By Seun Ibiyemi
The Federal Government, 36 states and 774 local government councils shared N3.007 trillion in revenue generated in July, following a 17.8 per cent increase in gross statutory collections.
The Federation Account Allocation Committee (FAAC) approved the allocation at its August meeting held in Owerri, Imo State, amid efforts to strengthen revenue mobilisation and public financial management across the three tiers of government.
The Federal Government received N1.146 trillion from the allocation, while the states got N943.352 billion and local government councils received N673.649 billion.
A further N243.478 billion, representing the 13 per cent derivation from mineral resources, was shared among benefiting states.
The July allocation was supported by a sharp rise in gross statutory revenue, which increased to N4.359 trillion from N3.700 trillion in June.
The N658.087 billion increase represented a 17.8 per cent month-on-month rise.
FAAC attributed the increase to stronger collections from Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duty Tax, petroleum royalties, mineral royalties, excise duty and gas-flaring penalties.
However, the gains were partly offset by declines in Value Added Tax (VAT), import duties, Common External Tariff levies, gas-flaring rental fees and miscellaneous oil revenue.
Gross VAT collections fell marginally to N793.968 billion in July from N799.746 billion in June, representing a decline of N5.778 billion, or 0.7 per cent.
FAAC said it would continue to work with revenue-generating agencies to close collection gaps and improve compliance with remittance requirements.
The committee also reaffirmed the need for all collectible revenue to be remitted fully, transparently and on time into the Federation Account, particularly ahead of a planned reconciliation of the accounts.
“Gross FAAC allocations have risen significantly over the past three years, driven largely by subsidy removal, exchange-rate unification and tax reforms,” the committee said.
The committee also highlighted the Nigeria Tax Act 2025, which came into effect on January 1, as a major change to the country’s revenue-sharing framework.
Under the new system, states receive 55 per cent of the VAT pool, up from 50 per cent, while the Federal Government’s share has been reduced to 10 per cent from 15 per cent.
The framework also provides that 30 per cent of the states’ VAT pool should be distributed according to the location where goods and services are consumed rather than the location of a company’s registered headquarters.
According to FAAC, the change is intended to establish a closer link between economic activity and the revenue accruing to states.
FAAC Urges States to Strengthen IGR
The committee urged states to use the higher allocations to strengthen their fiscal positions rather than deepen dependence on federal revenue.
It identified revenue quality, asset strength, economic growth, capital attraction, human capital and institutional transparency as the six key measures of fiscal strength.
States were encouraged to broaden their internally generated revenue beyond narrow tax bases, put idle public assets to productive use and develop official state-level Gross Domestic Product data to better measure economic activity.
FAAC also called for predictable business environments capable of attracting investment, alongside sustained spending on education and healthcare.
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On public financial management, the committee urged all tiers of government to maintain timely and audited accounts, establish comprehensive asset registers, verify payrolls and publish audited financial statements within the next 12 months.
FAAC said sustaining the improvement in statutory revenue would depend on continued discipline in revenue collection and remittance by Ministries, Departments and Agencies.
It also called for greater diversification of government revenue beyond oil, identifying solid minerals and other non-oil royalty streams as areas with potential to boost collections.
The FAAC meeting was held on the margins of the National Council of Federation and Economic Development, where commissioners of finance and accountants-general also discussed subnational fiscal fitness and strategies for converting higher allocations into sustainable development and social investment.
