FAAC Distributes N1.65 Trillion in May Amid Boost in VAT and Oil Derivation Funds

In May 2025, the Federation Account Allocation Committee (FAAC) disbursed N1.65 trillion to Nigeria’s federal, state, and local governments. This figure marks a slight decrease from the N1.68 trillion shared in April. The distribution followed FAAC’s monthly meeting chaired by Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy. The disbursement was drawn from total gross earnings of N2.94 trillion recorded during the month.

The shared revenue comprised statutory revenue (N863.89 billion), value-added tax (VAT) (N691.71 billion), electronic money transfer levy (N27.66 billion), and gains from exchange rate differences (N76.61 billion). Of the N1.65 trillion allocation, the federal government received N538 billion, states got N577.84 billion, and local government areas received N419.96 billion. An additional N124.07 billion was paid to oil-producing states as derivation revenue, in line with the constitutional 13% provision.

VAT collection saw a notable surge in May, with gross revenue reaching N742.82 billion, up by N100.56 billion from April. After accounting for deductions, N691.71 billion was available for distribution. From this, the federal government received N103.75 billion, states got N345.85 billion, and local governments took N242.10 billion. This increase in VAT reflects improved economic activity or enhanced tax compliance.

Statutory revenue also experienced a modest growth, rising from N2.08 trillion in April to N2.09 trillion in May. After removing collection costs and earmarked transfers, N863.89 billion remained for disbursement. The federal government received N393.51 billion, states took N199.59 billion, and local governments got N153.88 billion. Oil-producing states also received N116.89 billion from this stream as part of their derivation share.

Additional sources included the Electronic Money Transfer Levy, which yielded N28.82 billion, and exchange rate differences, contributing N76.61 billion. The levy was divided among federal, state, and local governments after deducting collection costs, while exchange rate gains added significantly to available funds. FAAC also earmarked N111.90 billion for collection expenses and N1.17 trillion for various transfers, interventions, and refunds, indicating robust inflows and fiscal activity across all levels of government.

Source: Business day