Nigeria is a blessed country with beautiful climatic conditions and one of the very few countries in the world free from natural disasters. Every state in Nigeria is blessed with rich human and natural resources which when explored, gives the states the funds needed to provide security, shelter, food and job creation for her residents.
A survey was carried out and we randomly asked people about which state is the richest in Nigeria? More than 80% gave their answers as Lagos state while others said Delta state. Based on the answers given, you can draw from it that some gave their answers based on the availability of Natural resources available in the states while others are based on the IGR (Internally Generated Revenues).
Ideally, based on Internally Generated Revenue (IGR) without doubt, as at May 2021 Lagos is richest state in Nigeria, but when based on availability of mineral resources like Crude oil, bitumen and the likes, Delta state, Rivers and Bayelsa states will be considered the Richest states in Nigeria since they are listed among the top 10 oil producing states in Nigeria.
In the cause of reading this post we shall give reasons why the states listed in this post are considered the top 10 richest states in Nigeria as at today.
Nigeria as at today is practicing a Federalism system of government. This is a system of government where revenues from all states ate paid to the federal government and the Federal Government in turn disburses the funds based on two major factors;
Principle of Equality
The Federal government adopted this system of revenue allocation for equal development in the country. Here equal allocation is given to all states irrespective of their internally generated revenue. Here states with higher contributions to the Federal Govt purse suffer get equal funds with states with little or no contribution at all. It is not a progressive system of government and the need for a paradigm shift to the presidential system is fast gaining grounds. Though the 13% derivation for oil producing states is still in progress but there has been a constant drop from the initial 50% to 1% before being pegged at the current 13% share which still does not reflect full offshore derived revenues from these oil producing states.
It is assumed that the state with the most population requires more funds therefore they get higher funding from the fed govt irrespective of what they bring to the government’s coffers.
The current system of government (Federalism) has been criticized by many, the agitation to revert to the Presidential system of government which Nigeria used to practice is fast gaining popularity based on the fact that True Federalism which Nigeria currently practice is hampering growth and economic development because other states especially in the Northern Nigeria have stopped what they are known for like farming and cattle rearing, now they wait for allocation from the Federal government for oil revenues gotten from other oil producing state in Nigeria.
The Presidential system of government practiced in the 60’s and 70’s encouraged all states to produce and generate funds and certain percentages are paid to the federal government and states keep the balance for development and provision of basic amenities for their residents. This helps states to be up and doing, they say necessity is the mother of all inventions, states will become proactive and the need for exploring new ways of generating revenue will spring up thus economic activities and development will be boosted.
10 Criteria for Ranking
- Based on IGR (Internally Generated Revenue) and Federal Allocation
- Based on Availability of Natural Resources
- Based on Population
- Presence of Investors
- Standard of Living
- Availability of Jobs
- Presence of Factors of Production (natural resources, labor resources, and capital resources)
- Cheap Labour
- Working Judiciary
a) Based on Internally Generated Revenue
Ideally, the amount of money a state generates is in proportion to the worth of the state. We mentioned earlier that based on IGR from human and capital resources, Lagos can be considered the Richest state in Nigeria but in terms of IGR from natural resources, Delta state can be considered the Richest state in Nigeria. Nigeria is currently practicing a Federalist system of government therefore funds gotten from delta state is the highest based on the Internally generated funds from human and natural resources, Delta state gets the highest allocation from the Federal Government of Nigeria and this automatically makes Delta state the richest state in Nigeria with an estimated funds of about 17.4 Billion Naira monthly allocation.
Therefore, Internally Generated Revenue is one of the most effective tool for coming up with our list of top 10 richest states in Nigeria.
b) Availability of Natural Resources
States blessed with natural resources like Crude Oil, Zinc, Magnum, Gold and other rare resources are often considered among the richest states in Nigeria. With such raw materials available, there is usually high presence of foreign investors with expertise in the field of exploration thus bringing about growth and economic development in such state which in turn increases their revenues. So you would agree with us that the presence of natural resources is a factor that must be considered when classifying the wealth of a state.
c) Based on Population
Population is considered under human resources. The more the population the higher the GDP of a nation. A state with high population like Lagos state is has its advantages and disadvantages as well. A state with high population ideally would generate more revenue than a state smaller population. A perfect example of this scenario was under former President Olusegun Obasanjo, when allocation to Lagos state was halted under Tinubu’s administration as Governor of Lagos state.
