…earn N41.85trillion in 33 months
•Nominal growth in revenue misleading — Economists
By Clifford Ndujihe, Nkiru Nnorom, Nnamdi Ojiego and Dickson Omobola
ARGUABLY, the three tiers of government, especially the states and local governments in Nigeria, have been seeing a quantum leap in their federal allocations since June 2023.
This notwithstanding, more Nigerians are groaning in pain inflicted on them by the adverse economic situation in the country.
With more money available for sharing, the surge in published monthly allocations from the Federation Account Allocation Committee, FAAC, reflects the impact of recent fiscal and monetary reforms, buoyant oil receipts propelled by the floating of the Naira and stoppage of oil subsidies.
From N8.209 trillion shared among the three tiers of government in 2022, the figure rose to N10.23 trillion in 2023, jumped to N15.26 trillion in 2024, and hit N16.446 trillion between January and September 2025.
In essence, the three tiers of government have shared N41.848 trillion in 33 months – January 2023 to September 2025.
Indeed, from N3.58 trillion in 2023, states’ allocations jumped to N5.81 trillion in 2024.
The rising allocations have continued in 2025, with states receiving N6.709 trillion between January and September. Within the period, the Federal Government got N5.656 trillion while the Local Governments received N4.041 trillion.
But the actual value of the receipts is a subject of controversy among economists who say while the funds look huge, there may be nothing to celebrate as the worth has dropped several times over due to inflation occasioned by price increases as a result of the removal of petrol subsidy and the crash of the Naira due to the unification of the FX regimes.
“Government at the various levels may be seen in some quarters as smiling to the bank with the rise in the funds accruing to them. But the reality of the situation is that the value of the money has depreciated since 2023”, one of the economists said
A NEITI FAAC Quarterly Review shows that distribution to state governments in 2024 recorded a percentage increase of 62% from N3.58 trillion in 2023, followed by local government councils with a 47% increase, while the Federal Government’s share rose by 24% from N3.99 trillion in 2023 to N4.95 trillion in 2024.
The report highlights that total FAAC allocations increased by 66.2% from N9.18 trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024.
Amplifying the huge receipts, Minister of Budget and Economic Planning, Senator Abubakar Bagudu, recently said allocation to 36 states and 774 local councils increased from N458.81 billion in May 2023 to N991.81 billion in June 2025, an increase of N533bn or 116.17 per cent.
He spoke at a session organised by the Sir Ahmadu Bello Memorial Foundation, SABMF, in Kaduna. Bagudu stressed that the figure excluded Electronic Money Transfer, EMT, levy, FX gains, and augmentations received by states.
More funds, more pains
The spiked revenues came with huge pains.
President Bola Tinubu’s stoppage of fuel subsidies and the floating of the naira as he was being sworn-in on May 29, 2023 had immediate socio-economic impact.
The exchange rate of the naira to dollar at a stage hit N1, 900 and fuel price rose from N197 per litre to between N1, 000 and N1, 200 in various parts of the country. Inflation rate rose steadily from 22.41 per cent and hit 34.80 percent in December 2024.
More than two years after, little or no improvements have been witnessed given the huge funds accruing to the states and local councils.
In 2023, no fewer than 93.8 million Nigerians (43 per cent) were said to be living below the poverty line, and the figure has reportedly jumped to 139 million (61 per cent).
The National Bureau of Statistics, NBS, in its November 2022 National Multidimensional Poverty Index, MPI, said 133 million Nigerians or 83 per cent of the population were multi-dimensionally poor.
The National Population Commission, NPC, put Nigeria’s estimated population in 2023 at 216 million.
The NBS is yet to release its data for 2025 but, as of April, the World Bank reported that 46 per cent of Nigerians were living below the NBS national poverty line of N376.50 per person daily.
The Worldometer, as of October 19, 2025, put Nigeria’s population at 238.9 million.
That means 109.89million Nigerians are currently living on N376.50 per person a day.
