FAAC Shares ₦2.55tn as Nigeria’s June Revenue Jumps to ₦4.5tn

Nigeria’s federal, state and local governments received ₦2.55 trillion from the Federation Account in June 2026 after gross government revenue rose sharply to ₦4.5 trillion.

The amount distributed was ₦250 billion higher than the ₦2.30 trillion shared from May revenue, representing a monthly increase of about 10.9 percent.

The increase provides more spending power to the three levels of government at a time when many states are struggling with higher salaries, rising project costs and growing public demand for better services.

However, the figures also raise an important question: will the additional revenue improve roads, schools, healthcare and other public services, or will it be consumed by salaries, overheads and debt payments?

Nigeria recorded gross federation revenue of ₦4.5 trillion in June, up from the previous month.

Gross statutory revenue rose to ₦3.7 trillion from ₦2.65 trillion in May. This represents an increase of about ₦1.05 trillion within one month.

Value Added Tax revenue also increased. Gross VAT collections rose from ₦743.69 billion in May to ₦799.75 billion in June, an increase of about ₦56.08 billion.

The rise came from stronger collections across several sources, including Companies Income Tax, Capital Gains Tax, Stamp Duties, petroleum royalties, gas-flaring charges, VAT, import duties and Common External Tariff levies.

However, collections from Petroleum Profit Tax, Hydrocarbon Tax, mineral royalties and some fees declined during the month.

Why Was Only ₦2.55tn Shared From ₦4.5tn?

The government did not distribute the entire ₦4.5 trillion collected in June.

About ₦160.74 billion was deducted as the cost of collecting the revenue. Another ₦1.79 trillion was removed for transfers, refunds and other approved obligations.

Together, these deductions amounted to nearly ₦1.95 trillion.

This left ₦2.55 trillion for distribution among the Federal Government, the 36 states and the 774 local government councils.

The size of the deductions matters because gross revenue does not show how much money is actually available for government spending.

A government may announce a large revenue figure, but deductions for refunds, collection costs and statutory transfers can reduce the amount that reaches ministries, states and local councils.

Greater transparency around these deductions would help Nigerians understand where the difference between gross and distributable revenue goes.

How Much Did the Federal Government Receive?

The Federal Government received ₦923.44 billion from the June distributable revenue.

The amount included the Federal Government’s share of statutory revenue and VAT collections.

Of the ₦1.81 trillion available as distributable statutory revenue, the Federal Government received ₦849.37 billion.

It also received ₦74.07 billion from the distributable VAT revenue.

The higher allocation could support the implementation of the 2026 federal budget. However, the government still faces heavy spending obligations, including salaries, debt servicing, infrastructure projects and social programmes.

How Much Did the States Receive?

Nigeria’s 36 state governments received a combined ₦838.21 billion from the June allocation.

The states received ₦430.81 billion from statutory revenue and ₦407.40 billion from VAT.

For many states, FAAC remains the most important source of monthly income.

The money helps them pay workers, fund ministries, complete projects and meet other financial obligations.

However, dependence on monthly federal allocations also exposes states to risks.

When oil prices fall, production declines or tax collections weaken, FAAC payments can drop. States that have not developed strong internally generated revenue may then struggle to pay salaries or fund public services.

How Much Did Local Governments Receive?

The 774 local government councils received a combined ₦591.39 billion from the June revenue.

They received ₦332.14 billion from statutory revenue and ₦259.25 billion from VAT.

Local governments are responsible for many services that directly affect communities, including primary healthcare, local roads, sanitation and markets.

The higher allocation could improve service delivery at the grassroots level if councils receive and use the funds properly.

However, questions remain over transparency, accountability and the ability of citizens to track how much each local government receives and spends.

How Much Went to Oil-Producing States?

Oil-producing states received ₦197.61 billion as 13 percent derivation revenue.

The derivation payment gives oil-producing states an additional share of revenue generated from natural resources within their territories.

This is separate from their normal share of the Federation Account.

The funds are expected to help oil-producing communities deal with environmental damage, infrastructure gaps and other effects of oil and gas production.

