The Federation Account Allocation Committee (FAAC) on Wednesday announced that ₦2.225 trillion was distributed among the Federal Government, 36 states, and the 774 local government councils for August 2025, reflecting Nigeria’s improving fiscal position and a third consecutive month of revenue growth.
The revenue surge comes barely two weeks after President Bola Tinubu disclosed that Nigeria had hit its 2025 revenue target ahead of schedule, a feat largely attributed to rising non-oil sector contributions.
Stronger Revenue Performance
According to a statement issued by the Office of the Accountant General of the Federation, the ₦2.225 trillion distributable revenue was drawn from a total gross inflow of ₦3.635 trillion recorded in August. After deducting ₦124.8 billion for collection costs and setting aside ₦1.28 trillion for transfers, interventions, refunds, and savings, the remainder was shared among the three tiers of government.
Breakdown of the distributable pool showed that statutory revenue accounted for ₦1.478 trillion, Value Added Tax (VAT) contributed ₦672.9 billion, Electronic Money Transfer Levy (EMTL) yielded ₦32.3 billion, while exchange difference brought in ₦41.2 billion.
The Federal Government received ₦684.4 billion from statutory allocations, states got ₦347.1 billion, and local governments received ₦267.6 billion. Oil-producing states shared an additional ₦179.3 billion as 13% derivation revenue.
From the VAT pool, the Federal Government took ₦100.9 billion, while states and local governments received ₦336.4 billion and ₦235.5 billion respectively.
For EMTL, ₦4.8 billion went to the Federal Government, ₦16.1 billion to states, and ₦11.3 billion to local councils. Exchange difference allocations saw ₦19.7 billion for the centre, ₦10.0 billion for states, ₦7.7 billion for local governments, and ₦3.7 billion to oil-producing states as derivation.
Trends Behind the Numbers
Although the total gross statutory revenue of ₦2.838 trillion was lower than the ₦3.07 trillion recorded in July, a drop of ₦231.9 billion, FAAC reported that VAT and import duty collections improved during the month, helping to cushion the dip. VAT alone rose by ₦34.6 billion compared to July, highlighting its growing importance in funding government operations.
This trend aligns with the Tinubu administration’s emphasis on diversifying Nigeria’s revenue base away from volatile oil earnings. Analysts say the steady rise in VAT and electronic transaction levy receipts indicates improved compliance and economic activity despite inflationary pressures.
“FAAC’s numbers show that the government is beginning to reap the benefits of tax reforms and the digitalization of revenue collection,” said Dr. Yusuf Abubakar, a public finance analyst. “But sustaining this momentum will require deepening efficiency and curbing leakages.”
Implications for States and LGs
The August allocation is expected to ease pressure on state governments struggling to fund salaries, pensions, and capital projects amid rising costs. With inflation at double digits and exchange rate volatility driving up the price of imported goods, governors will be under pressure to deploy the windfall prudently.
For local governments, which received more than ₦520 billion combined from statutory, VAT, and EMTL sources, the inflow presents an opportunity to address grassroots infrastructure and service delivery. However, civil society groups have repeatedly called for transparency in LG spending, noting that much of the funds often get diverted through joint state-local government accounts.
Non-Oil Sector Now Key Driver
The continued strong performance of the non-oil sector is one of the most significant takeaways from the August FAAC meeting. Sectors like telecommunications, financial services, and manufacturing contributed heavily to VAT and EMTL collections, helping offset declining petroleum profit tax and import duty revenues.
Economists warn, however, that the government must avoid over-reliance on VAT, which can be regressive and put additional strain on consumers already grappling with high living costs. “Boosting productivity and formalizing more of the economy should be the focus,” said financial consultant Kemi Onifade. “That’s the only way to sustain these numbers without overburdening households.”
Looking Ahead
With four months left in the fiscal year, fiscal watchers will be monitoring whether the Federal Government can maintain its revenue performance and keep its expenditure commitments on track. The administration is expected to release the Medium-Term Expenditure Framework (MTEF) for 2026–2028 soon, which will indicate how it plans to leverage higher FAAC inflows to finance infrastructure, social programs, and debt obligations.
For now, the ₦2.225 trillion distribution marks a positive signal for Nigeria’s fiscal health, but the bigger test lies in whether these funds will translate into tangible improvements for citizens across the country.
See also: Dangote’s Trucks hit the roads for distribution
Discover more from RainSMediaRadio
Subscribe to get the latest posts sent to your email.
