The Federation Account Allocation Committee (FAAC) disbursed N1.659 trillion in May 2025, marking a slight decrease of N22 billion (1.31%) compared to the N1.681 trillion shared in April 2025. This revenue, derived from various sources including statutory revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Exchange Difference revenue, was distributed among the Federal Government, 36 state governments, and 774 local government councils according to the established revenue-sharing formula. The distribution, conducted during a FAAC meeting in Abuja in June 2025, aimed to fund governmental operations across the nation.
The N1.659 trillion disbursed represents the net distributable revenue after deductions for cost of collection (N111.908 billion) and transfers, interventions, and refunds (N1.171 trillion). The total gross revenue available for May 2025 was N2.942 trillion. A key component, the gross statutory revenue, reached N2.094 trillion in May, slightly exceeding the N2.084 trillion recorded in April by N10.023 billion. VAT revenue also witnessed substantial growth, increasing by N100.555 billion from N642.265 billion in April to N742.820 billion in May. This signifies positive trends in key revenue streams despite the overall slight dip in total distributable revenue.
The distribution saw the Federal Government receiving N538.004 billion, state governments receiving N577.841 billion, and local government councils receiving N419.968 billion. Additionally, N124.076 billion, representing 13% of mineral revenue, was allocated to the benefiting states as derivation revenue. This allocation mechanism ensures that resource-rich states receive a share of the proceeds from the exploitation of their natural resources. This principle of derivation is a crucial element of Nigeria’s fiscal federalism, aiming to address regional disparities and promote equitable development.
A breakdown of the revenue distribution reveals the proportions allocated from each revenue stream. From the N863.895 billion statutory revenue, the Federal Government received N393.518 billion, states received N199.598 billion, and local governments received N153.881 billion. Benefiting states also received N116.898 billion from mineral revenue. The N691.714 billion VAT revenue was distributed with N103.757 billion to the Federal Government, N345.857 billion to states, and N242.100 billion to local governments. The EMTL of N27.667 billion was shared with N4.150 billion to the Federal Government, N13.833 billion to states, and N9.683 billion to local governments. Finally, from the N76.614 billion Exchange Difference revenue, the Federal Government received N36.579 billion, states received N18.553 billion, and local governments received N14.304 billion. An additional N7.178 billion from mineral revenue was allocated to benefiting states as derivation revenue.
The performance of various revenue streams presents a mixed picture. While Companies Income Tax, VAT, and Import Duty demonstrated growth, other levies such as CET Levies, Petroleum Profit Tax, Oil and Gas Royalty, and EMTL experienced declines. Excise Duty showed a marginal increase. This varied performance underscores the complex dynamics influencing government revenue generation, with factors such as economic activity, global market conditions, and regulatory changes playing significant roles. Analyzing these trends is crucial for informed policy adjustments aimed at optimizing revenue collection.
Despite the marginal decrease in total revenue distribution from April to May 2025, the allocations remain substantial and are designed to support the operational needs of government at all levels. The FAAC disbursement process plays a vital role in ensuring the continuous flow of funds to the Federal, State, and Local Governments, enabling them to deliver essential services to the citizenry and execute development projects. The observed fluctuations in revenue underscore the importance of diversification efforts and prudent fiscal management to mitigate the impact of volatile revenue streams and maintain a stable fiscal environment. The continued monitoring and analysis of revenue trends, coupled with proactive policy adjustments, will be crucial for achieving sustainable fiscal outcomes.