The impact, however, depends on how state governments manage the money and whether it reaches the communities most affected by extraction activities.

Why Is FAAC Revenue Increasing?

The latest increase reflects stronger tax collections and higher revenue from several government agencies.

Company taxes rose, while VAT and import-related collections also improved. Petroleum royalties and some gas-related charges contributed to the increase.

Recent reforms in tax administration may also be improving the government’s ability to identify taxpayers, collect outstanding liabilities and reduce revenue leakages.

The increase is not entirely driven by oil. The strong performance of Companies Income Tax and VAT suggests that non-oil revenue is becoming increasingly important to public finances.

This is positive for Nigeria because oil revenue is highly exposed to changes in global prices, production problems and crude theft.

A broader revenue base can provide the government with more stable income.

Expert View:

The Nigerian Economic Summit Group has warned that rising FAAC allocations have not made most states financially stronger.

In a February 2026 policy brief, the NESG said more than 30 states still received over 70 percent of their revenue from federal allocations.

It argued that higher FAAC payments had not translated into stronger financial independence because many states still had weak internal revenue systems and limited economic diversification.

The group recommended stronger fiscal discipline, better public financial management and reforms that would help states generate more revenue internally.

It also called for a better balance between capital and recurrent spending so that additional government income can support projects that improve productivity and create jobs.

The concern is that a revenue increase can quickly be consumed by salaries, political offices, overheads and debt repayments.

Without disciplined spending, higher allocations may not produce visible improvements in citizens’ lives.

What Does BudgIT Say About State Dependence on FAAC?

BudgIT’s 2025 State of States report also found that many states remained heavily dependent on Federation Account transfers.

According to the report, 21 states relied on FAAC for at least 70 percent of their revenue in 2024. This was an increase from 14 states in the previous year.

The report found that the combined recurrent revenue of the states reviewed rose from ₦8.66 trillion in 2023 to ₦14.4 trillion in 2024.

However, state expenditure also increased sharply, rising from ₦9.49 trillion to ₦15.63 trillion.

This shows that states can receive more money while continuing to face financial pressure if their spending grows at the same pace or faster.

BudgIT also found that states did not fully implement their education and healthcare budgets despite the increase in revenue.

The states reviewed spent about 66.9 percent of their education budgets and 61.9 percent of their healthcare budgets in 2024.

The figures suggest that higher revenue alone does not guarantee better public services.

Will the Higher Allocation Benefit Nigerians?

The additional revenue could help governments complete projects, pay salaries and improve services.

States could use the money to repair roads, improve hospitals, support schools and strengthen public transport.

Local governments could invest in primary healthcare, sanitation and community infrastructure.

But these benefits will depend on how the money is used.

If the additional revenue goes mainly to government overheads, political appointments and poorly planned projects, citizens may see little improvement.

Governments must publish clear details of how the funds are allocated and spent.

Citizens should also be able to compare the amount received by each state or local government with the projects delivered.

Can the Revenue Increase Continue?

The increase may not continue at the same rate every month.

Companies Income Tax collections often rise during major filing and payment periods. Revenue may fall after those deadlines pass.

Oil-related income can also change quickly when crude prices or production levels decline.

A slowdown in business activity could reduce VAT and company tax collections, while lower imports could affect customs revenue.

The government must therefore avoid treating a strong month as a permanent revenue increase.

States should use part of the additional income to invest in projects that can generate future revenue, rather than increasing recurrent spending that may be difficult to reduce later.

What Should States Do With the Extra Money?

States should focus on projects that improve economic activity and increase their ability to generate revenue.

Reliable roads, electricity, industrial facilities, agricultural infrastructure and digital public services can attract businesses and create jobs.

States should also improve tax administration without placing unfair pressure on individuals and small businesses that already pay taxes.

The goal should be to expand the number of productive businesses and taxpayers rather than repeatedly increasing charges on the same group.

The latest FAAC payment provides some financial relief, but it also places greater responsibility on governors and local government officials.

With more money available, governments will face stronger questions about why basic public services remain weak.