By Abiodun Folarin
WorldStage— The Federation Account Allocation Committee (FAAC), has approved the allocation of ₦3.007 trillion from July 2026 revenue to the Federal Government, 36 states and 774 Local Government Councils, while urging states to convert rising allocations into sustainable fiscal strength and social investments.
The Committee made the call at its August 2026 meeting held in Owerri, Imo State, on the margins of the ongoing National Council of Federation and Economic Development (NACOFED).
The meeting also featured a dedicated session for Commissioners of Finance and Accountants-General on strengthening fiscal fitness across the three tiers of government.
Under the approved July allocation, the Federal Government received ₦1.146 trillion, states received ₦943.352 billion, while the 774 Local Government Councils received ₦673.649 billion.
A further ₦243.478 billion, representing 13 per cent of mineral revenue, was shared to benefiting states as derivation revenue.
FAAC said the July figures reflected a strengthening revenue base, with gross statutory revenue rising to ₦4.359 trillion, an increase of ₦658.087 billion or 17.8 per cent from the ₦3.700 trillion recorded in June.
Gross Value Added Tax (VAT) revenue, however, stood at ₦793.968 billion, representing a marginal decline of ₦5.778 billion or 0.7 per cent from the ₦799.746 billion recorded in June.
The Committee attributed the increase in statutory revenue to improved collections across several revenue lines, 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.
It said the gains were partly offset by declines in VAT, import duty, CET levies, rental of gas flared fees and miscellaneous oil revenue.
FAAC also called on revenue-generating agencies to improve collection and remittance discipline, stressing the need for full, transparent and timely remittance of collectible revenue into the Federation Account.
Beyond the monthly revenue allocation, the Committee urged governments at all levels to use the current period of improved revenue to undertake reforms capable of strengthening public finances over the long term.
It identified six key areas, described as “vital signs” of fiscal fitness, including revenue quality, asset strength, economic growth, capital attraction, human capital development and institutional transparency.
According to FAAC, states should diversify their internally generated revenue beyond a narrow tax base, identify and put idle public assets to productive use, strengthen their economies and attract investment through a stable and predictable business environment.
It also stressed sustained investment in education and health, alongside timely, audited and transparent public accounts.
The Committee noted that the Nigeria Tax Act 2025, which took effect on January 1, 2026, has increased states’ share of VAT revenue from 50 per cent to 55 per cent, while reducing the Federal Government’s share from 15 per cent to 10 per cent.
It further noted that 30 per cent of the states’ VAT pool is now allocated based on the place of consumption rather than the registered headquarters of companies, thereby creating a stronger link between economic activity within a state and its federation revenue allocation.
FAAC urged all tiers of government to institutionalise reforms over the next 12 months, including comprehensive public asset registers, payroll verification and timely publication of audited accounts.
The Committee also reaffirmed its commitment to diversifying the Federation’s revenue base beyond oil, while continuing to monitor solid minerals and other non-oil royalty streams as potential sources of future revenue growth.
It said sustaining the gains recorded in statutory revenue would depend on continued discipline in revenue collection and remittance by Ministries, Departments and Agencies (MDAs).
FAAC added that its alignment with the NACOFED platform would strengthen coordination between the Federal Government and states on fiscal policy, revenue sharing and broader economic development priorities.
