By Gloria Ikibah
The Federation Account Allocation Committee (FAAC) has shared a total of N3.007 trillion generated in July 2026 among the Federal Government, the 36 state governments faacand the 774 local government councils, despite a decline in Value Added Tax (VAT) receipts.
The decision was reached at FAAC’s monthly meeting for August 2026, held in Owerri, Imo State, where members also reviewed the country’s fiscal outlook and discussed strategies to strengthen revenue generation and public financial management. 
According to the committee, the Federal Government received N1.146 trillion from the July revenue, while the 36 states shared N943.352 billion.
The 774 local government councils received N673.649 billion, while oil-producing states shared N243.478 billion as 13 per cent derivation revenue from mineral resources.
The latest figures showed a strong increase in statutory revenue.
Gross statutory revenue rose to N4.359 trillion in July, representing an increase of N658.087 billion, or 17.8 per cent, compared with the N3.700 trillion recorded in June.
However, VAT collections fell slightly during the period.
Gross VAT revenue stood at N793.968 billion in July, down by N5.778 billion, or 0.7 per cent, from the N799.746 billion generated in June.
FAAC attributed the growth in statutory revenue to stronger collections from key revenue sources, including Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duty Tax, petroleum royalties, mineral royalties, excise duty and gas flared penalties.
The committee noted, however, that the gains were partly offset by declines in VAT, import duty, Common External Tariff levies, rental of gas flared fees and other oil-related revenue.
It pledged to continue working with revenue-generating agencies to improve collections and close existing gaps in remittances.
FAAC also reaffirmed its commitment to ensuring the “full, transparent and timely remittance of collectible revenue by all revenue-generating agencies into the Federation Account”, especially as preparations begin for the planned accounts reconciliation exercise.
The committee emphasised the need to reduce Nigeria’s dependence on oil revenue by expanding non-oil income sources.
It identified solid minerals and other non-oil royalty streams as sectors with significant growth potential.
The meeting, which was held alongside the ongoing National Council of Federation and Economic Development (NACOFED), also focused on how the recent rise in government revenue could be translated into long-term fiscal stability across all three tiers of government.
As part of the discussions, Commissioners of Finance and Accountants-General participated in a special session on subnational fiscal sustainability.
The session examined ways to strengthen public finances and ensure that higher allocations lead to improved infrastructure, economic growth and better social services.
FAAC noted that allocations from the Federation Account had increased significantly over the past three years, largely due to the removal of fuel subsidies, exchange-rate reforms and recent tax policies.
The committee also highlighted the impact of the Nigeria Tax Act 2025, which came into effect on January 1, 2026.
Under the new tax regime, the share of VAT allocated to states increased from 50 per cent to 55 per cent, while the Federal Government’s share declined from 15 per cent to 10 per cent.
In addition, 30 per cent of the states’ VAT allocation is now distributed based on where goods and services are consumed rather than where companies are officially registered.
The committee said the new formula would create a stronger relationship between economic activities within states and the revenue they receive from the Federation Account.
FAAC urged both federal and state governments to focus on six critical indicators of fiscal strength, including revenue quality, asset strength, economic growth, investment attraction, human capital development and institutional transparency.
It advised governments to broaden their internally generated revenue beyond conventional tax sources, identify idle public assets and put them to productive use.
The committee also encouraged states to develop reliable Gross Domestic Product (GDP) data to improve economic planning and measurement.
It further called on governments at all levels to create business-friendly environments capable of attracting local and foreign investment.
According to the committee, sustained investments in education and healthcare remain essential for long-term economic growth and development.
On public financial management, FAAC urged all levels of government to maintain transparent, timely and properly audited accounts.
It also called for the establishment of comprehensive asset registers, improved payroll verification systems and the prompt publication of audited financial statements within the next 12 months.
The committee stressed that the sustainability of recent revenue gains would depend largely on greater discipline in revenue collection and remittances by Ministries, Departments and Agencies.
FAAC reiterated its support for ongoing reforms aimed at improving the transparency, predictability and growth of revenue allocations across the three tiers of government.
