Elegbede Abiodun
The Federation Account Allocation Committee (FAAC) saw a significant expansion in the distributable revenue shared among the three tiers of government in the first quarter of 2026, growing by 18.7 per cent on a year-on-year basis.
Data reconciled from official communication from FAAC indicated that the total amount of revenue shared to the Federal, State, and Local Government Councils compared to the corresponding period in 2025, saw a nominal increase of N928 billion.
Checks indicated that the total shared revenue for the first quarter of 2026 reached an aggregate of N5.887 trillion, a marked rise from the N4.959 trillion distributed during the first quarter of 2025.
This growth reflected a broader trend of improved revenue generation, serving as the primary fiscal lifeblood for the 36 states and 774 local government areas, though the quarterly performance was characterised by significant month-on-month volatility in specific tax streams.
A month-by-month analysis of the quarter under consideration showed that the year-on-year growth was sustained throughout the period, beginning with a robust performance in January.
During the first month of 2026, the committee shared N1.957 trillion, representing a 14.9 per cent increase over the N1.703 trillion distributed in January 2025. This initial momentum was largely underpinned by a historic surge in Value Added Tax (VAT) collections, which briefly crossed the N1 trillion gross threshold.
Although February 2026 saw a slight cooling of this momentum with a distribution of N1.894 trillion, it still outperformed the N1.678 trillion shared in February 2025 by 12.9 per cent.
The quarter concluded with a particularly strong showing in March 2026, which recorded the highest year-on-year jump of the period. The committee distributed N2.036 trillion in March, a staggering 29 per cent increase over the N1.578 trillion shared in the same month of the previous year.
This substantial rise in the final month of the quarter was the primary driver that pushed the overall quarterly growth beyond the 15 per cent mark. The March figures were bolstered by a significant rise in statutory revenue, which reached N1.699 trillion, alongside a strategic augmentation of N200 billion deployed to stabilise the distributable pool.
The composition of the revenue shared throughout the first quarter of 2026 highlighted several shifting dynamics within the Nigerian economy. Statutory revenue remained the most significant contributor to the federation account, but its growth was heavily influenced by exchange rate differentials.
It was observed that as the Nigerian Naira adjusted against major global currencies between early 2025 and 2026, the ‘exchange difference’ revenue, representing the gains made on foreign currency earnings from oil and gas exports, provided a substantial cushion to the account. This technical gain ensured that even in months where physical oil production faced logistical challenges, the nominal value of the shared revenue remained high.
In addition, the performance of the Federal Inland Revenue Service, Nigeria Revenue Service (NRS) and the Nigeria Customs Service (NCS) played a critical role in the N928 billion increase.
Overall, VAT, despite its intra-quarter volatility, trended significantly higher in 2026 than in the previous year. In January 2026, gross VAT collections reached unprecedented levels. While these figures receded in subsequent months, the baseline for consumption-based taxes has shifted upward compared to the 2025 fiscal year.
In the same vein, Electronic Money Transfer Levies (EMTL) and Corporate Income Tax contributed to the improved totals, reflecting intensified tax administration efforts and the ongoing digitalisation of the Nigerian financial system.
However, the increase in gross revenue was accompanied by a corresponding rise in the cost of collection. The revenue-generating agencies, including the NRS, the NCS, and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), saw their statutory percentage deductions increase in nominal terms as the total collection grew. These deductions, which typically range between 4 per cent and 7 per cent of specific revenue streams, are utilised to fund the administrative and operational costs of the agencies. Additionally, the committee continued to manage statutory transfers and refunds, ensuring that the final “distributable” figure remained sustainable.
In all, the federal government, which receives the largest share of the federation account, saw its average monthly payout rise to approximately N718 billion in 2026, up from roughly N560 billion in the first quarter of 2025.
