastructural projects, social programs, and recurrent obligations. However, the state has also shown strong efforts to reduce over-reliance on federal allocations by improving its internally generated revenue (IGR).
This article provides a comprehensive overview of Ogun State’s financial standing, focusing on its FAAC allocations, IGR performance, 2024 budget highlights, and how these resources are driving the state’s development.
Ogun State's FAAC Allocation Overview
The Federation Account Allocation Committee (FAAC) is the mechanism through which federally collected revenues—mainly from oil exports, taxes, customs duties, and royalties—are shared among the three tiers of government: federal, state, and local governments.
As per the revenue sharing formula, 52.68% goes to the federal government, 26.72% to the 36 states, and 20.60% to the 774 local governments.
In 2023, Ogun State received a total FAAC allocation of ₦120.72 billion, ranking it 30th among Nigeria's 36 states in terms of federal allocation receipts (The Cable). This relatively modest figure underlines Ogun’s lower dependence on FAAC compared to oil-producing states like Delta, Akwa Ibom, and Rivers, which benefit from the 13% derivation fund.
Although Ogun State is not among the highest recipients of federal allocations, the state’s leadership has consistently emphasized efficient resource management and aggressive internal revenue mobilization to fund its development agenda.
Ogun State’s Internally Generated Revenue (IGR) Performance
Ogun State has recorded remarkable achievements in boosting its IGR. In 2023, the state generated ₦146.87 billion, outperforming several other states and even surpassing the combined IGR of the entire South East geopolitical zone (Nairametrics).
Major Sources of Ogun State’s IGR Include:
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Taxes and Levies: These include Personal Income Tax (PAYE), road taxes, withholding taxes, business premises levies, and other statutory levies.
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Revenue from MDAs: Ministries, Departments, and Agencies contribute through fees for licenses, permits, and services rendered.
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Land Charges and Property Taxes: Due to its proximity to Lagos and the influx of industries and real estate developers, Ogun has leveraged property taxes to boost its revenue.
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Public-Private Partnerships (PPPs): Ogun leverages partnerships in sectors like agriculture, housing, and infrastructure to generate additional revenue.
The state government has also implemented digital tax collection platforms to improve transparency, widen the tax net, and reduce leakages.
Ogun State’s 2024 Budget: A Growth-Oriented Blueprint
Governor Dapo Abiodun presented a ₦703.03 billion budget for the 2024 fiscal year. The budget, christened "Budget of Sustainable Growth and Development," reflects the administration’s commitment to accelerating infrastructure delivery, human capital development, healthcare, and economic diversification (Ogun State House of Assembly).
Breakdown of the 2024 Budget:
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Capital Expenditure: ₦415.66 billion (59.1%)
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Recurrent Expenditure: ₦287.37 billion (40.9%)
The heavy tilt toward capital expenditure demonstrates the government’s focus on long-term infrastructure development over consumption spending.
Budget Implementation Progress and Transparency
By October 2024, Ogun State reported an 80% budget implementation rate (Vanguard). This level of performance is commendable and signifies efficient budget planning, execution, and financial discipline.
The transparency of the state’s fiscal processes and proactive public financial management have also been lauded by stakeholders, as it assures residents and investors that funds are utilized judiciously.
Key Sectors of Development Funded by State Allocations and IGR
Ogun State’s allocations and revenues are channeled into critical sectors aimed at fostering inclusive growth and development.
1. Infrastructure Development
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Road Construction and Rehabilitation: Ogun is aggressively expanding its road network to connect rural areas to urban centers and improve logistics for industries.
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Housing Projects: The state is delivering affordable housing units under its affordable housing program.
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Industrial Parks: Establishment of industrial clusters, particularly in Sagamu and Agbara, to attract investors and boost the manufacturing sector.
2. Education
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Basic and Secondary Education: Upgrading schools and providing modern learning facilities.
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Tertiary Education: Expanding infrastructure in state universities and polytechnics.
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Scholarship and Bursaries: Supporting students from low-income backgrounds.
3. Healthcare
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Primary Healthcare Development: Revitalizing healthcare centers across the 20 local government areas.
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General and Specialist Hospitals: Upgrading facilities to deliver quality secondary and tertiary care.
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Health Insurance Scheme: Expanding health insurance coverage to reduce out-of-pocket expenses for citizens.
4. Agriculture
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Farm Settlements and Clusters: Providing support for farmers, including inputs, mechanization services, and off-taker arrangements.
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Agro-Processing Facilities: Encouraging value addition to agricultural produce.
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Export Facilitation: Boosting exports through partnerships with trade agencies.
5. Youth Empowerment and Entrepreneurship
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Skill Acquisition Programs: Empowering youths with skills for entrepreneurship and employment.
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Access to Finance: Facilitating microcredit schemes and grants to support small businesses.
Challenges Facing Ogun State’s Financial Landscape
Despite these achievements, Ogun State still faces fiscal and developmental challenges, including:
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Infrastructure Deficit: Rapid urbanization is putting pressure on existing infrastructure.
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Youth Unemployment: The state’s youthful population demands more aggressive job creation programs.
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Environmental Degradation: Due to industrialization and urban expansion.
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Revenue Leakages: Despite improvements, tax evasion and leakages still pose challenges.
Mitigation Strategies
To tackle these challenges, the state is:
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Investing in technology to enhance tax collection efficiency.
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Promoting PPPs to bridge infrastructure gaps.
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Expanding skill acquisition programs.
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Strengthening environmental protection regulations.
Conclusion
Ogun State has distinguished itself as a state that blends prudent financial management with strategic investments in critical sectors. The state’s relatively low dependence on FAAC, robust IGR generation, and effective budget execution serve as models for other Nigerian states seeking sustainable development.
The state’s commitment to infrastructure, education, healthcare, agriculture, and youth empowerment ensures that it remains an attractive destination for investors and a haven for residents seeking economic opportunities.
Moving forward, sustaining fiscal discipline, deepening revenue diversification, and expanding infrastructure development will be key to maintaining Ogun State’s upward developmental trajectory.
