by NIyi Jacobs
Nigeria’s three tiers of government shared a total of N9.62 trillion from the Federation Account Allocation Committee (FAAC) over three months, but monthly allocations declined steadily, underscoring growing fiscal pressure across the federation.
Data compiled by the National Bureau of Statistics shows that FAAC distributions from August to October 2025 revenues fell from N3.64 trillion to N3.05 trillion before dropping further to N2.93 trillion, reflecting weaker oil receipts, fluctuating VAT performance, and persistent structural deductions.
From the cumulative N9.62 trillion shared during the period, the Federal Government received N2.28 trillion, the 36 states shared N2.13 trillion, while 774 local governments received N1.56 trillion. The remaining amounts went to statutory funds, derivation payments, and other special allocations.
August 2025 revenue provided the strongest inflow, with FAAC disbursing N3.64 trillion. The Federal Government received N810.05 billion, states N709.83 billion, and local governments N522.23 billion. VAT served as a key stabiliser during the month, contributing significantly to all tiers of government, while oil-producing states benefited from 13 percent derivation payments and various oil-related refunds. However, large deductions, including transfers to the Non-Oil Excess Account and payments to revenue agencies, reduced the net liquidity impact.
Allocations weakened in the following month as FAAC shared N3.05 trillion from September revenue. In a notable shift, states received N727.17 billion, slightly higher than the Federal Government’s N711.31 billion, while local governments got N529.95 billion. Stronger VAT collections supported subnational governments, but overall inflows declined amid continued transfers to special accounts and high cost-of-collection deductions.
The downward trend continued in November 2025, when FAAC shared N2.93 trillion from October revenue, the lowest monthly allocation in the three-month period. The Federal Government regained the largest share at N758.41 billion, while states’ allocation fell to N689.12 billion and local governments received N505.80 billion. VAT receipts weakened sharply during the month, removing a key buffer for subnational finances.
Analysts attribute the declining FAAC allocations to reduced oil-related revenues, including lower petroleum profit tax and royalties, alongside softer non-oil tax inflows. Lower crude production, underperformance in the oil sector, and slowing economic activity have combined to shrink the distributable pool.
The slide in FAAC disbursements highlights mounting fiscal strain for federal, state, and local governments, reinforcing concerns over revenue volatility and the urgent need for broader revenue diversification and stronger domestic revenue mobilisation.
