Abuja, October 18, 2025 – In a significant boost to Nigeria's fiscal federalism, the Federation Account Allocation Committee (FAAC) has disbursed a whopping N2.103 trillion to the federal, state, and local governments for the month of September 2025. This allocation, drawn from a gross revenue pool of N3.054 trillion, underscores a resilient recovery in key non-oil revenue streams amid ongoing economic challenges. Chaired by the Accountant-General of the Federation, Mr. Shamsudeen B. Ogunjimi, the FAAC's October 2025 meeting highlighted robust growth in Value Added Tax (VAT) and Electronic Money Transfer Levy (EMTL), even as statutory revenues from oil dipped. The distribution aims to empower subnational governments to tackle pressing issues like infrastructure deficits, healthcare, and education in a nation grappling with inflation and post-pandemic recovery.
The breakdown of this monumental N2.103 trillion allocation reveals a balanced yet strategic sharing formula designed to address Nigeria's diverse regional needs. The Federal Government, responsible for national defense, security, and major infrastructure projects, received the largest single share of N711.314 billion. This substantial inflow will undoubtedly bolster federal initiatives such as the ongoing railway expansions and agricultural subsidies under President Bola Tinubu's administration. Complementing this, the 36 states collectively pocketed N727.170 billion, providing governors with critical funds to address state-specific priorities like road rehabilitation and youth empowerment programs. Local Government Councils, the grassroots tier closest to the people, were allocated N529.954 billion, enabling them to invest in primary healthcare centers, rural electrification, and sanitation drives that directly impact everyday Nigerians.
A notable highlight is the N134.956 billion earmarked as Derivation Revenue – the constitutionally mandated 13% share of mineral revenues for oil-producing states. This lifeline is particularly vital for the Niger Delta region, home to states like Delta, Rivers, and Bayelsa, where oil extraction has long fueled environmental degradation and economic dependency. These funds are expected to accelerate remediation efforts, such as mangrove restoration and youth skill training, fostering sustainable development in these resource-rich yet underdeveloped areas.
Beyond the core allocations, FAAC approved N116.149 billion to cover the operational costs of revenue collection agencies, including the Nigeria Customs Service and Federal Inland Revenue Service (FIRS). This investment ensures the machinery of fiscal collection remains efficient, preventing leakages that have historically plagued Nigeria's revenue system. Additionally, a hefty N835.005 billion was set aside for Transfers, Interventions, and Refunds. These funds support specialized programs like the Universal Basic Education (UBE) intervention, ecological funds for flood-prone areas, and refunds to states overpaid in previous cycles, promoting equity and accountability across the federation.
Diving deeper into the revenue components, the communiqué issued at the meeting's conclusion paints a vivid picture of Nigeria's evolving fiscal landscape. Value Added Tax (VAT), a barometer of domestic consumption, soared to a gross of N872.630 billion for September 2025 – a staggering 20.7% increase from the N722.619 billion distributed in August. This N150.011 billion surge reflects heightened economic activity, driven by back-to-school spending, festive preparations ahead of the yuletide season, and a rebound in retail sales post-fuel subsidy removal. After deducting N34.905 billion for collection costs and N25.132 billion for transfers and refunds, the net distributable VAT stood at N812.593 billion.
This net amount was shared equitably: the Federal Government claimed N121.889 billion (15%), states took the lion's share at N406.297 billion (50%), and local councils received N284.408 billion (35%). Such a formula, enshrined in the 1999 Constitution, ensures that states and locals – which handle over 70% of public service delivery – are not starved of resources. For states like Lagos and Kano, with bustling commercial hubs, this VAT windfall translates to enhanced funding for urban transport and market upgrades, directly benefiting millions of traders and commuters.
In stark contrast, Gross Statutory Revenue – dominated by oil-related inflows – plummeted to N2.128 trillion, a sharp N710.134 billion (25%) decline from August's N2.838 trillion. This downturn is attributed to volatile global oil prices, hovering around $75 per barrel amid geopolitical tensions in the Middle East, coupled with OPEC+ production cuts that limited Nigeria's exports to 1.38 million barrels per day. Despite the setback, FAAC allocated N79.090 billion for collection costs and N809.873 billion for transfers and refunds, leaving a distributable balance of N1.239 trillion.
This balance was apportioned as follows: Federal Government N581.672 billion (47%), states N295.032 billion (24%), local governments N227.457 billion (18%), and derivation N134.956 billion (11%). The federal heavy tilt here underscores oil's enduring role as Nigeria's fiscal backbone, funding 60% of the national budget. However, experts caution that over-reliance on crude exposes the economy to shocks, urging diversification into tech and agriculture.
Adding to the positive notes, the Electronic Money Transfer Levy (EMTL) contributed a steady N53.838 billion, up slightly from prior months, fueled by Nigeria's digital payment boom via platforms like Opay and PalmPay. Distribution included N7.753 billion to the federal government (14.4%), N25.842 billion to states (48%), N18.089 billion to locals (33.6%), and N2.154 billion for costs. With over 70% of transactions now cashless, EMTL exemplifies how fintech innovations are reshaping revenue generation, potentially adding N700 billion annually to federation coffers.
The communiqué further detailed revenue trends: VAT, Import Duty, and EMTL posted significant gains – VAT up 21%, Import Duty by 15% due to eased port congestions, and EMTL by 8%. Conversely, Customs Excise Tariff (CET) Levies and Company Income Tax (CIT) fell sharply – CIT down 18% amid corporate profit squeezes from naira devaluation. Petroleum Profit Tax (PPT) edged up 2%, a marginal win from higher output, while Oil and Gas Royalty dipped 3% and Excise Duty 5%, reflecting subdued refining activity at Dangote Refinery.
In summary, September's total distributable revenue crystallized at N2.103 trillion, comprising N2.239 trillion from Statutory sources (corrected for prior deductions), N812.593 billion from VAT, and N51.684 billion from EMTL. This figure, while below gross N3.054 trillion due to deductions, marks a 12% year-on-year increase, signaling fiscal stabilization.
Implications for Nigeria's Economy and Governance
This FAAC disbursement arrives at a pivotal moment. With inflation at 22.5% and unemployment at 5.3%, the funds offer a lifeline. States like Enugu plan N50 billion for agro-processing hubs, creating 10,000 jobs, while locals in Borno will rebuild 200 schools ravaged by insurgency. Federally, N711 billion supports the Student Loan Act, disbursing to 1.5 million beneficiaries.
Yet, challenges persist. Oil volatility demands urgent reforms: the Petroleum Industry Act's full implementation could boost production to 2 million bpd by 2027. VAT's growth highlights consumption tax potential, but equitable sharing – with northern states decrying Lagos-centric biases – requires dialogue. EMTL's success calls for cybersecurity investments to curb fraud.
Analysts like Dr. Aisha Bello of the Lagos Business School hail the allocation as "a pragmatic step towards inclusive growth," projecting 3.5% GDP growth in Q4 2025. Governor Umo Eno of Akwa Ibom praised derivation funds for "healing our wounds." As FAAC meets next, stakeholders urge transparency via the Open Treasury Portal to build public trust.
In essence, this N2.103 trillion is more than numbers – it's a catalyst for Nigeria's renewal. By empowering all tiers, it bridges federal-state divides, fostering a united front against poverty. As Mr. Ogunjimi noted, "This allocation reaffirms our commitment to fiscal equity, ensuring no Nigerian is left behind."
