The Federation Account Allocation Committee (FAAC) distributed N1.65 trillion among Nigeria’s three tiers of government in May 2025, marking a N30 billion decline from the N1.68 trillion shared in April, despite a sharp increase in Value Added Tax (VAT) collections during the month.
According to a communiqué issued by the Ministry of Finance after the June 2025 FAAC meeting chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, total gross revenue stood at N2.94 trillion. From this, the committee approved N1.65 trillion for disbursement after accounting for statutory deductions and other obligations.
The May allocation comprised statutory revenue of N863.89 billion, VAT of N691.71 billion, Electronic Money Transfer Levy of N27.66 billion, and N76.61 billion from exchange rate differences.
However, the increase in VAT—up by N100.56 billion compared to April’s N642.26 billion—was not sufficient to offset declines in other revenue streams and rising deductions for interventions, refunds, and collection costs.
Distribution by Tier of Government
Of the total distributable pool, the Federal Government received N538.51 billion, state governments collectively received N577.84 billion while local governments were allocated N419.96 billion. Additionally, oil-producing states received N124.07 billion as derivation revenue, representing 13% of mineral income as provided under Section 162(2) of the Constitution.
Collection costs amounted to N111.90 billion in May, while N1.17 trillion was reserved for transfers, refunds, and other statutory interventions.
VAT Performance Surges
Gross VAT revenue rose significantly to N742.82 billion in May from N642.26 billion in April. After deductions totaling N51.1 billion for collection and transfer obligations, N691.71 billion was shared among the federal, state, and local governments.
From the net VAT allocation, the Federal Government received N103.75 billion, states received N345.85 billion, and local governments were allotted N242.10 billion. The increase in VAT was attributed to improved compliance and expansion of taxable activities across key sectors.
Statutory Revenue and Other Inflows
Gross statutory revenue stood at N2.09 trillion in May, a marginal increase of N10.02 billion from April. After deductions of N81.04 billion for collection costs and N1.149 trillion for statutory transfers and interventions, N863.89 billion remained for distribution.
From the statutory pool, the Federal Government received N393.51 billion, states received N199.59 billion, and local governments were allocated N153.88 billion. Oil-producing states were also paid N116.89 billion from statutory derivation.
The Electronic Money Transfer Levy generated N28.82 billion during the period, of which N27.66 billion was shared: the Federal Government received N4.15 billion, states N13.83 billion and local governments N9.68 billion.
Exchange rate gains contributed N76.61 billion to the total revenue. This was distributed with the Federal Government receiving N36.57 billion, states N18.55 billion, local governments N14.30 billion and oil-producing states getting N7.17 billion as part of the derivation formula.
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