By Philip Obazee

There is a familiar objection whenever Lagos is presented as a model for Nigerian state governance. Lagos, we are told, is “different.” It was the old federal capital. It has the ports. It has the headquarters. It has the density. It had a head start. And, by the way, Lagos still receives a very large share from the Federation Account Allocation Committee (FAAC), so why pretend that Lagos is a product of superior governance rather than historical privilege?

The objection sounds sensible, even sophisticated. But it is also incomplete—and, more importantly, it is strategically unhelpful. If Nigeria is serious about economic development, the right question is not whether Lagos had advantages (it did), but whether Lagos has built something that other states can replicate. In plain terms, is Lagos’s “success” mostly geography and history, or is it a method—a machine—that transforms local economic energy into public capacity and public goods?

The case for emulating Lagos does not require anyone to believe that every state can become Lagos in size. That is not the standard. The standard is whether Lagos’s governing framework can improve the trajectory of other states, raising the quality of public services, increasing the credibility of state institutions, widening the tax base, and reducing the crippling dependence on transfers. Once you frame it that way, the “head start” argument becomes far less decisive.

The Lagos difference is not simply where it is. It is what it does.

The real Lagos lesson is “function.” Lagos, more than most states, has tried, imperfectly but persistently, to build a government that can perform repeatable tasks;identify economic actors, collect revenue without leakage, plan multi-year projects, execute procurement with some discipline, and deliver visible public goods. This is not a daydream. It is the hard, boring work of state capacity. And state capacity, is not a catchphrase, it is what development ultimately runs on.

To understand this cleanly, imagine a state as a converter. Economic activity exists in every state, markets, transport, construction, farms, services, trading networks, land transactions, and millions of small businesses. The question is whether the state can convert that activity into public capacity.

In most states, economic activity is like water flowing across sand. You see movement, you see volume, but little is captured. Taxation is narrow and coercive, focused on the few visible people and firms. Payments are discretionary, sometimes negotiated, often handled in cash, and frequently leaky. Land systems are opaque. Procurement is politicized. Projects are announced and abandoned. Plans are written and shelved. In that environment, “revenue” is not a system; it is a contest. And where revenue is a contest, governance becomes a fight over extraction rather than a discipline of service delivery.

Lagos’s comparative achievement—again, imperfect but real—is that it has tried to build pipes, not buckets. It has invested in systems that identify, bill, collect, reconcile, and enforce. It has built institutions whose job is not to make speeches but to deliver outputs. It has steadily widened its internally generated revenue (IGR) relative to most peers. And it has used that revenue, at least in part, to finance the kind of infrastructure and services that keep economic activity expanding.

This is why the Lagos story matters for national development; the portable part of Lagos is not its coastline. The portable part is its administrative technology.

Why the “FAAC explains Lagos” argument fails

Yes, Lagos receives a large FAAC allocation. That is true, and it should not be denied. But it is also true that many other states receive large FAAC allocations relative to their size and still do not “work” in the everyday sense Nigerians mean: streets degrade; refuse piles up; drainage systems collapse; schools and clinics decay; salaries and pensions are delayed; and economic potential remains unconverted into sustained prosperity.

If FAAC alone produced function, then high-allocation states would look like Lagos in operational performance. They often do not. That tells you something crucial; money is not the binding constraint in the way Nigerians often imagine. The binding constraint is the system that turns money into assets and assets into services.

FAAC is income. Function is capability. A state can have income without capability, and when it does, it tends to spend rather than build. It finances the recurrent state, not the productive state. It covers salaries, overhead, political maintenance, and the endless costs of a government that is busy but not effective. The result is a dependency cycle: because the state cannot reliably raise its own revenue, it cannot plan; because it cannot plan, it cannot build; because it cannot build, the economy remains small and informal; and because the economy remains small and informal, the state cannot raise revenue. That is the transfer trap.

Lagos’s emulable advantage is not that it receives transfers. It is that it has built an internal revenue machine large enough to reduce the share of public finance that depends on transfers. It is not dependent in the same way. It has more degrees of freedom. It can make commitments. It can co-finance projects. It can borrow with greater credibility. It can experiment, fail, and try again, because it has a fiscal base.

