In a development that underscores the growing revenue profile of Africa’s largest economy, the three tiers of government in Nigeria—Federal, State, and Local Government Councils—shared a massive N2.094 trillion from the Federation Account for the month of October 2025. The disbursement, described by officials as one of the highest monthly allocations in recent years, was finalized during the monthly Federation Account Allocation Committee (FAAC) meeting held in Abuja, the nation’s capital.
The Office of the Accountant General of the Federation (OAGF) confirmed the figure in an official communiqué issued by the Director of Press and Public Relations, Mr. Bawa Mokwa. The substantial allocation reflects improved collections from several key revenue sources despite a notable decline in Value Added Tax (VAT) receipts, highlighting the volatility and diversified nature of Nigeria’s revenue streams in an era of fluctuating global oil prices and domestic economic reforms.
The N2.094 trillion disbursed represents the total distributable revenue after mandatory deductions. It is made up of three primary components:
- Distributable statutory revenue: N1.376 trillion
- Distributable Value Added Tax (VAT): N670.303 billion
- Electronic Money Transfer Levy (EMTL): N47.870 billion
Before arriving at the distributable figure, the gross revenue available for October stood at an impressive N2.934 trillion. From this amount, N115.278 billion was deducted as cost of revenue collection by agencies such as the Nigeria Customs Service, Federal Inland Revenue Service, and Nigerian Upstream Petroleum Regulatory Commission, while a further N724.603 billion was set aside for transfers, statutory interventions, refunds, and savings.
Following the constitutionally approved revenue-sharing formula, the net distributable N2.094 trillion was allocated as follows:
- Federal Government: N758.405 billion
- State Governments (collectively): N689.120 billion
- Local Government Councils (collectively): N505.803 billion
In addition, oil-producing states received an extra N141.359 billion as their 13 per cent derivation revenue from mineral resources, a constitutional provision designed to compensate host communities and states for the environmental and social costs of hydrocarbon extraction.
A breakdown by revenue stream provides deeper insight into how each tier of government benefited:
- Statutory Revenue (N1.376 trillion distributable)
- Federal Government: N650.680 billion
- State Governments: N330.033 billion
- Local Governments: N254.442 billion
- Derivation (13%) to oil-producing states: N141.359 billion
- Value Added Tax (N670.303 billion distributable)
- Federal Government (15%): N100.545 billion
- State Governments (50%): N335.152 billion
- Local Government Councils (35%): N234.606 billion
- Electronic Money Transfer Levy (N47.870 billion distributable)
- Federal Government (15%): N7.180 billion
- State Governments (50%): N23.935 billion
- Local Government Councils (35%): N16.755 billion
When compared to the previous month, October’s performance showed a mixed picture. Gross statutory revenue rose modestly from N2.128 trillion in September to N2.164 trillion in October, an increase of N36.832 billion. Several non-oil revenue heads recorded significant growth, including Petroleum Profit Tax (PPT), Hydrocarbon Tax, Companies Income Tax (especially from upstream oil activities), Capital Gains Tax, Stamp Duty, Oil & Gas Royalties, Import Duty, Excise Duty, and Common External Tariff (CET) Levies. These gains suggest that ongoing tax administration reforms and higher corporate profitability in the extractive and trade sectors are beginning to yield dividends.
However, the decline in Value Added Tax was stark. Gross VAT collections fell from N872.630 billion in September to N719.827 billion in October, a drop of N152.803 billion or approximately 17.5 per cent. Analysts attribute this slump to seasonal consumption patterns, reduced consumer spending amid persistent inflationary pressures, and possible inefficiencies in VAT administration at the retail level. The Electronic Money Transfer Levy and certain fees also recorded declines, underscoring the challenges of relying heavily on consumption-based taxes in an economy where purchasing power remains constrained for many households.
Despite the VAT setback, the overall revenue outturn remains robust, buoyed by stronger performances in oil-related taxes and import duties. The substantial FAAC disbursement will provide critical fiscal space for all tiers of government as they finalize their 2026 budgets and continue implementation of ongoing projects. For many states and local governments that depend almost entirely on federal allocations, the October payout offers temporary relief from perennial cash-flow difficulties and may enable settlement of salary arrears, pension obligations, and infrastructure commitments.
Economists have welcomed the development but caution that sustained revenue growth will require deeper structural reforms, including plugging leakages, broadening the tax base beyond oil, and improving VAT compliance through digital enforcement mechanisms. The significant derivation payout to oil-producing states also reignites conversations about resource control and the need for a more equitable fiscal federalism framework that balances the interests of producing and non-producing regions.
As Nigeria navigates the final quarter of 2025, the October FAAC disbursement of N2.094 trillion stands as a testament to the country’s resilient revenue machinery, even as it exposes lingering vulnerabilities in non-oil taxation. For citizens, the hope remains that these funds will translate into tangible improvements in public services, infrastructure, and overall governance effectiveness across the federation.
