Figures from the Federation Account Allocation Committee (FAAC) for 11 months of last year show a substantial surge in funds distributed to subnational governments. They received N6.73 trillion between January and November.

The figure represents a 29.08 per cent increase when compared to the N5.02 trillion FAAC distributed during the same period of 2024.

The improved allocations suggest a shift in the nation’s fiscal landscape, providing states and local government areas with unprecedented liquidity to manage their economies.

FAAC maintained a steady flow of funds throughout last year, with monthly disbursements to states frequently crossing the half-trillion naira mark.

The year opened in January with N498.49 billion, rising to N593.70 billion in February. Although March and April saw slight moderations to N562.19 billion and N530.45 billion, respectively, the momentum returned in the second half of the year.

By September and October, monthly allocations to states reached a peak of N727.17 billion, before settling at N689.12 billion in November. This consistency stands in stark contrast to 2024, where monthly figures hovered between N300 billion and N400 billion, only crossing the N500 billion threshold in December of that year.

A breakdown of the total receipts for the first seven months of 2025 identifies a specific group of states as major beneficiaries of the Federation’s Account revenue. Delta State led the pack with a total of N423.85 billion, followed closely by Rivers State at N388.76billion. Other high-earning states include: Akwa Ibom: N348.62 billion; Bayelsa: N306.88 billion; Lagos: N289.31 billion; and Kano: N195.12 billion.

The states with the lowest allocations in 2025 were Ogun, N110.35 billion; Ebonyi.N112.19 billion; Nasarawa, N113.22 billion; Kogi, N114.27 billion and Taraba, N115.03 billion.

The significant lead held by oil-producing states like Delta, Rivers, and Akwa Ibom is attributed to the 13 percent derivation principle, which ensures that a portion of mineral revenue is distributed to them. Lagos and Kano continue to benefit from high internal economic activities and their respective shares of the Value Added Tax (VAT) pool.

In a parallel trend, funds designated for local government councils, which are typically processed through state accounts, also saw a marked rise. These allocations started at N361.75 billion in January and climbed to N419.97 billion by June.

The latter half of the year saw even more significant growth, with September reaching N522.23 billion and October recording the highest point at N529.95 billion. These funds are intended to support grassroots development, although their effective utilisation remains a subject of public interest.

Several fiscal factors converged to produce the 2025 windfall. The removal of the petrol subsidy played a central role by making available oil revenues that were previously used to offset fuel costs.

Additionally, the country saw a rise in oil production, which grew from 1.26 million barrels per day in 2023 to 1.34 million in 2024, with these levels being sustained throughout the year in review.

Ongoing exchange rate reforms also contributed to increasing the value of the naira against the dollar-denominated oil earnings. Furthermore, non-oil revenue streams became more robust, with a notable rise in collections of VAT and Electronic Money Transfer Levy (EMTL), both of which provided a larger pool of distributable funds for the federal, state and local government. (The Nation)

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