The Federation Account Allocation Committee (FAAC) has distributed N2.428 trillion among the Federal Government, 36 state governments, and 774 local government councils as revenue for September 2026.
The disbursement follows the monthly meeting of the committee, which determines the sharing formula for the nation’s pooled revenues generated from oil and non-oil sources.
This allocation serves as the primary funding mechanism for state-level governance, covering essential expenditures including civil service salaries, infrastructure maintenance, and debt servicing.
The September figures reflect the ongoing volatility in global energy markets and the domestic effort to expand the non-oil tax base through the Federal Inland Revenue Service.
The total sum comprises statutory revenues and the distribution of Value Added Tax (VAT), which provides a critical liquidity injection for state governments across the federation.
Analysts note that the current allocation levels are closely tied to the prevailing exchange rate and the actual volume of crude oil exports reported by the Nigerian National Petroleum Company (NNPC) Limited.
For many states, these funds represent the bulk of their monthly internally generated revenue, highlighting a persistent systemic dependence on the federation account rather than local tax collection.
Revenue Components and Fiscal Impact
The total distributable revenue is typically split between the federation account’s statutory allocations and VAT. While the statutory portion is heavily influenced by oil benchmarks, VAT distributions are driven by domestic consumption and economic activity.
Increased efficiency in VAT collection and the integration of digital tax systems have helped sustain these figures despite fluctuations in oil production levels.
The distribution comes at a time when several state governments are facing increased pressure to fund social intervention programmes and bridge infrastructure gaps in the wake of rising inflation.
Data from the National Bureau of Statistics suggests that inflation continues to erode the real value of these allocations, meaning that while the nominal figures appear high, the purchasing power for capital projects has diminished.
Fiscal experts argue that the current sharing formula often leaves smaller states struggling to meet basic operational costs, while larger states manage significant surpluses.
This disparity has led to repeated calls for a review of the revenue allocation formula to better reflect current demographic and developmental needs.
Furthermore, the Federal Government has continued to encourage states to diversify their revenue streams to reduce the shock of sudden drops in oil prices, which directly impact the FAAC monthly totals.
The Budget Office of the Federation has previously highlighted the need for states to implement more aggressive internally generated revenue (IGR) strategies to ensure long-term sustainability.
The current disbursement will likely be prioritised by state governors to settle outstanding contractor payments and fund the remainder of the 2026 fiscal year obligations.
Market observers are now monitoring how this liquidity will affect local government administration, particularly following recent legal and regulatory shifts regarding the autonomy of local government councils.
The next FAAC meeting is expected to take place in mid-October to determine the allocations for the October 2026 revenue cycle.
Explore more Money stories and analysis from Business Elites Africa.
