Kano, Adamawa and Borno States have emerged as top contributors to the pool of Value Added tax (VAT) in 2024 in Nigeria.
Kano State, with the VAT contribution of N77.7 billion, was the top in northern Nigeria and the fourth in the entire country.
This is contained in the data released by the Agora Policy, a Nigerian think tank and non-profit committed to finding practical solutions to urgent national challenges.
Adamawa and Borno became distant second and third in the north while trailing as 10th and 11th among the 36 states of the federation.
The VAT data shows that with the exception of Lagos, Rivers and Oyo States, all other states in the country received more than their contributions in the VAT sharing formular.
Other states such as Niger, Taraba, Kwara and Kaduna became the fourth, fifth, sixth and seventh in the North. Nasarawa and Kebbi had the lowest position 29th and 34th in Nigeria and 18 and 19th of the northern states.
However, all the 19 northern states received allocations higher than what they had generated into the national coffers.
A Breakdown
Kano State, the leading contributor in the North, generated N77.76 billion in VAT but received N117.19 billion in FAAC allocations, representing 150.7% of its contributions.
Other states like Adamawa and Borno contributed N42.01bn and N35.29bn and also received: N70.41bn (167.6%) and N76.15bn (215.8%) respectively.
Niger State contributed N34.84bn and received N74.79bn FAAC allocation representing 214.7% of its contribution, while Taraba State contributed N32.37bn and received N63.24bn (195.4%).
Kwara contributed: N31.51bn and received: N63.63bn (201.9%), Kaduna contributed: N30.30bn received: N88.50bn (292.1%), Jigawa contributed: N28.54bn and received: N76.68bn (268.7%), Benue contributed: N26.59bn and received: N75.47bn (283.8%), Sokoto contributed: N25.98bn and received: N71.94bn (276.9%).
Katsina contributed N22.08 billion but received N85.59 billion, translating to 387.6% of its contribution.

Others are Gombe with a contribution of N25.45bn and FAAC allocation of N62.77bn representing 246.7%. Kogi contributed: N23.61bn, received: N68.74bn (291.2%), Plateau State contributed: N22.10bn, received: N67.87bn (307.1%), Yobe contributed: N19.79bn, received: N61.78bn (312.1%)’
Zamfara contributed: N17.83bn and received: N67.87bn (380.7%) as Nasarawa and Kebbi States contributed N15.89bn and N8.77bn and received N58.16bn (365.9%) and N66.55bn (758.5%) respectively.
While Kebbi State is the least in the VAT generation in the North with N8.77bn, Imo State from the Southeast recorded the smallest figure across the whole federation with only N4.38bn VAT but received N70.70bn FAAC representing 1,613% of its contribution.
These figures reflect a broader trend across the most Nigerian states, where reliance on federal allocations is disproportionately high compared to VAT pool.
Comparative Analysis
Lagos State’s contribution of N2.75 trillion to the VAT pool remains the highest contribution among all the states. The state received N460.11 billion in VAT-FAAC allocations, highlighting its fiscal self-sufficiency.
Other states that received less than what they have generated are Rivers and Oyo which contributed N832.69 billion and N272.41 billion respectively but received N186 billion and N116 billion as VAT-FAAC allocations.
Implications of Overreliance on FAAC
The reliance on federal funds discourages states from exploring alternative revenue streams. Agriculture, solid minerals, and tourism remain underutilized in many northern states, leaving their economies vulnerable to federal funding fluctuations.
It undermines the fiscal autonomy of states, limiting their capacity to make independent economic decisions and invest in critical sectors.
With federal allocations serving as a financial cushion, state governments may lack the incentive to implement robust revenue-generation mechanisms or maintain transparency in resource management.
Cases in states like Kebbi and Bauchi in the Northwest and Northeast as well as Imo in Southeast illustrate the scale of dependency on FAAC allocation across the country.
While Bauchi State contributed N19.59 billion as VAT and got FAAC allocation of N77.47 billion (395.3%), Kebbi State’s situation is even more pronounced as it contributed only N8.77 billion to the VAT pool and received N66.55 billion in FAAC allocations – a 758.5% return.
Despite this significant federal funds’ inflow, most Nigerian states struggle with inadequate infrastructure, poor health outcomes, and low educational attainment, raising questions about their effective utilization.
This suggests that there is a need for the states to utilise the resources to improve the wellbeing of their citizens.
Need for Reform, Fiscal Responsibility
Paul Daniel, a Bauchi-based financial expert, said there is the need for states to prioritize economic diversification and fiscal reforms.
“States must move beyond reliance on FAAC allocations to fund their budgets. The potential in agriculture, mining, and local manufacturing remains untapped in many northern states,” he said
He added that governance reforms, including the establishment of transparent and accountable tax collection systems, are also critical.
“Without transparency and accountability, additional funds will not translate into development. State governments must show the political will to channel resources into sectors that directly impact citizens’ lives.”
Lessons from Lagos
Lagos State, by leveraging its industrial base, efficient tax administration, and strategic investments in infrastructure, became less dependent on FAAC allocations.
Its ability to generate substantial VAT demonstrates the benefits of industrialisation and economic planning which states especially the North must adopt.
The states must also develop critical infrastructure to attract investment, stimulate economic growth and establish robust mechanisms for monitoring and reporting public expenditure to ensure accountability.
While federal funds remain vital for supporting governance, the current dependency model is unsustainable and hampers the state’s economic growth.