Nigeria’s 36 states shared a cumulative N4.43 trillion from the Federation Account Allocation Committee (FAAC) between January and July 2025, with receipts of oil-rich states accounting for about 35% of whole disbursements.
Knowledge from the Nationwide Bureau of Statistics (NBS) and FAAC stories present that Delta State obtained the best web allocation in the course of the interval—N361.23 billion—adopted carefully by Rivers (N301.18 billion), Lagos (N279.03 billion), Akwa Ibom (N278.11 billion), and Bayelsa (N274.81 billion).
These high 5 states alone accounted for practically 35% of the entire FAAC disbursement to all states inside the seven-month interval.
On the backside of the distribution had been
- Ekiti (N70.83 billion).
- Ogun (N67.20 billion).
Oil income continues to be the lifeline
The dominance of the oil-producing states in FAAC allocation displays Nigeria’s continued reliance on petroleum income as the primary supply of presidency funding.
The derivation precept, which grants 13% of oil and gasoline income to producing states, has saved states like Delta, Rivers, and Bayelsa constantly forward of others in month-to-month allocations.
Whereas Delta’s N361.23 billion leads the pack, analysts observe that the state’s excessive receipts are largely tied to grease derivation funds, not internally generated income (IGR).
Equally, Rivers and Akwa Ibom, each key crude-producing states, benefited closely from derivation inflows and value-added tax (VAT) returns from industrial actions inside their jurisdictions.
Lagos retains edge amongst non-oil states
Lagos State, Nigeria’s business nerve centre, stood out because the highest-earning non-oil-producing state, receiving N279.03 billion in seven months.
- The majority of its FAAC receipts got here from VAT and statutory allocations, along with its personal strong IGR base estimated at over N400 billion yearly.
Economists say Lagos’ efficiency reinforces the significance of financial diversification on the subnational stage.
In accordance with Dr. Muda Yusuf, CEO of the Centre for the Promotion of Non-public Enterprise (CPPE), Lagos demonstrates that
“Fiscal independence and competitiveness are achievable by way of strategic investments in infrastructure, city productiveness, and governance effectivity.”
Northern States lag behind
Regardless of its big inhabitants, northern states collectively obtained smaller shares of the FAAC pie.
Kano, probably the most populous northern state, ranked sixth general with N149.81 billion, whereas Katsina (N109.31 billion), Borno (N110.00 billion), and Jigawa (N106.87 billion) trailed far behind the oil-rich southern states.
Most northern states rely nearly solely on federal transfers to fund their budgets.
Analysts warn that the hole between resource-rich and resource-poor areas may additional widen with the implementation of presidency new fiscal reforms.
“FAAC formulation, to an incredible extent, rewards useful resource management, slightly than fiscal effectivity,” Lagos-based authorized practitioner, Barrister Ralph Udo, famous. “For me, that ought to function a enough incentive for states to discover methods to spice up their IGR. Till states embrace the intelligence of fiscal independence, enhance IGR, and scale back waste, Nigeria will stay caught in a rent-sharing financial system,” mentioned Barrister Udo, the Principal Associate of Ralp Udo Chambers.
Center-Belt and Southeastern States present modest positive aspects
States within the Center Belt, notably;
- Benue (N104.58 billion).
- Niger (N97.38 billion).
- Kogi (N95.20 billion),
These states maintained mid-range allocations, pushed by their contributions from stable minerals and agriculture.
In the meantime, southeastern states reminiscent of Anambra (N111.85 billion), Enugu (N92.71 billion), and Abia (N98.12 billion) obtained reasonable disbursements.
The Southeast’s comparatively decrease allocations spotlight low federal allocation and the necessity to enhance IGR
Fiscal imbalance and the case for restructuring
The NBS information deliver renewed consideration to Nigeria’s long-standing debate over fiscal federalism.
Critics argue that the present mannequin promotes fiscal laziness, as most states depend on Abuja for month-to-month disbursements slightly than constructing sustainable native economies.
“States proceed to behave like administrative outposts slightly than financial entities,” noticed Chief Blakey Ijezie, the Convener of Blakey’s Nationwide Tax Convention in addition to the Blakey’s Nationwide Financial Convention.
Towards sustainable subnational economies
The distribution of FAAC funds has rekindled the argument for financial restructuring and useful resource management.
Permitting states to retain the next share of revenues from native assets may spur competitors, innovation, and accountability.
Consultants imagine such steps are vital if Nigeria is to interrupt free from the cycle of dependency. An analyst at BudgIT Foundation famous that,
“The way forward for Nigeria’s fiscal stability lies not in how a lot FAAC distributes however in how effectively states handle and develop their economies.”
Finally, reaching sustainable subnational economies will depend upon how properly states diversify their income bases, strengthen governance, and scale back overreliance on federal allocations.
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