Akakan Umoh
As revenue jumped to 18 per cent increase, the Federal Government, 36 states and 774 local government councils shared N3.007 trillion revenue generated in July 2026.
The Federation Account Allocation Committee (FAAC) approved the distribution at its August meeting in Owerri, Imo State, as officials assessed the impact of recent fiscal reforms and considered measures to strengthen revenue mobilisation and public financial management.
A statement issued on Tuesday by the Director of Press and Public Relations, Office of the Accountant-General of the Federation, Bawa Mokwa, stated that gross statutory revenue increased to N4.359 trillion in July, against N3.700 trillion recorded in June.
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The increase of N658.087 billion, representing 17.8 per cent month-on-month jump, was attributed to improved collections from petroleum and non-oil revenue sources.
The federal government received N1.146 trillion from the allocation, while the states received N943.352 billion and local government councils got N673.649 billion.
A further N243.478 billion, representing the 13% derivation from mineral resources, was shared among benefiting states.
The increase was driven by 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, according to FAAC.
Those gains were partly offset by weaker receipts from Value Added Tax (VAT), import duties, Common External Tariff levies, rental fees from gas flaring and miscellaneous oil revenue.
Gross VAT revenue fell marginally to N793.968 billion in July from N799.746 billion in June, a decline of N5.778 billion, or 0.7 per cent.
FAAC said it would continue working with revenue-generating agencies to close collection gaps and improve the discipline around remittances into the Federation Account.
The committee also reaffirmed the need for all collectible revenue to be remitted fully, transparently and on time, 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 increase in federation revenue comes as the government seeks to translate higher collections into stronger public finances across federal, state and local governments. The meeting was held on the margins of the National Council of Federation and Economic Development.
Commissioners of Finance and Accountants-General also held a session on subnational fiscal fitness, focusing on how states can strengthen their finances and ensure higher allocations result in sustainable development and social investment.
FAAC highlighted the Nigeria Tax Act 2025, which came into effect on Jan. 1, as another major change to the revenue-sharing framework. Under the new system, states receive 55% of the VAT pool, up from 50%, while the Federal Government’s share fell to 10% from 15%.
The new framework also provides for 30% of the states’ VAT pool to be distributed according to the location where goods and services are consumed, rather than the location of a company’s registered headquarters. The change is intended to create a closer link between economic activity and the revenue received by states.
The committee urged governments to focus on six measures of fiscal strength: revenue quality, asset strength, economic growth, capital attraction, human capital and institutional transparency.
States were encouraged to broaden 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.
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.
“Achieving sustainable fiscal strength will require continued discipline in revenue collection and remittance by Ministries, Departments and Agencies,” FAAC said.
The committee said sustaining the improvement in statutory revenue would depend on continued efforts to diversify government income beyond oil, with solid minerals and other non-oil royalty streams identified as areas with potential for stronger collections.
