FG, States, and LGs Distribute N1.678 Trillion in February Federal Allocation

 

In a significant financial update, Nigeria’s Federal Government, alongside its 36 states and 774 local government areas (LGAs), has shared a total of N1.678 trillion from the Federation Account for February 2025. This disbursement, detailed in a March 22, 2025, report by Gists9ja, reflects the outcome of the latest Federation Account Allocation Committee (FAAC) meeting held in Abuja on March 21, 2025. Chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and attended by the Accountant General of the Federation, Shamseldeen Ogunjimi, the meeting underscored the ongoing revenue-sharing mechanism critical to Nigeria’s fiscal framework as of March 23, 2025.

Breakdown of the N1.678 Trillion Allocation

The FAAC communiqué, released by Bawa Mokwa, Director of Press and Public Relations at the Office of the Accountant-General of the Federation, provides a detailed breakdown of the N1.678 trillion distributable revenue. This sum comprises several revenue streams:

• Statutory Revenue: N827.633 billion
• Value Added Tax (VAT) Revenue: N609.430 billion
• Electronic Money Transfer Levy (EMTL): N35.171 billion
• Solid Minerals Revenue: N28.218 billion
• Augmentation: N178 billion

From this total, the Federal Government received N569.656 billion, state governments were allocated N562.195 billion, and local government councils secured N410.559 billion. Additionally, N136.042 billion—representing 13% of mineral revenue—was distributed to benefiting states as derivation revenue, a boon for oil- and mineral-producing regions.

The communiqué further revealed that the gross revenue available for February stood at N2.344 trillion. After deductions of N89.092 billion for collection costs and N577.097 billion for transfers, interventions, refunds, and savings, the net distributable amount emerged as N1.678 trillion.

Revenue Trends: Declines and Gains

The February allocation marks a slight decline from January 2025’s N1.703 trillion, reflecting fluctuations in key revenue sources. Gross statutory revenue dropped to N1.653 trillion from January’s N1.848 trillion—a decrease of N194.664 billion. Similarly, VAT revenue fell to N654.456 billion from N771.886 billion, a reduction of N117.430 billion. These declines were attributed to lower collections in Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Excise Duty, Import Duty, and CET Levies. However, gains in Oil and Gas Royalties and EMTL provided some offset, highlighting the mixed performance of Nigeria’s revenue streams.

Breaking down the statutory revenue of N827.633 billion, the Federal Government took N366.262 billion, states received N185.773 billion, LGAs got N143.223 billion, and N132.374 billion went to derivation states. For the VAT component of N609.430 billion, the Federal Government received N91.415 billion, states got N304.715 billion, and LGAs secured N213.301 billion.

Economic Context and Implications

The FAAC allocation is a cornerstone of Nigeria’s fiscal federalism, distributing federally collected revenues among the three tiers of government based on a formula that considers population, landmass, revenue generation, and other factors. The N1.678 trillion shared in February, though slightly lower than January’s figure, remains a critical lifeline for funding government operations, infrastructure projects, and public services nationwide.

This disbursement occurs amid broader economic challenges, including inflation, currency fluctuations, and debates over fiscal policy under President Tinubu’s administration. The inclusion of N178 billion in augmentation suggests efforts to bridge revenue shortfalls, possibly due to lower-than-expected oil production or tax collections. For states and LGAs, particularly those reliant on federal transfers, this allocation will influence budgetary priorities, from salary payments to development initiatives.

State and Local Impact

For the 36 state governments, the N562.195 billion provides a substantial boost, though governors will face pressure to address local demands amid rising costs of living. The 774 LGAs, with N410.559 billion, are tasked with grassroots development, yet concerns persist about mismanagement or diversion of funds at this level—a recurring critique in Nigeria’s governance discourse. The N136.042 billion derivation revenue offers additional relief to mineral-rich states, potentially fueling projects in the Niger Delta and other resource-endowed regions.

Public and Political Reactions

Posts on X indicate varied public sentiment. Some Nigerians view the allocation as routine, with one user noting, “Tinubu is obliged to share our income, so meet your State Governors looting your allocations” (paraphrased), reflecting skepticism about accountability. Others see it as a sign of economic resilience despite global headwinds. Politically, the timing aligns with tensions over the Rivers State emergency rule, though the FAAC process remains insulated from such disputes, focusing solely on revenue distribution.

Looking Ahead

As of March 23, 2025, the FAAC’s February allocation underscores Nigeria’s dependence on oil, VAT, and supplementary levies, even as efforts to diversify revenue persist. The slight dip from January suggests potential vulnerabilities in the economy, which analysts will monitor in subsequent months. For citizens, the real test lies in how these funds translate into tangible improvements—roads, schools, healthcare—rather than remaining abstract figures in government ledgers.

For the full scoop, check out the original Gists9ja report from March 22, 2025. What do you think about this allocation and its impact on your state or LGA? Share your thoughts below as Nigeria navigates its fiscal future!