N3.007TRN SHARED AS FEDERATION REVENUE JUMPS BY N658BN

The Federal Government, 36 states and 774 local government councils shared N3.007 trillion in federation revenue for July 2026, following a sharp increase in statutory collections.

The allocation was approved at the August meeting of the Federation Account Allocation Committee, FAAC, held in Owerri, Imo State.

According to a statement issued by the Director of Press and Public Relations in the Office of the Accountant-General of the Federation, Bawa Mokwa, gross statutory revenue climbed to N4.359 trillion in July from N3.700 trillion recorded in June.

The N658.087 billion increase represents a 17.8 per cent month-on-month rise, with stronger receipts recorded from both petroleum and non-oil revenue sources.

However, Value Added Tax revenue recorded a slight decline during the period.

Gross VAT collections stood at N793.968 billion in July, compared with N799.746 billion in June, representing a drop of N5.778 billion or 0.7 per cent.

Several revenue streams recorded improved performance during the month, including Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duty, petroleum royalties, mineral royalties, excise duty and gas-flaring penalties.

The gains were partly reduced by lower receipts from VAT, import duties, Common External Tariff levies, gas-flaring rental fees and other miscellaneous oil revenues.

FAAC said it would continue working with revenue-generating agencies to address collection gaps and strengthen compliance with remittance requirements.

The latest increase in federation revenue comes amid ongoing fiscal reforms, including the removal of petrol subsidy, foreign exchange reforms and efforts to expand Nigeria’s tax base.

Beyond the monthly revenue-sharing exercise, the FAAC meeting also focused on how the three tiers of government could turn increased allocations into sustainable economic growth.

Officials at the meeting were encouraged to strengthen internally generated revenue, improve the management and commercialisation of public assets, expand economic activities, attract private investment and increase spending on human capital.

They were also urged to improve transparency in public finances.

States were advised to use the period of stronger revenue inflows to establish comprehensive records of government assets, verify payroll systems and ensure that audited financial statements are published promptly.

The meeting was held alongside the National Council of Federation and Economic Development and examined the fiscal position of the federal and subnational governments.

According to the Accountant-General’s office, federation revenues have increased significantly over the past three years, with subsidy reforms, exchange-rate changes and tax reforms identified among the major factors behind the growth.

The meeting also considered the impact of the Nigeria Tax Act 2025, which came into effect on January 1, 2026, particularly its changes to VAT distribution.

Under the new arrangement, states now receive 55 per cent of VAT revenue, up from 50 per cent, while the Federal Government’s share was reduced from 15 per cent to 10 per cent.

The framework also requires 30 per cent of the states’ VAT pool to be distributed based on the location where consumption occurs rather than where a company’s headquarters is registered.

The new formula is expected to strengthen the relationship between economic activity and revenue allocation, potentially encouraging states to attract businesses and expand their local economies.

FAAC also reiterated the importance of ensuring that all collectible revenues are fully and promptly remitted by Ministries, Departments and Agencies into the Federation Account.

The committee stressed the need for Nigeria to reduce its dependence on crude oil by developing other revenue sources, including solid minerals and non-oil royalties.

It warned that maintaining the July revenue performance would require stronger collection systems and greater remittance discipline across government agencies.

The committee said the focus should now extend beyond sharing increased revenues to ensuring that the additional funds are channelled into productive investments, infrastructure and other areas capable of improving citizens’ welfare.

FAAC therefore urged the Federal Government and state governments to use the current revenue gains to implement lasting fiscal reforms and build stronger, more predictable public finances.