The Federation Accounts Allocation Committee (FAAC) announced last week a notable increase in the disbursement to the three tiers of government for October, totaling NGN1.30 trillion.
This figure reflects a 7.9% month-on-month increase from August’s NGN1.20 trillion, driven largely by improved revenue from oil and gas royalties, excise duties, electronic money transfer levies (EMTL), and customs external tariff levies (CET).
Revenue Breakdown and Allocation
In September, total gross revenue reached NGN2.30 trillion, with the disbursed amount representing approximately 56.5% of this total.
The remaining balance of NGN878.95 billion has been earmarked for transfers, interventions, and refunds, alongside NGN80.99 billion allocated for the cost of collection.
The Federal Government Received a total of NGN424.87 billion (up from NGN374.93 billion in August), accounting for 32.7% of the total allocation.
State Governments were allocated the sum of NGN544.14 billion, an increase from NGN522.34 billion in August, while local Governments received a total of NGN329.86 billion, up from NGN306.53 billion the previous month.
Factors Contributing to Increased Revenue
The significant boost in allocations is attributed to several key factors include Oil & Gas Royalties. A rise in global oil prices and increased production contributed to higher revenue from this sector.
Excise Duties and Levies is also enhanced compliance and economic activities which resulted in improved collections from excise duties and EMTL, while, Customs Revenue saw an increase in trade activities and tariffs bolstered customs receipts.
Challenges Ahead
Despite the positive growth in allocations, challenges remain on the horizon. Notably, revenues from Companies Income Tax (CIT) and Value Added Tax (VAT) have experienced declines, indicating potential weaknesses in the broader economy.
Moreover, analysts caution that ongoing issues such as below-target oil production levels—forecasted at 1.52 million barrels per day, compared to the budgeted 1.78 mb/d—along with challenging macroeconomic conditions, could hinder future revenue growth. While gains from exchange rate differentials may bolster government revenues from foreign sources in naira terms, these factors could create constraints on sustained fiscal growth.
The October FAAC disbursement reflects both the resilience and vulnerabilities of Nigeria’s revenue-generating mechanisms. As government bodies navigate the complexities of fluctuating revenues, ongoing macroeconomic challenges will require strategic interventions to ensure stable funding for essential services and development projects across all tiers of government.