Due to the working infrastructures and high population in Lagos states, funds were generated internally from taxes paid by all organizations, private businesses and all working class residents in the states carried out by the LIRS (Lagos state Internal Revenue Service). Billions of Naira were generated monthly within the state and the state functioned properly without a single allocation for more than 4 years.
d) Presence of Local & Foreign Investors
Every business man would invest in a metropolitan city because there is available of raw materials, good road network, security and cheap labour and all this is in a bid to maximize profit and minimize cost.
A state with high rate of influx of investors is good for the state because taxes will be paid to the government of the state, there will be more job opportunities thus improving the standards of living in that state. Such state will automatically generate more revenue for its running and upkeep. So using the presence of Local & Foreign Investors as a metric for listing the richest states in Nigeria is well deserved.
e) Standard of Living
Do you know that the wealth of a state is proportionate to the standard of living of people living in the state? Yes it is because a rich state would with ease provide all the basic amenities of life for citizens within the state. Health care facilities at subsidized rate will be made available, free education at state level, scholarship programmes and cheap housing.
So you can see that aside the funds generated by a state, another yardstick for measuring how rich a state in Nigeria can be is based on the standard of living in that state.
f) Availability of Jobs
Job creation is borne out of investment opportunities and economic development in the state. The top 10 richest states in Nigeria all have investors thus jobs are automatically created. Aside the oil sector, another fast growing sector is Agricultural industry. Most northern states have vast lands which are being utilized for agricultural purposes, the sad part is many of taken their foot off the pedal because of the constant federal allocation they receive.
Only a few states like Adamawa state, Niger, and Borno state despite the militancy going on there (Borno) still manage to farm and transport their goods to other major cities like Abuja, Lagos, Kano, Kaduna and other states in need of their farm produce.
g) Factors of Production
Where there is natural, human and capital resources, development abounds. The top 10 richest states in Nigeria as seen below have all factors of production readily available which is no surprise why they are among the wealthiest states in Nigeria.
The availability of a working human and capital resources are needed tools for exploration of the natural resources. When these factors of production are working, every component part are fall into place. There will be flow of income, the law of supply and demand comes into place, standard of living is improved upon and there will be cash flow.
h) Cheap Labour
Where there is cheap labour, there is more inflow of investors. Take China for example. Multinational companies like Apple, Samsung, Ford, Toyota and other giant blue-chip companies have their production factories in China mainly because of the availability of cheap labour and a working government.
As said earlier, the goal of every company is to minimize cost and maximize profit and when such potentials are sighted in a state, investment opportunities are high in such states thus there will be a multiplier effect on the revenue generated from such state because taxes will be collected based on accumulated profit. Hope you are now clear as regards how availability of cheap labour can indirectly adds to a state’s coffers.
i) Security of Lives and Properties
In fact this should have come up as number (1) one factor to be considered why these states are considered the richest states in Nigeria. In everything, safety is considered number one priority. A state is considered safe when lives and properties are not endangered, where one can walk freely without harassment or fear of intimidation.
In Nigeria today, very few states can boast of these qualities but assuredly, the top 10 richest states in Nigeria listed here can boast of it 70% which is a pass mark as no country in the world can boast of such 100%.
A safe state is one with a steady polity and policies. Government policies are taken into consideration before investors push in their funds into a state so as not to be hard bitten by harsh policies that could cripple their businesses.
Lagos state, Delta state, Abia state, and other states listed below are considered safe to a reasonable extent in doing business that is why they generate the much needed funds for taking care of her populace while still contributing to the Federal government’s purse.