That is what other states must learn; development requires a state that can fund itself, at least partially, from within.

The most important sentence in this entire op-ed is this: a state that cannot reliably raise revenue from its own economy will never reliably deliver public goods to its own people.

This is why Lagos is a blueprint, not a brag.

A Lagos-style “machine” is replicable: the modules any state can copy

When people hear “Lagos model,” they often picture flyovers, bridges, and big urban projects. That is the wrong image. The Lagos model is not concrete; it is architecture—administrative architecture. It is a set of institutional modules that can be installed in different environments.

Start with the first module: legibility. A state cannot govern what it cannot see. If it does not know who lives where, who owns what, who runs which business, which properties exist, and which transactions occur, then taxation becomes guesswork and enforcement becomes predation. Legibility is not a philosophical term. It is a practical one: addresses, registries, taxpayer IDs, property identification, mapping, and reliable records. Lagos has invested more in these basic instruments than most states. Not perfectly, but materially.

Second module: low-discretion revenue collection. The easiest way to kill revenue is to make it discretionary—negotiated in offices, collected in cash, and “settled” through personal relationships. That system creates three diseases: leakage, harassment, and distrust. Lagos’s revenue story, to the extent it succeeds, is a story of digitization, e-payments, automated reconciliation, and reducing the number of hands that touch the money. This is not glamorous, but it is the difference between a state that can plan and a state that improvises.

Third module: base-broadening before rate-hiking. Most states chase revenue by squeezing the same visible people: formal businesses, civil servants, and a handful of large taxpayers. That is not sustainable. The Lagos approach has been to widen the net, bring in many small payments from many actors, and treat compliance as a design problem—make it easy to pay, predictable to pay, and less humiliating to pay. That is how you build a tax culture without turning taxation into an act of war.

Fourth module: land administration and property-based finance. Land is one of the few truly immobile assets. It can be taxed, titled, and used to deepen credit if the state runs a credible land system. Many states have land systems that are opaque by design—because opacity is profitable to gatekeepers. Lagos has pushed further toward legibility through land charges and systems that attempt, at least, to identify and bill property. The lesson is not “copy Lagos’s exact law.” The lesson is “make land administration a platform for fiscal stability and urban planning.”

Fifth module: disciplined procurement and delivery routines. Nigeria’s development graveyard is full of “projects” that were funded, announced, and abandoned. A functioning state treats procurement as an engineering problem: published pipelines, standardized contracts, milestone-based payments, audit trails, unit-cost benchmarks, and consequences for nonperformance. Lagos has taken more steps in this direction than many states. Again, not perfectly. But far enough to show that the difference between aspiration and delivery is not rhetoric. It is routine.

Sixth module: specialized delivery agencies for complex systems. In Lagos, transport governance is often cited because it shows the logic: create a technical institution that can plan, contract, enforce, and integrate a system over time. Most states try to run complex systems through generalist ministries and ad hoc committees. That rarely works. The state needs institutions whose job is to deliver, not to negotiate.

Seventh module: the fiscal contract—make the link between taxes and services visible. Nigerians will pay for value, but they will not pay to be cheated. If people see taxes disappear into a black hole, compliance will remain low. Lagos has, at times, made the connection between revenue and visible services more credible than other states. The lesson for other states is simple: earmark a small share of new collections for highly visible local projects, drainage, streetlights, clinics, school repairs, and publish the cost and contractor. That is how you build trust, and trust is how you expand the base.

These modules are not unique to Lagos. They are general-purpose tools of governance. They can be implemented in states with farms, in states with oil, in states with trade corridors, and in states with large informal markets. The point is not to imitate Lagos’s skyline; it is to imitate Lagos’s operating system.

Why emulation is necessary, not optional

Nigeria cannot develop if only one state becomes functional. We are a federation. The country’s demographic momentum is enormous. The strain on infrastructure, employment, and public services will not be solved by one megacity “working.” Lagos itself cannot carry the national burden. It is already congested. It is already overstretched. Even if Lagos becomes a world-class city tomorrow, Nigeria will still fail if most states remain fiscally dependent and administratively weak.

