By Kayode Oladipupo
A state that waits every month for Abuja to send money is not running an economy. It is running a cash-distribution system.
That distinction captures one of Nigeria’s deepest development challenges.
For too long, many states have focused on federal allocations, salaries and government projects, while the productive economy—farms, factories, businesses, technology, tourism and services—has received insufficient strategic attention.
Nigeria now needs a different development compact: the Federal Government should provide the national economic platform, while states turn that platform into production, investment and jobs.
Abuja sets the platform; states drive the local economy
The Federal Government must concentrate on responsibilities that require national coordination: macroeconomic stability, monetary and exchange-rate policy, national fiscal policy, trade and customs, national security, major interstate infrastructure, energy-market regulation and the broader investment framework.
States, however, are closer to the economic activity that determines whether Nigerians actually experience growth. They influence land administration, state and rural roads, markets, urban planning, skills development, agricultural extension, local investment facilitation and many business-facing services.
The principle should therefore be straightforward: Abuja should create the platform. States should convert the platform into economic opportunity. Neither level should use the other as an excuse for inaction.
Every state needs an economic strategy
Every state has an economic identity. One may have agricultural strength; another manufacturing, logistics, tourism, mining, technology or a large consumer market.
The job of government is to identify those comparative advantages and develop the value chains around them.
An agricultural state should move beyond distributing inputs to building storage, processing, logistics and market access. An industrial state should prioritise land, infrastructure, energy solutions, skills and investment facilitation.
The goal is to move from administering sectors to building competitive economic ecosystems.
The policy test: spend for productive capacity
Every major state policy, budget allocation and capital project should pass five questions:
What will it produce?
Will it increase economic output?
What will it unlock?
Will it attract private capital, reduce production costs or connect producers to markets?
Who becomes more productive?
How many farmers, workers, entrepreneurs or businesses gain productive capacity?
What will it cost to sustain?
Can the state maintain it without creating an excessive recurrent burden?
What survives after government funding ends? Will businesses and communities continue the activity because it has become economically viable?
This changes the central question from “What project are we building?” to “What productive capacity are we creating?”
Measure the economy, not government activity
Every state should publish an annual Economic Performance Scorecard with baseline figures, annual targets and independently verifiable results.
The scorecard should track:
– Private investment: value actually deployed, not merely announced;
– Jobs: net sustainable jobs created, with youth employment separately reported;
– Business growth: new businesses, survival after two and three years, and SMEs that scale beyond micro-enterprise;
– Production: annual output growth in priority sectors;
– Capital efficiency: private investment mobilised for every ₦1 of state capital expenditure on targeted economic projects;
– Infrastructure impact: productive roads, markets and economic clusters connected, alongside measurable reductions in travel or logistics costs;
– Skills: trainees securing jobs or establishing viable businesses within 12 months;
– Business climate: time and cost required for key permits, land documentation and approvals;
– Revenue quality: growth in internally generated revenue associated with an expanding economic base;
– Market expansion: growth in interstate trade and non-oil exports.
This distinction matters. An industrial park is an output of government. Businesses operating profitably inside it, employing people and paying taxes are economic outcomes.
From allocation politics to production politics
Federal transfers will remain important. Fiscal federalism does not require every state to become financially independent. But every state can become more productive, more investable and less dependent on transfers for economic expansion.
Government should enable rather than crowd out enterprise. Its strongest economic role is often to provide infrastructure, regulation, security, skills, information and market access while allowing private capital and entrepreneurship to do the scaling.
Nigeria does not need 36 governments competing merely to spend more. It needs 36 states building stronger productive economies around their comparative advantages.
The policy call should therefore be clear.
Every state should adopt a five-year economic transformation compact, tied to its budget and published annually. It should identify priority sectors, baseline economic data, investment targets, job targets, infrastructure requirements, business-environment reforms and measurable outcomes.
The Federal Government should strengthen the national platform on which these economies operate. States should be held accountable for how effectively they use that platform.
And citizens should be able to ask their governors a simple question every year:
Is our state producing more, attracting more investment, creating more sustainable jobs and generating broader economic opportunity than it did a year ago?
That is the shift Nigeria needs—from allocation to production, from projects to productivity, and from government as spender to government as economic enabler.
The future of Nigerian federalism should not be measured by how much money flows from Abuja to the states, but by how much economic value flows from the states into the Nigerian economy.
Oladipupo, a Public Policy Advocate is also MD/CEO Kemkay Consult. He writes from Akure