Nigeria’s three tiers of government shared a cumulative ₦9.62 trillion from the Federation Account over a three-month period, as monthly disbursements trended downward, underscoring rising fiscal pressure on public finances.
Data from the Federation Account Allocation Committee (FAAC), compiled by the National Bureau of Statistics, shows that allocations covering August, September and October 2025 revenues declined steadily, falling from ₦3.64 trillion to ₦2.93 trillion within the period.
The pattern mirrors pressures seen earlier in 2025 and reflects Nigeria’s continued exposure to volatile oil earnings, fluctuating VAT performance, and exchange-linked revenues.
How the ₦9.62 trillion was shared
Over the three months under review, FAAC disbursements totalled ₦9.62 trillion, distributed as follows:
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Federal Government (FGN): ₦2.28 trillion
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August: ₦810.05 billion
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September: ₦711.31 billion
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October: ₦758.41 billion
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36 States: ₦2.13 trillion
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August: ₦709.83 billion
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September: ₦727.17 billion
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October: ₦689.12 billion
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774 Local Governments: ₦1.56 trillion
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August: ₦522.23 billion
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September: ₦529.95 billion
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October: ₦505.80 billion
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The remaining funds went to derivation payments, special accounts, and statutory deductions.
August revenue: strong opening at ₦3.64 trillion
The three-month stretch opened on a relatively strong note, with ₦3.64 trillion shared from August 2025 revenue. The Federal Government received the largest portion at ₦810.05 billion, followed by states (₦709.83 billion) and local governments (₦522.23 billion).
Value Added Tax (VAT) played a stabilising role, contributing ₦100.94 billion to the Federal Government, ₦336.45 billion to states, and ₦235.52 billion to local governments. Oil-producing states also benefited from a ₦183.01 billion 13% derivation fund, alongside oil-related refunds.
However, heavy deductions dampened the headline strength, including over ₦124 billion paid to revenue collection agencies and a sizable ₦851.17 billion transfer to the Non-Oil Excess Account.
September revenue: allocations fall to ₦3.05 trillion
By October 2025, FAAC disbursements from September revenue dropped to ₦3.05 trillion. In a notable shift, states overtook the Federal Government, receiving ₦727.17 billion, compared with ₦711.31 billion for the FGN. Local governments received ₦529.95 billion.
The change was largely driven by stronger VAT receipts, which delivered ₦406.30 billion to states and ₦284.41 billion to local governments, highlighting the growing importance of consumption taxes in subnational finances. Despite this, liquidity tightened as ₦700 billion was again transferred to the Non-Oil Excess Account.
October revenue: FAAC dips further to ₦2.93 trillion
The downward trend continued in November 2025, with FAAC sharing just ₦2.93 trillion from October revenue—the lowest monthly allocation in the three-month period.
The Federal Government regained the largest share at ₦758.41 billion, while states’ allocations fell to ₦689.12 billion and local governments received ₦505.80 billion. VAT weakened during the month, reducing its cushioning effect on subnational finances.
What you should know
The slide in FAAC allocations reflects weakening oil-related revenues, including petroleum profit tax and royalties, driven by lower production and sector-wide challenges. At the same time, VAT and other non-oil taxes also softened, limiting the size of the distributable pool.
Together, these trends underline the fiscal strain facing Nigeria’s federal, state and local governments, reinforcing the urgency of revenue diversification and stronger domestic revenue mobilisation to reduce reliance on volatile oil earnings.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