J) Working Judiciary
Since the function of the Judiciary is implementation of the law, laws that encourage citizens and foreign investors to own lands and properties should be implemented as this would give them a sense of belonging within the states their businesses and companies are sited.
This can be done by introducing what is known as property right. A right given to citizens and investors to be able to buy, own or even sell their properties as without this in place, companies will feel reluctant investing or doing business in such state there by making the state lose out on potential revenues. Though some regulations must be put in place to checkmate activities of foreigners however, too many regulations will not be too good as this would hamper the free flow and beauty of the transaction. States listed here have such rights in place for investors though certain criteria must be met.
The above factors are the basis on which we bring to you, the top 10 richest states in Nigeria for May 2021 in which we have tabulated below for ease of understanding for readers. We will be ranking the top 10 states in Nigeria from the least richest to the number one on the basis of their GDP (Gross Domestic Products), IGR (Internally Generated Revenues) and Federal allocations.
Top 10 Richest States In Nigeria For May 2021
10. Kaduna State – US$10,334,000 GDP
Kaduna state gained prominence with the introduction of the Kaduna refinery and the Nigerian Defence Academy sited in this state. Who says the north is saddled with barren lands? here are a list of mineral resources available in Kaduna state; Amethyst, Aqua Marine, Asbestos, Clay, Flosper, Gemstone, Gold, Graphite, Kaolin, Hyanite, Mica, Rock Crystal, Ruby, Sapphire, Sihnite, Superntinite, Tentalime, Topaz and Tourmaline. These resources makes the state the richest state in the north in terms of mineral and natural resources.
Kaduna is one of the biggest cities in Nigeria, a city filled with all the financial institutions ranging from insurance companies, to banks, manufacturing industries and oil & gas industry.
Like Lagos state, Kaduna state is quite safe to do business because of the absence of militants activities except on very few occasions where there are religious crises which the police force are always on time to bring under control.
With an estimated population size of over 8million people, Kaduna state is one of the best places for small business and medium enterprises. The population and market size is big enough to showcase your products at very good prices hence making it possible for government to collect taxes on profits made by companies and businesses in the state.
Aside taxes and royalties from Oil and gas companies, Kaduna state government collects taxes from construction companies like Julius Berger, Textile industries, financial institutions and other SMEs registered within the states and carrying out their day to day transactions therein.
Kaduna state ranks on the number 10th spot on the richest states in Nigeria with a GDP of US$10,334,000 and a Federal allocation of about 4.1Billion Naira.
9. Ogun State – US$10,470,000 GDP
This is a southwestern that shares a border with Lagos state. The closeness of this state to Lagos state has greatly affected the economic development in this state in the sense that people who work in Lagos can easily acquire an accommodation in Ogun state.
A state where majority of the people in the rural areas are farmers, transportation of perishable items are easily transferred from Ogun to Lagos due to the nearness and are sold at very profitable prices.
Aside the proximity to a metropolitan city (Lagos state) Ogun state is known to have large deposits of Bitumen, Clay, Feldspar, Gemstone, Kaolin, Limestone and Phosphate, most of which are in commercial quantities which is viable for economic use.
Ogun state has a current GDP of US$10,470,000 which makes it rank among the richest states in Nigeria.
8. Akwa Ibom State – US$11,179,000 GDP
This is a Niger Delta state located in the South-South Geo-political region of Nigeria. Currently Akwa-Ibom state receives the highest amount of allocation after Delta state from the Federal government of Nigeria. The state is not just endowed with several mineral and natural resources but also with rich culture and traditions.
With a beautiful topography made up of hills and valleys, the government has made the state a tourism haven for tourists from various parts of the world.
Akwa Ibom State has a population of over 5,000,000 people most of which are fisher men and farmers. Though Oil exploration activities is also a constant threat to the environment of people in the rural area in this state, however, the government has put in place, policies and regulation to ease the sufferings of people in these areas, one of which is the employment of youths within the states and rural areas these resources are being tapped and making sure they comply with their corporate social responsibilities within the area.
