Nigeria’s three tiers of government shared a total of ₦1.93 trillion from the Federation Account in November 2025, marking a notable decline from the previous month and raising fresh concerns over fiscal pressures on states and local governments that depend heavily on federal allocations.
The funds were distributed at the December 2025 meeting of the Federation Account Allocation Committee (FAAC) held in Abuja, according to a statement issued by the Office of the Accountant-General of the Federation.
The allocation reflects weaker revenue inflows during the period, particularly from oil and major tax sources.
November FAAC Revenue Reflects Sharp Monthly Decline
An analysis of the November FAAC revenue shows that the ₦1.93tn shared represented a ₦166bn drop from the ₦2.094tn allocated in October 2025.
This translates to a 7.9 per cent month-on-month decline, significantly deeper than the marginal reduction recorded between September and October.
Fiscal analysts say the sharper fall highlights the vulnerability of public finances to fluctuations in oil receipts, tax collections, and broader macroeconomic conditions, even as reforms are underway to strengthen revenue mobilisation.
According to the FAAC communiqué, the ₦1.93tn distributed for November was drawn from a total gross revenue of ₦2.34tn, after deductions for collection costs and statutory transfers.
Specifically, ₦84.25bn was deducted as the cost of revenue collection, while ₦330.63bn was set aside for transfers, interventions, refunds, and savings.
Composition of the Shared Revenue
The November FAAC revenue was made up of three major components:
₦1.403tn from statutory revenue
₦485.84bn from Value Added Tax (VAT)
₦39.65bn from the Electronic Money Transfer Levy (EMTL)
The breakdown underscores the continued importance of non-oil revenues such as VAT and electronic transaction levies, even as overall inflows weakened during the month.
How the Funds Were Shared
From the ₦1.93tn total allocation, the Federal Government received ₦747.16bn, while state governments shared ₦601.73bn.
The 774 local government councils received ₦445.27bn, and oil-producing states were paid ₦134.36bn as 13 per cent derivation revenue.
Further details show that from the ₦1.403tn statutory revenue, the Federal Government received ₦668.34bn, states got ₦338.99bn, and local governments received ₦261.35bn, in addition to derivation funds.
From the VAT pool of ₦485.84bn, the Federal Government received ₦72.88bn, states shared ₦242.92bn, while local governments got ₦170.04bn.
Revenue from the Electronic Money Transfer Levy was also shared, with the Federal Government receiving ₦5.95bn, states ₦19.82bn, and local governments ₦13.88bn.
Revenue Sources Weaken Across the Board
The FAAC communiqué attributed the decline in November FAAC revenue to broad-based reductions across key revenue streams.
Gross statutory revenue for November stood at ₦1.74tn, down sharply from ₦2.16tn recorded in October — a fall of nearly ₦428bn in one month.
Similarly, gross VAT revenue dropped from ₦719.83bn in October to ₦563.04bn in November, representing a ₦156.79bn decline.
While excise duties recorded a moderate increase, this was insufficient to offset sharp declines in other major revenue lines.
Key revenue sources that recorded significant drops include Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, oil and gas royalties, import duties, CET levies, VAT, EMTL, and other fees.
Economists note that the decline reflects a mix of softer oil market conditions, slower corporate activity, and structural challenges in tax administration, despite ongoing reforms.
Implications for States and Local Governments
The fall in November FAAC revenue is particularly concerning for state governments, many of which rely overwhelmingly on monthly allocations to fund salaries, infrastructure projects, and social services.
Recent data from the BudgIT State of States Report revealed that more than 30 states depend on FAAC for the bulk of their revenue, with 31 states relying on federal allocations for at least 80 per cent of their current income.
The report further showed that 29 states depend on FAAC for at least half of their total revenue, while 21 states rely on it for more than 70 per cent, underscoring the limited fiscal independence of most subnational governments.
Analysts warn that sustained declines in FAAC allocations could worsen liquidity pressures at the state level, increase borrowing, delay capital projects, and heighten salary arrears if alternative revenue sources are not strengthened.
Long-Term Revenue Outlook Remains Mixed
Despite the monthly decline, authorities say Nigeria’s overall revenue performance in 2025 shows signs of improvement.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, recently disclosed that inflows into the Federation Account reached ₦23.06tn in the first 10 months of 2025, driven by fiscal reforms, stronger audits, and better coordination among revenue-generating agencies.
However, fiscal experts caution that rising inflows do not automatically translate to stability if revenue remains volatile and heavily exposed to oil price movements and consumption-based taxes.
They argue that deeper reforms are required to expand non-oil revenue, improve compliance, and reduce the structural dependence of states on monthly FAAC distributions.
Balancing Revenue Growth and Fiscal Stability
As Nigeria pushes forward with tax and fiscal reforms, including the implementation of the Nigeria Tax Act from 2026, policymakers face the challenge of stabilising revenue inflows while protecting vulnerable subnational governments from fiscal shocks.
The November FAAC revenue figures highlight both progress and persistent weaknesses in the country’s public finance framework.
While reforms have helped improve overall collections in 2025, the sharp month-on-month decline serves as a reminder that Nigeria’s fiscal health remains sensitive to economic headwinds.
For states and local governments, the message is increasingly clear: diversifying revenue sources and strengthening internally generated revenue will be critical to surviving periods of declining federal allocations.
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