Nigeria's three tiers of government shared a total of about ₦16.44 trillion from the Federation Account between January and September 2025, according to data from the Federation Account Allocation Committee (FAAC).
The figure represents a 40 percent increase compared to the ₦11.9 trillion distributed in the same period of 2024, reflecting improved oil earnings, stronger non-oil revenues, and exchange rate adjustments that boosted naira inflows.
Despite the higher revenue, concerns persist over deteriorating infrastructure and worsening poverty levels across the country, as the fiscal gains have yet to translate into visible improvements in essential services such as education, healthcare, and transportation.
Monthly FAAC reports showed consistent growth throughout the period, with ₦1.70 trillion disbursed in January, ₦1.68 trillion in February, ₦1.58 trillion in March, ₦1.68 trillion in April, and ₦1.66 trillion in May. Allocations rose further to ₦1.82 trillion in June, ₦2.00 trillion in July, ₦2.23 trillion in August, and ₦2.10 trillion in September, bringing the cumulative nine-month total to ₦16.44 trillion — one of the highest in Nigeria's fiscal history.
From the total amount shared, the federal government received about ₦5.66 trillion, states got ₦5.52 trillion, and local governments ₦4.04 trillion. Oil-producing states also received an additional ₦1.23 trillion under the 13 percent derivation formula — a 27 percent increase from the same period in 2024.
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The surge in allocations was driven by higher oil production, improved tax administration, and increased compliance by formal-sector taxpayers. Oil output averaged around 1.5 million barrels per day in the third quarter of 2025, up from 1.3 million barrels a year earlier, supported by tighter enforcement against crude theft, reopening of export terminals, and a more stable exchange rate.
However, analysts warn that many states remain financially fragile due to their heavy dependence on FAAC allocations. Reports by BudgIT and other civic groups show that more than two-thirds of Nigeria's 36 states rely on federal allocations for over half of their revenues, with many spending more than 70 percent on recurrent costs such as salaries, pensions, and debt servicing.
While the improved revenue profile has offered short-term relief, it has also contributed to inflationary pressures, as government spending continues to outpace production. Nonetheless, 2025 FAAC data indicates a gradual shift toward more sustainable sources like taxes and royalties, with fewer one-off windfalls from exchange-rate gains.
The Federal Inland Revenue Service (FIRS) also reported improved tax compliance and broader coverage across the formal sector, supporting the overall increase in non-oil revenue inflows.
