The Federal Government, 36 states and 774 local government councils shared a record N3.007tn from the Federation Account in July 2026, the highest monthly FAAC allocation ever recorded, as stronger statutory revenue pushed the amount available for distribution above the N3tn mark for the first time.
The statutory collections rose by N658.09bn, driven by improved receipts from petroleum and non-oil taxes. The disbursement was approved at the August 2026 meeting of the Federation Account Allocation Committee held in Owerri, Imo State.
The PUNCH reports that the N3.007tn distributed in July is the highest monthly FAAC allocation recorded in 2026 and the largest allocation in the reviewed FAAC records from 2019 to July 2026.
A statement issued on Tuesday by the Director of Press and Public Relations in the Office of the Accountant-General of the Federation, Bawa Mokwa, said the gross statutory revenue rose to N4.359tn in July from N3.700tn recorded in June.
The increase represented N658.087bn, or 17.8 per cent, signalling stronger collections across several oil and non-oil revenue sources. However, gross Value Added Tax revenue declined marginally to N793.968bn in July from N799.746bn in the preceding month, representing a decrease of N5.778bn, or 0.7 per cent.
The statement read, “In its regular monthly business, FAAC approved the disbursement of a total of N3.007tn to the Federal Government, the 36 state governments and the 774 Local Government Councils as revenue for July 2026.
“The month’s figures point to a strengthening underlying revenue base. Gross statutory revenue rose to N4.359tn in July 2026, up N658.087bn, a 17.8 per cent increase, from N3.700tn in June 2026, reflecting improved collection performance across oil and non-oil statutory sources. Gross VAT revenue held broadly steady at N793.968bn, a marginal decline of N5.778bn (0.7 per cent) from N799.746bn in June, suggesting consumption-tax receipts remain resilient month-on-month.”
The communiqué showed that Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duty Tax, petroleum royalties, mineral royalties, excise duty and gas flaring penalties recorded increases during the month.
The gains, however, were partly offset by declines in VAT, import duty, CET levies, rental of gas flaring fees and miscellaneous oil revenue. “The committee will continue to monitor as it works with revenue-generating agencies to close collection gaps and improve remittance discipline,” Bawa stated.
The development comes amid a sustained rise in revenues accruing to the Federation Account following major fiscal reforms, including the removal of petrol subsidy, foreign exchange reforms and efforts to widen the tax base.
Beyond the monthly allocation, the Owerri meeting also shifted attention to a broader question confronting the country’s three tiers of government: whether rising federation allocations would translate into stronger state economies, improved infrastructure and better social services.
The FAAC meeting, which was held on the sidelines of the National Council of Federation and Economic Development, brought together finance commissioners and accountants-general to discuss the fiscal health of the federation and ways of converting recent revenue growth into long-term economic strength.
Bawa said government officials were urged to focus on six key areas described as vital to fiscal fitness, including improving the quality of internally generated revenue, strengthening and commercialising public assets, expanding economic activity, attracting private capital, investing in human capital and improving transparency in public finance.
States were also encouraged to use the period of stronger revenue to build comprehensive asset registers, verify payrolls and ensure the timely publication of audited accounts.
“The FAAC convened its August 2026 meeting in Owerri, the Imo State capital, on the margins of the ongoing National Council of Federation and Economic Development, pairing the Committee’s routine monthly business with a broader push to strengthen fiscal fundamentals across Nigeria’s federating units.
“The FAAC session discussed the state of the economy, fiscal governance, and federal and subnational fiscal fitness. The session set out the scale of the recent revenue windfall and called for deliberate reform to convert it into durable fiscal strength rather than a temporary gain. The meeting noted that gross FAAC have risen significantly over the past three years, driven by subsidy removal, exchange-rate unification and tax reform,” the statement added.
The meeting further highlighted changes introduced under the Nigeria Tax Act 2025, which took effect from January 1, 2026, and altered the distribution of VAT revenue among the tiers of government.
Under the new framework, the states’ share of VAT revenue increased from 50 per cent to 55 per cent, while the Federal Government’s share declined from 15 per cent to 10 per cent.
The new arrangement also provides that 30 per cent of the states’ VAT pool should be distributed according to the place of consumption rather than the location of a company’s registered headquarters.
The change is expected to create a stronger link between economic activity within a state and the revenue it receives from the Federation Account, potentially increasing competition among subnational governments to attract businesses and expand their economies.
The committee also reaffirmed its commitment to the full and timely remittance of collectible revenues by Ministries, Departments and Agencies into the Federation Account.
It stressed the need to diversify government revenues beyond crude oil and said solid minerals and other non-oil royalty streams would remain areas of focus as the federation seeks to build a more resilient revenue base.
The committee noted that sustaining the strong statutory revenue recorded in July would depend on improved collection and remittance discipline by revenue-generating agencies.
It added that the challenge for governments was no longer merely to share rising revenues but to ensure that the additional funds were converted into productive investments capable of strengthening public finances and improving living standards.
The meeting therefore urged the Federal Government and the states to use the current period of revenue growth to institutionalise reforms that would make federation allocations more predictable while building stronger foundations for long-term economic development.
“The committee noted that sustaining the statutory revenue gains recorded in July 2026 will depend on continued discipline in collection and remittance across Ministries, Departments and Agencies, and reiterated its support for reforms aimed at improving the predictability and growth of allocations to all three tiers of government,” the statement concluded.
The PUNCH reports that FAAC distributed N1.96tn in January, N1.89tn in February, N2.04tn in March, N2.25tn in April, N2.30tn in May and N2.55tn in June.
The total amount distributed between January and June 2026 stood at N12.99tn. With the latest July allocation of N3.007tn, the Federal Government, 36 state governments and 774 local government councils have collectively received N15.997tn from FAAC so far in 2026.
Source: punchng.com
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