States urged to reduce dependence on FAAC

The analyst further backed calls for states to increase their internally generated revenue (IGR), but cautioned that not every state has the economic structure to immediately generate substantial independent revenue.

He noted that states heavily dependent on civil service employment cannot simply increase taxes and expect significant growth without first investing in people, land, infrastructure and productive industries.

Using Osun State as an example, he said the state would need to transition from an economy largely dependent on government employment to one driven by industry and private-sector activity before substantial growth in IGR could be achieved.

He argued that attracting businesses, developing industries and creating an environment for investment would eventually expand the tax base through corporate taxes, VAT and other economic activities.

The discussion also renewed calls for a broader restructuring of Nigeria's governance system.

The analyst argued that the cost of running government remains excessively high, with a significant portion of increased allocations being absorbed by salaries, pensions and the general cost of administration.

He cited the continued debate around the Oronsaye Report, which recommended the reduction and restructuring of federal government agencies, saying implementing such reforms could help reduce the cost of governance.

He also pointed to developments such as state police, decentralisation of electricity regulation and railway reforms as signs that the conversation around restructuring has already begun.

According to him, Nigeria needs a leaner government that spends more of its resources on productive investments rather than maintaining an expensive administrative structure.

He stressed that the country's young population represents one of its greatest economic assets, but government must create the conditions for young Nigerians to turn their skills, businesses and innovations into productive economic activity.

The central question, he maintained, is therefore no longer simply how much money government has saved, but what Nigerians can point to as evidence that those savings have improved their lives.