PSPI Rankings: Why Nigeria Needs Deeper Governance Metrics, Not Just League Tables

Phillips Consulting’s 2026 Ranking Puts States Under the Microscope — But Is the Lens Complete?

When Phillips Consulting rolled out the 2026 edition of its Public Sector Performance Index (PSPI) this month, governors across Nigeria’s 36 states took note — and a familiar scramble for the top spots began. The index, which scores states on fiscal health, revenue mobilisation, economic activity and governance processes, has cemented itself as the most widely cited subnational scorecard in the country. For investors, development partners and the federal government, it is a shortcut to identifying reform champions and laggards.

But a closer reading of the methodology, laid out in a detailed analysis that accompanied the release, reveals a more uncomfortable truth: the league table may say more about what is easy to measure than about what actually makes a state govern well. The numbers reward visible outcomes — a low debt-to-revenue ratio, a high internally generated revenue (IGR) figure, a capital-heavy budget — while often overlooking the institutional plumbing that determines whether those numbers translate into lasting improvements for citizens.

That gap is now fuelling a quiet but consequential debate among governance experts, economists and the consulting firm itself. The core question: can Nigeria truly benchmark state performance without measuring budget credibility, procurement integrity, public investment management and the quality of public financial reporting? The consensus emerging is that while the PSPI remains a valuable tool, it must evolve — or risk becoming a beauty contest that rewards statistical polish over substantive reform.

What the PSPI Misses: The Institutional Foundations of Real Governance

The Limits of Ratio-Based Fiscal Discipline

On paper, a state can score highly on fiscal discipline simply by keeping expenditure below a certain threshold of revenue and maintaining a manageable debt stock. But the analysis notes that fiscal discipline is not just about balancing numbers; it is about whether public financial management systems deliver what they promise. A state may approve an ambitious budget, yet release only a fraction of capital funds during the year, roll projects over endlessly, and accumulate unpaid bills — all while its headline ratios remain tidy. Incorporating indicators of budget credibility — the gap between approved and actual expenditure, the timeliness of fund releases, the extent of arrears — would reveal whether fiscal plans actually reach the classroom or the clinic.

Similarly, procurement systems, the bridge between spending and results, are invisible in the current framework. A state can report high capital expenditure while its procurement processes are opaque, contracts are inflated, and projects suffer from chronic delays and cost overruns. The analysis suggests that metrics on competitive tendering, use of electronic procurement portals, publication of contract awards, and compliance with open contracting standards would better capture whether public money is being converted into functional infrastructure.

Public Investment Management: Choosing the Right Projects

Even when procurement works, the state may be building the wrong things. The PSPI does not assess whether capital projects are selected through rigorous appraisal, aligned with development plans, or subjected to post-completion evaluation. A new market structure that stands empty or a road that washes away in one rainy season can both coexist with impressive capital expenditure ratios. Adding indicators of project completion rates, cost overruns and asset maintenance would distinguish productive investment from politically driven spending.

Revenue, Debt and the Data That Distorts

IGR is treated as a straightforward measure of fiscal strength, yet many states rely on fragmented, informal collection systems that burden small traders without building sustainable tax capacity. The analysis argues that the index should consider the cost of collection, the structure of the tax base and the degree of automation — factors that determine whether high IGR today will still exist five years from now. On the debt side, low debt ratios can mask underinvestment in critical infrastructure, just as higher debt can be justified by growth-enhancing projects. Without understanding the purpose and quality of borrowing, debt sustainability scores remain ambiguous.

Perhaps the most understated risk is the uneven quality of the data itself. States with stronger reporting systems and more complete disclosure of liabilities and arrears may, paradoxically, appear weaker than states that simply fail to report what they owe. The dependency on officially submitted figures means the index may inadvertently reward opacity.

Momentum vs. Sustainability

The PSPI’s Momentum Index, which tracks improvement over time, is a welcome innovation. But the analysis cautions that short-term gains can be flattered by one-off increases in federal allocations or favourable commodity prices, not by deliberate reform. Without controlling for such external factors, the momentum metric may misattribute luck to governance.

For Governors, Investors and the Index Curators: How to Read — and Improve — the Numbers

• State governments planning their next fiscal year should look beyond the PSPI ranking position and audit their budget credibility, procurement processes and project completion rates. A state that scores well on headline ratios but has significant expenditure arrears or chronically late capital releases is likely to see its ranking erode once deeper metrics are adopted — and is already delivering suboptimal outcomes now.
• Phillips Consulting can strengthen the PSPI’s policy impact by piloting a supplementary module on institutional process indicators, possibly starting with a smaller set of states that already report budget execution data. Incorporating budget variance analysis, procurement transparency scores and project completion rates would differentiate the index from purely outcome-based rankings and align it more closely with international frameworks such as PEFA.
• Development finance institutions and impact investors using the PSPI for due diligence should triangulate the index findings with available budget implementation reports, auditor-general opinions and open contracting data. A high PSPI score without strong underlying process integrity is a potential red flag for project execution risk.
• Civil society organisations and media can complement the PSPI by publishing shadow audits that test whether the official numbers hold up in specific sectors — for instance, by physically verifying a sample of capital projects reported as complete. This would create pressure for data quality and accountability that a composite index alone cannot generate.