The correct national development strategy is therefore not to envy Lagos or explain it away. It is to industrialize state capacity across the federation.

That phrase—industrialize state capacity—captures the real task. It means turning governance into replicable production. It means standardizing revenue systems, land systems, procurement systems, delivery agencies, and transparency systems across states, with local adaptation but common discipline.

And this is where the “history” objection becomes almost irrelevant. History affects the starting point, yes. But the machine affects the trajectory. A state may never match Lagos’s GDP level, but it can still become far more functional than it is today by installing the machinery that Lagos has built.

There is, however, one hard truth we must not hide: the reason many states do not emulate Lagos is not ignorance. It is incentives.

The political economy obstacle: why non-emulation persists

A Lagos-style state is a less discretionary state. It reduces the number of places where rents can hide. It digitizes revenue, which reduces cash handling. It publishes procurement, which reduces opaque contracting. It makes land administration more legible, which threatens gatekeepers. It creates audit trails, which increase the risk of theft. In short, it squeezes the rent space.

For many political coalitions, that is not attractive. A low-capacity state is not only a failing state; it is also a profitable state for those who control the leak points. That is why reform often meets sabotage. That is why “committees” are created to delay. That is why digitization is announced but not implemented. That is why registers are created but not maintained. That is why laws exist but do not bite.

If we are serious, we must treat emulation as a political project, not only a technical one. Reform requires; a coalition that benefits from function more than from discretion, credible enforcement against rent-seekers, and citizen-facing proof that the state can deliver.

What should be done—practically

If Nigeria wants every state to learn the Lagos way, the federation needs a strategy that makes state capacity politically and fiscally rational.

First, performance-based federal support. Abuja should not simply allocate funds; it should reward measurable improvements in state capacity: increases in IGR collection efficiency, reductions in permit processing time, publication of audited accounts, procurement transparency, and completion rates of capital projects. This is not punishment. It is incentive alignment. States that build capacity should get bonus access to concessional financing and infrastructure co-funding.

Second, a national “state operating system” standard. Nigeria should develop standard templates for revenue administration, land cadastre development, e-permitting, procurement transparency, and project monitoring—so states do not reinvent the wheel. Lagos shows the direction; the federation can standardize the toolbox.

Third, build one flagship delivery institution per state. Not ten agencies. One. Choose the sector that most directly affects daily life and productivity—transport, sanitation, water, or power interface—and build a technical institution with a multi-year plan, ring-fenced revenue, and measurable service metrics. Function grows by building institutions that actually do something.

Fourth, make the fiscal contract visible. Each state should publicly commit that a fixed share of incremental revenue will go into visible community projects with published costs and contractors. Trust is not created by speeches; it is created by repeated, verifiable delivery.

Finally, protect reformers. In Nigeria, building function often creates enemies. The federation, civil society, media, and business communities must protect and celebrate governors and commissioners who build systems rather than distribute favors. If reformers are isolated, the rent coalition wins.

The conclusion: from FAAC to function is the development path

Nigeria’s development challenge is not purely one of resources. It is one of conversion. We have economic activity, but too little fiscal capture. We have budgets, but too little durable public capital. We have allocations, but too little functionality. We have plans, but too little execution.

Lagos is not perfect, but Lagos is instructive because it shows that a Nigerian state can build a machine that converts activity into capacity. That machine is the transferable asset. That is what other states must emulate.

The national conversation should therefore change. Instead of arguing whether Lagos is privileged, we should ask a more useful question: what would it take for every state to become meaningfully functional—to collect revenue with dignity, to build infrastructure with discipline, to deliver services with continuity, and to earn the trust of its citizens?

That is the real development debate. And it is the debate Nigeria must win.

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Philip Obazee retired as a managing director and head of derivatives from Macquarie Asset Management – a global asset management company with office in Philadelphia, PA, USA, and currently, he is the founder and chief executive officer of Polymetrics Americas Research.