Government generate funds through taxes from these oil companies as well as royalties from Oil well owners too. Akwa Ibom is one of the richest states hence receives an allocation of about 17,4Billion Naira from the Federal government of Nigeria.
The state has a current Gross Domestic Product of about US$11,179,000
7. Edo State – $11.89 Billion US Dollars GDP
Edo state from inception is known for her rich tradition, blessed with rich human and natural resources like Timber, Bitumen, Clay Dolomite, Phosphate, Glass-sand, Gold, Gypsium, Iron-ore, Lignite, Limestone, Marble & crude oil. It was recently classified as a Niger Delta state not just because of its location but because of the recent discovery of commercial quantity of oil and gas products.
Edo state has an estimated population size of 3.2 Million people which has helped greatly in the area of workforce for the nation. Majority of the youths in this region are now being introduced into farming and other technical jobs.
The state is known for its hospitality business and tourism aside the financial institution and oil company located in the region. According to the National Bureau of Statistics, Edo state is ranked as one of the fastest growing states in Nigeria within the south south region.
Edo state’s current GDP stands at $11.89Billion US Dollars and it receives an allocation of over 5.7Billion Naira from the Federal government based on what was remitted by the state to the Federal purse.
6. Kano State – US$12,393,000 GDP
This state and Kaduna state are the only two northern states that makes the list of richest states in Nigeria. Infact Kano is the richest Northern state in terms of revenue and GDP (Gross Domestic Products). Kano state is lagos version of the northern metropolitan city.
The state is a islamic dominated state, however, other religious tribe like the Christians and even the Atheist do their businesses with relative ease there. Kano state is the most populous Northern state in Nigeria with a population of 9,500,000 people according to the Nigerian Bureau of Statistics.
Kano State is the second largest city economically speaking after Lagos State with working industries that specializes in textile, tanning, footwear, cosmetics, plastics, enamelware, pharmaceuticals, ceramics, furniture and the likes.
The state is also known for its farming activities which are transported to other cities like Kaduna, Lagos, Abuja, Port-Harcourt and other cities. Some are sold to Beverage and food industries on request.
Kano state has boasts of a GDP of US$12,393,000 and a Federal allocation of about 6.4Billion Naira, making it the 6th richest state in Nigeria.
5. Imo State – US$14,212,000 GDP
Imo state is one of the richest states in Nigeria with various natural resources including crude oil, natural gas, lead, Calcium Cabornate and zinc as well as other rare floras which includes iroko, mahogany, obeche, bamboo, rubber tree and oil palm.
The major occupation of the people in this state is farming, that is, production of cash crops and consumable goods like palm oil, groundnut, raffia palm, rice, melon, cotton, cocoa, rubber, and maize, yam, cassava, cocoyam and maize are all produced for both domestic and economic purposes.
Imo state sits on a land mass of around 5,100 sq. km. The state is listed among the Niger delta states because of its oil producing capacity. Huge funds in form of royalties and taxed are generated from oil exploration companies and activities in the state. Taxes from hotels and other financial institutions are also adds to the state’s IGR.
As an encouragement for her citizens to go into farming, tax holidays are granted to farmers plus free mechanized tools and materials to aid in their farming activities. The state is blessed hence farm produce are harvested in large quantities for domestic and economic purposes.
4. Oyo State – US$16,121,000 GDP
Oyo State ranks as number 4 on the list of richest states in Nigeria and based on its IGR and GDP. The state is sited on a landmass of 28,454 square kilometers and is rated the 14th biggest state in Nigeria with a population of over 4million people.
Known for Education, farming and other agricultural produce, Oyo state holds the record for the first university in Nigeria, as at today there are over three hundred and twenty (320) public and private secondary schools and over 1,500 public and private primary schools in the state.
Oyo state has the International Institute of Tropical Agriculture (lITA), a non-profit institution that generates agricultural innovations to meet Africa’s most pressing challenges of hunger, malnutrition, poverty and natural resource degradation.
Also is the popular cocoa house sky scrapper, one of a kind in the state and one of the biggest in Western Africa.
