(DDM) – Nigeria’s federal, state, and local governments have shared a total of N1.894 trillion from February 2026 revenue collections, according to the latest Federal Account Allocation Committee (FAAC) report.
How FAAC works
The Federal Account Allocation Committee (FAAC) coordinates revenue distribution from the federation account to the three tiers of government—federal, state, and local.
Revenue sources include statutory allocations, Value Added Tax (VAT), customs duties, and other federally collected revenue streams.
FAAC meetings occur monthly, with the Ministry of Finance, Central Bank of Nigeria (CBN), and other revenue agencies reconciling collections before sharing funds.
February revenue breakdown
From the N1.894 trillion shared:
Federal Government (FG): Received approximately N721.78 billion, covering statutory revenue and its share of VAT and oil proceeds.
State Governments: Shared about N519.95 billion, which includes their statutory allocations plus VAT proceeds.
Local Government Areas (LGAs): Received N378.34 billion, reflecting their statutory allocation and VAT component.
Excess Crude Account (ECA) contributions and derivation funds also form part of the allocation but are accounted separately.
Key contributors to revenue
Oil revenue remains the largest contributor, though non-oil revenue streams such as VAT and customs duties are steadily increasing.
The CBN has reported steady VAT remittances from states, indicating improved compliance and digital collection efforts.
Implications for governance
The shared revenue funds essential government operations including education, health, infrastructure, and security.
States and LGs rely heavily on FAAC allocations due to limited internally generated revenue in some regions, particularly rural areas.
Timely FAAC disbursements help maintain government payrolls and finance developmental projects, though challenges like delayed allocations can affect service delivery.
Challenges and considerations
Nigeria faces a fiscal imbalance, as oil-dependent federal revenues fluctuate with global crude prices, affecting FAAC shares.
States with higher internally generated revenue often manage better, while smaller LGAs depend almost entirely on allocations from FAAC.
Calls for fiscal reforms, VAT harmonization, and greater transparency in revenue collection have grown louder among economists and civil society groups.
Looking ahead
The February 2026 allocation underscores the need for robust financial planning across all government tiers.
FAAC continues to serve as a critical tool in Nigeria’s federal fiscal system, ensuring equitable distribution of national resources while highlighting the ongoing importance of diversifying revenue sources beyond oil.
