Nigeria’s federal, state and local governments shared a record N3.007 trillion in FAAC revenue allocation for July, following a sharp rise in statutory revenue that has strengthened the funds available to all three tiers of government. The allocation was approved by the Federation Account Allocation Committee (FAAC) at its August meeting in Owerri, Imo State, amid renewed efforts to improve revenue collection and public financial management.
Of the total allocation, the Federal Government received N1.146 trillion, while the 36 states shared N943.352 billion and the 774 local government councils received N673.649 billion. Benefiting states also received N243.478 billion in 13% derivation revenue from mineral resources, highlighting the growing role of resource-based revenue in government finances.
The stronger allocation was largely driven by a significant increase in gross statutory revenue, which climbed from N3.700 trillion in June to N4.359 trillion in July. That represents a monthly increase of N658.087 billion, or 17.8%. FAAC attributed the rise to improved collections from Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duty, petroleum royalties, mineral royalties, excise duty and gas-flaring penalties. However, weaker VAT and import-related receipts slightly reduced the overall gains, with gross VAT falling 0.7% to N793.968 billion.
FAAC said the latest revenue performance reflects the impact of recent fiscal reforms, including subsidy removal, exchange-rate reforms and changes to the tax system. The Nigeria Tax Act 2025, which took effect on January 1, has also changed the way VAT revenue is shared, increasing the states’ share of the VAT pool to 55% from 50%, while reducing the Federal Government’s share to 10% from 15%. Under the new framework, part of the states’ VAT allocation is also linked to where goods and services are actually consumed.
Despite the record distribution, FAAC warned that stronger revenue must translate into better fiscal management and sustainable development. The committee urged governments to widen their internally generated revenue, put idle public assets to productive use, strengthen transparency and maintain accurate financial records. It also called for continued efforts to diversify government income beyond crude oil, pointing to solid minerals and other non-oil revenue sources as areas with potential. With N3.007 trillion now distributed, attention is shifting to whether governments can turn the improved revenue flow into meaningful investments in infrastructure, healthcare, education and economic growth.
source: Business day
