In a troubling signal for Nigeria’s fiscal trajectory, the Federation Account Allocation Committee (FAAC) has reported a third consecutive monthly decline in revenue allocation to the three tiers of government. The sum of N1.578 trillion was distributed among the federal, state, and local governments for March 2025, a drop from N1.678 trillion in February and N1.703 trillion in January.
The decline, revealed in a statement by Bawa Mokwa, Director of Press and Public Relations at the Office of the Accountant General of the Federation, underscores mounting fiscal challenges as the country grapples with fluctuating oil revenues, declining tax income, and rising expenditure obligations.
Breakdown of Allocation
According to the communiqué issued after the April FAAC meeting held in Abuja, the N1.578 trillion total revenue comprised:
N931.325 billion from statutory revenue
N593.750 billion from Value Added Tax (VAT)
N24.971 billion from the Electronic Money Transfer Levy (EMTL)
N28.711 billion from foreign exchange difference revenue
From the total distributable amount, the Federal Government received N528.696 billion, states got N530.448 billion, and local government councils took N387.002 billion. In addition, N132.611 billion was shared to oil-producing states as 13% derivation revenue.
Detailed Revenue Distribution
The breakdown of statutory revenue of N931.325 billion showed that:
The Federal Government received N422.485 billion
State governments received N214.290 billion
Local governments got N165.209 billion
For VAT, out of the N593.750 billion collected:
The Federal Government received N89.063 billion
States received N296.875 billion
Local councils got N207.813 billion
From the EMTL proceeds:
The Federal Government earned N3.746 billion
States got N12.485 billion
Local governments received N8.740 billion
The N28.711 billion from exchange rate gains was split as follows:
Federal Government: N13.402 billion
States: N6.798 billion
Local Governments: N5.241 billion
Oil-producing states (derivation): N3.270 billion
The committee reported a gross revenue of N2.411 trillion for March 2025. However, this was significantly reduced by N85.376 billion in collection costs and N747.180 billion allocated for transfers, refunds, and other financial interventions.
Interestingly, while statutory revenue improved slightly from N1.653 trillion in February to N1.718 trillion in March, the overall distributable amount still declined due to weaker collections from VAT and other non-oil sources. VAT collections alone fell from N654.456 billion in February to N637.618 billion in March.
FAAC highlighted that revenues from Petroleum Profit Tax (PPT) and Companies Income Tax (CIT) saw notable improvements, indicating some recovery in corporate profitability. However, this was offset by declining revenues from oil and gas royalties, VAT, EMTL, excise duties, import duties, and Common External Tariff (CET) levies.
The steady drop in allocations raises concerns over the financial resilience of subnational governments, many of which depend heavily on FAAC disbursements to fund salaries, infrastructure, and basic services. With inflation remaining high and debt obligations mounting, the decline in available funds could strain governance and service delivery across the country.
Experts warn that unless there is a meaningful uptick in revenue generation—especially through tax reforms, non-oil exports, and economic diversification—the country may face deeper budgetary stress.
As Nigeria continues to navigate economic headwinds, the declining FAAC allocations reinforce the urgency for robust fiscal reforms, enhanced revenue mobilization, and prudent spending. With the first quarter of 2025 now complete and three straight months of falling allocations recorded, all eyes are on the federal and state governments to implement measures that can stabilize public finances and support long-term development.