Overview: FAAC Shares Lower Revenue in February 2025
The Federation Account Allocation Committee (FAAC) has disbursed a total of N1.678 trillion to the Federal Government, state governments, and local government councils as revenue for February 2025. This allocation marks a slight decline from the N1.703 trillion distributed in January 2025, reflecting drops in key revenue streams such as Value Added Tax (VAT), Petroleum Profit Tax (PPT), and Companies Income Tax (CIT).
The details of the allocation were revealed in a communiqué issued after the FAAC meeting held in Abuja, chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. The Accountant General of the Federation, Shamseldeen Ogunjimi, along with senior government officials, was also present at the meeting.
Despite the fall in revenue, the Nigerian government remains committed to ensuring adequate distribution of available funds to sustain public services, governance, and development projects.
Breakdown of FAAC Revenue Distribution for February
The total FAAC allocation of N1.678 trillion was generated from multiple revenue sources, including:
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₦827.633 billion from statutory revenue
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₦609.430 billion from Value Added Tax (VAT)
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₦35.171 billion from Electronic Money Transfer Levy (EMTL)
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₦28.218 billion from Solid Minerals revenue
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₦178 billion from augmentation funds
However, before distributing the revenue, some deductions were made:
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₦89.092 billion was deducted as the cost of revenue collection
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₦577.097 billion was allocated for transfers, interventions, refunds, and savings
This left a net distributable balance of N1.678 trillion, which was shared among the Federal Government, states, and local governments.
Decline in Major Revenue Streams
A drop in key tax revenues contributed to the lower amount available for allocation.
1️⃣ Decline in Statutory Revenue
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₦1.653 trillion in February, down from ₦1.848 trillion in January
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Represents a decline of ₦194.664 billion
2️⃣ Drop in VAT Revenue
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₦654.456 billion in February, compared to ₦771.886 billion in January
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This is a decrease of ₦117.430 billion
While earnings from Electronic Money Transfer Levies (EMTL) and Oil & Gas Royalty improved, the overall decline in tax revenues negatively impacted total allocations for the month.
How the Revenue Was Shared Among Government Tiers
The February FAAC allocation was distributed as follows:
Total Revenue Distribution (₦1.678 Trillion):
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Federal Government: ₦569.656 billion
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State Governments: ₦562.195 billion
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Local Government Councils: ₦410.559 billion
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Oil-Producing States (13% Derivation Revenue): ₦136.042 billion
Detailed Breakdown by Revenue Type
1️⃣ Statutory Revenue (₦827.633 billion)
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Federal Government: ₦366.262 billion
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State Governments: ₦185.773 billion
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Local Governments: ₦143.223 billion
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Oil-Producing States (Derivation Fund): ₦132.374 billion
2️⃣ VAT Revenue (₦609.430 billion)
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Federal Government: ₦91.415 billion
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State Governments: ₦304.715 billion
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Local Governments: ₦213.301 billion
3️⃣ Electronic Money Transfer Levy (EMTL) (₦35.171 billion)
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Federal Government: ₦5.276 billion
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State Governments: ₦17.585 billion
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Local Governments: ₦12.310 billion
4️⃣ Solid Minerals Revenue (₦28.218 billion)
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Federal Government: ₦12.933 billion
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State Governments: ₦6.560 billion
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Local Governments: ₦5.057 billion
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Oil-Producing States (Derivation Fund): ₦3.668 billion
5️⃣ Augmentation (₦178 billion)
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Federal Government: ₦93.770 billion
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State Governments: ₦47.562 billion
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Local Governments: ₦36.668 billion
Economic Implications of FAAC Revenue Decline
The fall in revenue allocations could have significant economic consequences, especially for states and local governments that depend heavily on FAAC funds for their budgets. Some of the potential effects include:
✅ Reduced Government Spending – With lower allocations, some states and LGs may need to cut budgets, delay projects, or reduce expenditure on critical sectors like health, education, and infrastructure.
✅ Impact on Public Salaries – Many states and LGs rely on FAAC funds to pay salaries. A sustained decline in revenue could lead to delays in salary payments, potentially causing hardship for civil servants.
✅ Increased Borrowing by Governments – With lower FAAC disbursements, some states might be forced to borrow to meet their obligations, increasing their debt burden.
✅ Slower Economic Growth – Government spending is a key driver of economic activity. A decline in FAAC revenue could slow economic growth, especially in states that lack alternative revenue sources.
Need for Revenue Diversification
Given the persistent volatility in FAAC revenue, there is an urgent need for Nigeria to diversify its revenue sources beyond oil and taxes.
📌 The government should focus on:
✔️ Expanding non-oil revenue sources, including solid minerals, technology, and agriculture.
✔️ Enhancing tax collection efficiency to reduce evasion and broaden the tax base.
✔️ Encouraging Foreign Direct Investment (FDI) in industries beyond oil and gas.
✔️ Improving financial management policies to cut waste and increase fiscal efficiency.
With Nigeria’s economy facing growing challenges, the government must take proactive steps to ensure long-term financial stability and reduce dependence on oil-based revenue streams.
Read also: “Reps Deny $5,000 Inducement Allegations Over Rivers State Emergency Declaration”
A Call for Fiscal Stability
Despite the decline in FAAC revenue, the Nigerian government has ensured equitable distribution of funds to all levels of government. However, the drop in VAT and statutory revenue signals a need for urgent economic reforms to stabilize public finances and enhance revenue collection.
With increasing economic uncertainty, policymakers must adopt sustainable strategies to strengthen revenue sources, attract investment, and improve fiscal discipline. Nigeria’s future economic stability depends on it.