Oyo states currently has a GDP of US$16,121,000 and receives over N4.5 billion allocation from the Federal government which makes it the fourth richest state in Nigeria as at 2019.
3. Delta State – US$16,749,000 GDP
Delta State ranks on number 3 position on the top 10 richest states in Nigeria with a land mass of 16,842 square kilometres and a gross domestic product of US$16,749,000 and an internally generated revenue of 17.4 Billion Naira.
The state is also rated among the top 10 oil producing state in Nigeria with about 306,000 barrel of crude oil produced per day.
Aside oil, Delta state is known for its agricultural and farm produce which also list it among the top 10 states in Nigeria that in terms of agriculture and farming.
Delta state is classified under the South-south geo political zone of Nigeria with a population of 4,200,000 and its capital sited in Asaba.
Warri is the economic nerve of Delta state reason being that major multinational oil companies and refineries are sited there.
2. Rivers State – US$33,679,000 GDP
Rivers State is one of the top oil producing states in Nigeria with a Gross Domestic Product of US$33,679,000. The state has a population of 5,198,716 which makes it sixth-most populated state in Nigeria according to the last concluded census.
The state is one of the main sustainers of Nigeria’s economy owing to the exploration activities by Major oil companies sited in Trans Amadi in the capital city of Port Harcourt.
Aside Oil, other tech and blue chip companies also add to the generation of funds for the state, taxes royalties are collected from these companies which all makes up for the state’s sources of income.
Rivers state receives from the Federal government of Nigeria, N14.7 billion as allocation, the 13% derivation from al oil producing states is included in this amount. Rivers state is the 2nd richest state in Nigeria after Lagos state in terms of GDP but rated as number 3 in terms of IGR and allocation from the Federal government of Nigeria.
1. Lagos State – US$33,679,000 GDP
Lagos state casually called the city of hustlers is a metropolitan city sited in the southwestern geopolitical zone of Nigeria. Lagos state though be referred as the smallest state in Nigeria, it is Nigeria’s financial hub and unarguably Nigeria’s economically capital.
It might be the smallest state in terms of Landmass, ironically, it is the most populous city in Africa with a population of over 60million people and it holds the title as the fifth largest economy in Africa.
Being a metropolitan city, the state has been able to prove beyond doubt that it is self-sustainable, with or without Federal government’s allocation, Lagos state has put in place, measures to internally generate funds via its airports, creeks, seaports, taxes from companies and individuals, tolls and the likes.
Lagos state is currently rated the richest state in Nigeria with a GDP of US$33,679,000. This is the highest GDP when compared to other states.
Based on Federal government’s allocation, Lagos state receives an average of 9.1Billion naira.
10 Richest States In Nigeria According To Federal Allocation Based On Their IGRs
The table below shows the richest states in Nigeria from the least to the number 1 on the spot based on FG allocation to these states. Judging from the table below, the richest states in Nigeria based on GDP and IGRs of these states, you would agree that there is a close relationship.
Where Lagos state is the richest state in Nigeria in terms of GDP, Delta state is the richest in terms of Federal allocation because it receives more based on what was generated from this state and the 13% derivation policy for all oil producing states. Therefore, rating states in Nigeria and their wealth can be argued from two contexts (GDP and IGRs or Federal Allocation) as as seen above.
|States In Nigeria||Federal Allocation In Naira|
|Akwa Ibom||17.2 billion|
In conclusion, all states in Nigeria are well blessed but most have failed to harness the vast resources at their disposal since the discovery of oil in Oloibiri in Rivers state, Nigeria. Some have seen the discovery of oil in Nigeria as a curse rather than blessing while some have concluded that the Federal government of Nigeria has failed in its duty to return to the presidential system of government which would bring about each state governors developing their states with what they can produce while paying a percentage to the government account.
The post is quite lengthy because we deemed it necessary to cover major areas and give reasons why the states listed here are ranked the top 10 richest states in Nigeria as at May 2021. We will continue to update this post should there be a change or latest update on the subject matter.
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