The Federation Account Allocation Committee (FAAC) has shared ₦2.428 trillion among the Federal Government, state governments and local government councils for September 2026, up from ₦2.338 trillion distributed in August, as a rebound in statutory revenue and oil-related collections boosted allocations across Nigeria’s three tiers of government.
The latest figures show that gross revenue entering the Federation Account increased to ₦3.913 trillion in September from ₦3.685 trillion in August, although revenue from Value Added Tax (VAT) recorded a slight decline.
Key Highlights
- FAAC distributed ₦2.428 trillion for September 2026, compared with ₦2.338 trillion for August.
- Gross Federation Account revenue rose to ₦3.913 trillion from ₦3.685 trillion.
- Statutory revenue increased by approximately ₦246.384 billion to ₦3.096 trillion.
- Gross VAT collections fell to ₦816.872 billion from ₦834.843 billion.
- The Federal Government received ₦832.242 billion from September revenue.
- State governments shared ₦799.872 billion, while local government councils received ₦560.660 billion.
- The 13 per cent derivation allocation to oil-producing states increased to ₦236.050 billion from ₦184.388 billion.
- The figures highlight the continued importance of oil-related revenue to Nigeria’s monthly fiscal allocations.
FAAC Allocation Increases by ₦90 Billion in September
The September allocation of ₦2.428 trillion represents an increase of approximately ₦90 billion, or 3.85 per cent, compared with the ₦2.338 trillion distributed for August.
The increase followed a rise in gross revenue available to the Federation Account, which climbed from ₦3.685 trillion in August to ₦3.913 trillion in September.
The latest figures indicate an improvement in revenue inflows after the decline recorded in August. However, the increase in monthly allocations does not necessarily mean that government finances have become more stable, as receipts from oil, taxes and other revenue sources can fluctuate.
FAAC allocations are particularly important to state and local governments, many of which depend heavily on their monthly statutory transfers to fund salaries, infrastructure, healthcare, education and other public services.
Statutory Revenue Drives September Growth
Statutory revenue was the main contributor to the increase in September’s Federation Account receipts.
Gross statutory revenue rose to ₦3.096 trillion in September from ₦2.850 trillion in August, an increase of approximately ₦246.384 billion.
According to figures reported following the FAAC meeting, the improvement was supported by stronger collections from petroleum-related taxes, royalties, import duties and other statutory revenue sources.
The amount of statutory revenue available for distribution increased to ₦1.672 trillion in September from ₦1.565 trillion in August.
The rebound highlights the continued influence of oil-sector earnings and related taxes on the resources available for distribution among the three tiers of government.
However, the sustainability of the improvement will depend on factors such as crude oil production, international oil prices, collection efficiency and the performance of other revenue sources.
VAT Revenue Declines Despite Higher Overall Allocations
While statutory revenue improved, Value Added Tax collections recorded a decline in September.
Gross VAT revenue fell to ₦816.872 billion from ₦834.843 billion in August, representing a decrease of approximately ₦17.972 billion.
The distributable VAT pool also declined, moving from ₦773.233 billion in August to ₦756.587 billion in September.
VAT is linked to taxable consumption and business transactions. However, a one-month decline alone is insufficient to establish whether household spending or overall economic activity has weakened. Changes in collection timing, business transactions and other factors can also affect monthly receipts.
The decline nevertheless contrasted with the stronger statutory revenue performance and limited the overall improvement from non-oil revenue sources.
How Much Did the Federal Government Receive?
The Federal Government’s allocation increased to ₦832.242 billion from ₦804.897 billion in August.
State governments received ₦799.872 billion, up from ₦794.313 billion, while local government councils received ₦560.660 billion compared with ₦555.142 billion in the preceding month.
The figures indicate that all three tiers recorded higher allocations in September.
| Beneficiary | August 2026 | September 2026 |
|---|---|---|
| Federal Government | ₦804.897bn | ₦832.242bn |
| State governments | ₦794.313bn | ₦799.872bn |
| Local government councils | ₦555.142bn | ₦560.660bn |
| Total distributable revenue | ₦2.338tn | ₦2.428tn |
Source: FAAC allocation figures reported for August and September 2026. Amounts are rounded where appropriate.
The additional funds could help governments meet recurrent obligations and finance public projects. Their actual impact will depend on each government’s spending priorities, outstanding liabilities and fiscal management.
Oil-Producing States Receive Higher Derivation Payments
Oil-producing states recorded a substantial increase in their 13 per cent derivation allocation, which is linked to mineral revenue generated from their territories.
Derivation payments rose to ₦236.050 billion in September from ₦184.388 billion in August.
The increase represents a rise of approximately ₦51.662 billion and reflects the stronger mineral-related revenue recorded during the period.
The derivation principle provides additional revenue to eligible oil-producing states, including states in the Niger Delta, under the constitutional revenue-sharing framework.
Higher derivation receipts can strengthen the financial capacity of beneficiary states. However, the extent to which communities benefit depends on how the funds are budgeted, allocated and spent on public services and development projects.
Revenue Collection Costs and Other Deductions Rise
The improvement in gross revenue was accompanied by higher deductions and allocations for other statutory purposes.
Revenue collection costs deducted by relevant agencies increased to ₦131.758 billion in September from ₦125.142 billion in August.
Funds set aside for statutory transfers, interventions, refunds and savings also rose, increasing from approximately ₦1.221 trillion in August to ₦1.352 trillion in September.
These deductions and transfers affect the amount ultimately available for distribution to the Federal Government, states and local government councils.
Monitoring the relationship between gross revenue, deductions and net distributable funds remains important when assessing the overall performance of the Federation Account.
Read also:
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- Tinubu Says World Bank Report Confirms Reforms Are Working as Nigerians Question Economic Gains
What the September FAAC Figures Mean for Nigeria’s Economy
The increase in FAAC allocations provides additional funds to the three tiers of government as they approach the final quarter of 2026.
For states and local councils, higher monthly receipts could provide some relief in meeting payroll obligations, maintaining infrastructure and delivering public services. The additional resources may also reduce pressure on governments that rely heavily on federal allocations.
However, higher allocations do not automatically translate into improved living standards. The outcome depends on expenditure management, debt obligations, project implementation and the effectiveness of public spending.
The decline in VAT collections also shows that the revenue picture was mixed, with stronger statutory receipts offsetting weaker VAT performance.
Nigeria Remains Exposed to Oil Revenue Fluctuations
The August-to-September comparison underscores Nigeria’s continued exposure to fluctuations in oil-related revenue.
When statutory receipts increase, the Federation Account generally has more resources available for distribution. When oil production, prices or collections decline, the funds available to the three tiers of government can come under pressure.
Diversifying government revenue through more effective non-oil taxation, improved compliance and broader economic activity could help reduce this vulnerability over time.
For now, September’s higher FAAC allocation offers an improvement on August’s figures, but sustaining the gains will require stable revenue collection and prudent fiscal management across all levels of government.
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