By Emmanuella Opara | November 5th 2026
KEY POINTS
- Experts say state and local governments must play a stronger role in translating national economic policies into investment and improved living standards.
- Policy inconsistency and poor coordination between federal and state authorities have contributed to the loss of major investment opportunities.
- Lagos accounts for approximately 39 per cent of Nigeria’s total internally generated revenue, according to the 2026 State Performance Index.
- Stakeholders call for greater fiscal transparency, accountability and a fairer revenue-sharing system to encourage industrial development across states.
MAIN STORY
Nigeria’s ability to attract investment and achieve sustainable economic growth will depend largely on the capacity of state and local governments to implement policies that support businesses, improve infrastructure and expand economic opportunities, experts have said.
Speaking at the Nigeria-South Africa Forum in Lagos, stakeholders argued that subnational governments must become more actively involved in investment negotiations and economic planning to ensure that national policies translate into tangible benefits for citizens.
Adetilewa Adebajo, chief executive officer of The CFG Advisory, said inconsistent government policies and inadequate coordination between federal and state authorities had weakened Nigeria’s investment environment.
He argued that governors should participate more actively in trade missions and investment discussions, noting that states play an important role in providing the land, infrastructure and operating conditions required by businesses.
Adebajo cited the departure or reduction of operations by companies including Kimberly-Clark, Procter & Gamble and Guinness as examples of the challenges facing investors. He said the return of JPMorgan Chase presented an opportunity that Nigeria needed to protect through consistent policies.
He also highlighted the development of Lekki Port, explaining that negotiations with China Harbour Engineering Company lasted two years before the company completed the port in less than 24 months.
According to him, the project demonstrated how cooperation between different levels of government could accelerate major investments.
He also recalled that a proposed $20 billion Dangote refinery investment, initially considered for the Olokola Free Trade Zone in Ogun State, was eventually located elsewhere following a political disagreement between the investor and the state government.
Adebajo said the incident illustrated how personalised political decisions could cost states major economic opportunities, stressing the need for policies that remain consistent beyond individual administrations.
He added that infrastructure developed around Lekki Port had also supported the transportation of equipment for Dangote’s refinery.
While the Federal Government is responsible for national trade policies, he said state governments remain central to investment decisions because they control the land needed for many projects.
The forum also examined the responsibilities of subnational governments in improving living standards through infrastructure, education, healthcare and business administration.
Olufemi Awoyemi, chief executive officer of Proshare, said local governments were particularly important to understanding Nigeria’s fiscal system because they were closest to households and communities.
He maintained that assessing economic performance at the state and local government levels required reliable data on taxation, revenue generation and public spending.
Awoyemi also raised concerns about the Federal Government’s proposed $21.7 billion external borrowing plan, noting that the country already had a budget deficit of approximately N30 trillion.
He argued that the priority should be establishing how borrowed funds would be spent and ensuring that the projects financed delivered measurable benefits.
He further questioned the effectiveness of fiscal policies focused on increasing tax collections without adequately expanding the tax base or improving the value citizens receive from government spending.
Awoyemi noted that Nigeria’s tax-to-GDP ratio had increased from five per cent to 12.4 per cent, but argued that improving revenue generation required more than collecting additional taxes from existing taxpayers.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, also called for greater involvement of subnational governments in addressing poverty and the rising cost of living.
He said Nigeria continued to operate with a centralised approach that did not adequately recognise the responsibilities of state and local governments in economic development.
Yusuf also questioned the accountability of local governments, arguing that insufficient attention was paid to how they managed the resources available to them.
He noted that although economic reforms had increased the resources available to state governments, the Federal Government continued to face substantial debt-service obligations approaching N15 trillion.
Yusuf further highlighted the imbalance between the economic responsibilities states undertake and the revenue they receive from industrial activities within their territories.
Using Ogun State as an example, he explained that manufacturing companies placed considerable pressure on infrastructure and the environment, while the state relied largely on Pay-As-You-Earn tax revenue.
He called for a more equitable fiscal arrangement that would encourage states to attract and accommodate industrial investments by giving them greater incentives beyond PAYE collections.
Data from Phillips Consulting’s 2026 State Performance Index ranked Jigawa as Nigeria’s best-performing state, followed by Abia and Enugu.
The report also identified Lagos as the country’s leading internally generated revenue contributor, accounting for approximately 39 per cent of total state IGR.
Adebajo reiterated that the return of JPMorgan Chase was a positive development but warned that policy instability could undermine the bank’s long-term presence.
He recalled that the financial institution first entered Nigeria in 1961 but eventually left after disagreements with the government over the treatment of its business and management structure.
He said Nigeria needed to avoid repeating the circumstances that previously affected the bank’s operations.
THE ISSUES
Nigeria’s investment challenges extend beyond the availability of capital. Policy uncertainty, weak coordination between government institutions and inadequate infrastructure can influence whether investors establish, expand or sustain operations in the country.
The experiences surrounding the proposed Dangote refinery location and the development of Lekki Port illustrate the economic consequences of disagreements between government authorities and investors.
There is also the question of fiscal federalism. States are expected to provide infrastructure and create conditions for businesses to operate, but concerns remain about whether the existing revenue-sharing arrangements adequately reward them for attracting industrial activities.
The concentration of internally generated revenue in Lagos further highlights the differences in revenue-generating capacity among states and the need to strengthen economic activities across the country.
WHAT’S BEING SAID
“While the federal government creates trade policies, states are critical because they own the land required for investment”, Adetilewa Adebajo, chief executive officer of The CFG Advisory, said.
“The case shouldn’t be the same this time around, as long-term retention of JP Morgan requires stable policies”, Adebajo said.
“There are several flaws in the way the fiscal policies are sometimes administered because, for instance, the tax-to-GDP ratio was 5 percent, then it was increased to 12.4 percent to get more from those who were paying, but that was never the problem”, Olufemi Awoyemi, chief executive officer of Proshare, said.
“When we talk about these issues, actually, the closest to the grassroots are the local governments. But hardly do we even engage them to find out what they do with their resources”, Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said.
WHAT’S NEXT
The concerns raised at the forum place greater responsibility on federal, state and local governments to strengthen cooperation on investment promotion, infrastructure development and fiscal management.
The effectiveness of future economic reforms will depend partly on whether subnational authorities can attract investments, improve public services and establish more predictable conditions for businesses.
BOTTOM LINE
Nigeria’s economic potential cannot be fully realised through federal policies alone. States and local governments must become active participants in investment promotion, revenue generation and service delivery, while consistent policies and a more balanced fiscal arrangement remain essential to sustaining private-sector investment.
