Reported by: Oahimire Omone Precious | Edited by: Oravbiere Osayomore Promise.
The Federation Account Allocation Committee has distributed a total of N2.55 trillion to the three tiers of government for June 2026, marking the highest monthly payout so far this year and extending a steady upward trend in federation revenue that has been building since the beginning of the year. The revenue was shared during FAAC's July meeting held in Abuja on Wednesday, July 15, 2026, according to a statement by Bawa Mokwa, Director of Press and Public Relations at the Office of the Accountant-General of the Federation. The distributable amount represents a significant increase of approximately N250 billion, or 10.9 per cent, over the N2.3 trillion shared for May, continuing what analysts have described as Nigeria's longest FAAC rally in 2026. The steady rise in allocations reflects stronger revenue performance driven by increased collections from both statutory sources and Value Added Tax, providing much-needed fiscal relief to state and local governments grappling with mounting expenditure pressures.
The N2.55 trillion distributable revenue comprised N1.809 trillion in statutory revenue and N740.724 billion in Value Added Tax revenue, according to the FAAC communiqué. The committee reported that total gross revenue available for June stood at N4.5 trillion, out of which N160.744 billion was deducted as cost of collection, while N1.789 trillion was allocated to transfers, interventions, and refunds. The gross figures highlight the underlying momentum in Nigeria's revenue generation, with gross statutory revenue rising sharply to N3.7 trillion in June from N2.651 trillion in May, representing an increase of N1.049 trillion. Gross VAT revenue also improved, climbing to N799.746 billion from N743.688 billion in May, marking a 7.5 per cent increase of N56.078 billion.
From the total distributable pool, the Federal Government received N923.438 billion, while the 36 states received N838.208 billion, and the 774 local government councils received N591.390 billion. Oil-producing states also shared N197.610 billion as 13 per cent derivation revenue, a provision that has long been a source of contention between resource-rich states and the rest of the federation. A breakdown of the N1.809 trillion statutory revenue showed that the Federal Government received N849.366 billion, state governments received N430.810 billion, and local government councils received N332.136 billion, with the N197.610 billion derivation revenue allocated separately to benefiting states. From the N740.724 billion distributable VAT revenue, the Federal Government received N74.072 billion, state governments received N407.398 billion, and local government councils received N259.253 billion.
The VAT distribution formula, which was revised under the Nigeria Tax Act 2026 and the Nigeria Tax Administration Act 2026, reflects a deliberate policy shift that reduced the Federal Government's share of net VAT from 15 per cent to 10 per cent, while increasing the states' portion from 50 per cent to 55 per cent, with local governments retaining 35 per cent. The reforms, which took effect on January 1, 2026, have significantly altered the fiscal landscape, redirecting a larger share of consumption tax revenues to subnational governments. This restructuring is part of a broader effort to strengthen state and local government finances, enhance their ability to deliver public services, and reduce their dependence on volatile oil revenues. The new VAT formula has already begun to reshape the fiscal dynamics of the federation, with states now receiving a larger share of the revenue generated from consumption taxes, which have become increasingly important as crude oil prices remain unpredictable.
FAAC attributed the improved revenue performance to significantly higher collections from Companies Income Tax, Capital Gains Tax, Stamp Duties, Petroleum Royalties, Gas Flaring Penalties, Rental Income, Miscellaneous Oil Revenue, Value Added Tax, Import Duties, and Common External Tariff Levies. However, the committee noted that receipts from Petroleum Profit Tax, Hydrocarbon Tax, Mineral Royalties and Fees declined considerably during the period, while Excise Duty recorded only a marginal increase. The mixed performance across different revenue streams reflects the ongoing transformation of Nigeria's fiscal structure, where non-oil revenues are increasingly playing a more prominent role in sustaining government finances.
The June allocation extends a pattern of steady growth that has characterized FAAC distributions throughout 2026. The N2.3 trillion shared for May was itself an improvement over the N2.257 trillion distributed for April, which exceeded the N2.04 trillion of March, which in turn was N150 billion higher than the N1.89 trillion shared from February revenue. The consistent upward trajectory has been driven by a combination of improved tax administration, higher oil prices, and the implementation of fiscal reforms aimed at broadening Nigeria's revenue base. The Nigeria Revenue Service, which was established through the consolidation of the Federal Inland Revenue Service and other revenue agencies, has played a key role in enhancing collection efficiency and reducing leakages across the tax system.
The June allocation also reflects the impact of the four reform laws signed in June 2025, which took effect on January 1, 2026. The Nigeria Tax Act 2026 and the Nigeria Tax Administration Act 2026, alongside other reform legislation, have fundamentally restructured the country's fiscal framework. Beyond the VAT formula changes, the reforms also compelled the Nigerian National Petroleum Company Limited to remit the full profit from oil and gas earnings to the Federation Account, a move that has significantly boosted statutory revenues available for distribution. The reforms have also streamlined the tax administration process, reducing bureaucratic bottlenecks and improving compliance among taxpayers.
The sharp increase in statutory revenue from N2.651 trillion in May to N3.7 trillion in June represents a particularly notable development, as it suggests that the reforms are beginning to yield tangible results in terms of revenue generation. The N1.049 trillion month-on-month increase in statutory revenue is one of the largest recorded in recent years and underscores the potential for further growth as the reforms take full effect. The improvement in VAT collections, from N743.688 billion in May to N799.746 billion in June, also reflects the resilience of consumption taxes even as economic conditions remain challenging for many households and businesses.
The FAAC meeting was chaired by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, who has been at the forefront of the administration's fiscal reform agenda. The minister has consistently emphasised the need to diversify Nigeria's revenue base away from oil dependence and to strengthen the fiscal capacity of subnational governments. The June allocation provides evidence that these reforms are beginning to deliver results, though significant challenges remain in ensuring that the additional resources are translated into tangible improvements in public service delivery and infrastructure development across the country.
Despite the positive revenue trends, concerns persist about the sustainability of the current trajectory. The decline in Petroleum Profit Tax, Hydrocarbon Tax, Mineral Royalties and Fees serves as a reminder that Nigeria's fiscal position remains vulnerable to fluctuations in the global oil market and the health of the extractive industries. The government has therefore continued to pursue reforms aimed at broadening the tax base and reducing reliance on volatile oil revenues. The significant increases in Companies Income Tax, VAT, Import Duties, and other non-oil revenues suggest that these efforts are gaining traction, but sustained political commitment and institutional capacity will be required to maintain the momentum.
The June FAAC allocation provides a welcome boost to the finances of all three tiers of government, particularly at a time when states and local governments are facing mounting pressure to meet salary obligations, fund infrastructure projects, and address the humanitarian needs of displaced populations. The additional resources will also support the implementation of the 2026 budget, which was signed into law earlier this year with ambitious revenue targets. As the government continues to implement its fiscal reform agenda, the challenge will be to ensure that the increased allocations translate into improved outcomes for citizens, particularly in the areas of education, healthcare, and infrastructure. For now, the June FAAC distribution stands as a testament to the potential of reform to transform Nigeria's fiscal fortunes, even as the journey toward sustainable and inclusive growth continues.
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