FAAC Allocates ₦2.2tn to Federal, States and LGs for August

The Federation Account Allocation Committee (FAAC) has announced the disbursement of ₦2.2 trillion to the Federal Government, states, and local government councils as revenue allocation for August 2025. The figure represents one of the highest monthly disbursements in recent years and reflects improved collections from oil and non-oil sources amid ongoing fiscal reforms.

According to details released after the FAAC meeting in Abuja, the gross statutory revenue for August stood at over ₦1.05 trillion, while VAT collections contributed ₦520.5 billion. Electronic money transfer levies brought in ₦21.6 billion, and excise duties yielded ₦17.2 billion. Additionally, augmentations from exchange rate differentials and excess oil revenues further boosted the distributable pool, bringing the total to ₦2.2 trillion.

The breakdown showed that the Federal Government received about ₦872.7 billion, while state governments shared ₦664.6 billion. Local government councils received ₦484.7 billion, and ₦174.5 billion was allocated to the oil-producing states as derivation funds under the 13 percent principle. The balance was set aside for transfers and statutory deductions, including allocations to relevant government agencies.

FAAC officials highlighted that the surge in distributable revenue was largely driven by stronger oil receipts following improved crude production levels, coupled with sustained reforms in tax administration that boosted VAT and customs duty collections. The Central Bank of Nigeria’s foreign exchange policy, which has allowed for market-driven pricing of the naira, also contributed by raising the naira value of oil exports.

Revenue from the oil sector has shown steady improvement since mid-2025, with production rising closer to 1.6 million barrels per day, aided by tighter security measures in the Niger Delta and a significant decline in crude oil theft. On the non-oil side, rising consumption tax payments, higher import duties, and electronic money transfer charges have further strengthened the revenue pool.

Analysts say the August disbursement provides much-needed fiscal space for governments across all tiers to fund development projects, pay workers’ salaries, and meet recurrent obligations. Many states had been struggling with revenue shortfalls earlier in the year due to delayed remittances, making this ₦2.2 trillion payout particularly timely.

However, concerns remain about how effectively the funds will be used. Civil society groups and economists continue to stress the importance of channeling such windfalls into infrastructure, healthcare, and education, rather than relying on the allocations primarily for recurrent expenditure. They argue that Nigeria’s long-term fiscal stability depends on strengthening internally generated revenue while managing FAAC inflows prudently.

Meanwhile, FAAC reaffirmed its commitment to maintaining transparency in the allocation process. It urged state governments and local councils to ensure accountability in deploying the funds, stressing that greater efficiency in public spending is crucial to sustaining public trust.

The August allocation comes against the backdrop of ongoing discussions on fiscal federalism, with some states calling for a review of the revenue-sharing formula to reflect current economic realities. While the Federal Government currently takes the largest share, many states argue that more resources should flow to subnational governments, which bear the brunt of service delivery to citizens.

As the economy continues to adjust to reforms, the ₦2.2 trillion shared in August stands out as a key milestone. It reflects not only improved collections and reforms in fiscal policy but also the potential for sustained growth in Nigeria’s revenue base if oil output remains stable and non-oil revenue continues its upward trend.