The annual headline inflation surged to 34.80 per cent in December 2024.
In January 2025, the NBS updated the base year for its Consumer Price Index from 2009 to 2024, which resulted in a recalibration of the inflation rate to 24.48 per cent.
Thereafter, the rate has been declining, according to the NBS, hitting 18.02 per cent in September 2025.
Wet the grass, Tinubu tasks governors
Disturbed by the persistent cries of hardship and suffering from the citizenry, President Tinubu, recently urged state governors to justify the unprecedented fiscal inflow with visible development results.
The President, who spoke at the National Executive Committee, NEC, meeting of the All Progressives Congress, APC, charged the governors elected on the platform of the APC to redouble their efforts in delivering development at the grassroots, saying many Nigerians were still dissatisfied with the pace of governance and the benefits of democracy.
His words: “We need to do more. Nigerians are still complaining at the grassroots. You, the governors, have to wet the ground and give more dividends of democracy at the grassroots. “We must not rest. Our people need to feel the impact of government more directly.”
Nominal growth in revenue misleading —Muda Yusuf
Meanwhile, a top economist, Muda Yusuf, said even though nominal growth revenue was misleading, states could execute more programmes with better deployment of funds.
“States now have more revenue to execute their programmes such as improving infrastructure, paying salaries and pensioners,” the CEO of the Centre for Promotion of Private Enterprises, CPPE, added.
However, he raised the question of how well the revenues are being deployed to drive meaningful development, averring that states ought to be publishing their accounts for transparency.
Yusuf noted that poor management of resources by the states has resulted in little or no impact on the lives of the people, cautioning against overestimating the growth of the revenues by the states.
“The fact that revenue has grown in nominal terms doesn’t mean they can buy much. The nominal growth can be misleading. It creates an illusion that the states are getting richer, so we must factor this into our expectations,” he stated.
‘Nothing to celebrate’
For his part, Chief Economist at ARKK Economics & Data Limited, Dr Samson Simon, said: “Allocations to states more than doubled in 2024 compared to 2023. It rose from N11.38 trillion to N5.4 trillion in 2023.
“This might seem much in just a year.
“However, it is mere nominal increase. In real terms, it is not an increase.
“When you adjust for inflation and exchange rate, you would realise the allocation has actually reduced, hence nothing to celebrate.
“Even government at the centre is gasping for breath when its own FAAC allocation has ballooned, hence binge borrowing. This demonstrates real increase is what matters.
“Governors can do better by ensuring allocation efficiency and getting their priorities right as resources are still very much meager relative to needs. “Governors should put first projects that benefit the largest parts of their population by transforming healthcare, education, infrastructure and social welfare.
“Spending and allocation to different budget line items must be transparent, accounted for and made the most of.
“States must not depend on FAAC allocation to get things done for the people.
“Instead, they must resort to earning their keep and impacting lives of people on their watch.”
‘Economic distress’
Also reacting, Chairman of the Alliance for Economic Research and Ethics Ltd/Gte, Hon. Dele Oye, cautioned against celebrating the surge in government revenue recorded across the three tiers of government over the past 33 months, stressing that the accompanying economic distress facing Nigerians calls for sober reflection rather than praise.
Oye noted that while Nigeria’s earnings have grown significantly due to reforms such as fuel subsidy removal and foreign exchange liberalization, the gains have come at a steep social cost.
He cited the World Bank’s data indicating that over 139 million Nigerians now live in poverty, describing the figure as a stark reminder of the widening gap between fiscal performance and citizens’ welfare.
He observed that the policies, though yielding more revenue, triggered inflationary pressures, currency depreciation, and the exit of several multinational companies, leading to business closures and job losses.
According to him, “the economic context remains troubling, with inflation currently at 18.2 percent and millions of households struggling to afford basic needs.”
The former President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) urged the federal and state governments to focus on inclusive economic policies that stimulate production, create jobs, and enhance living standards rather than relying solely on fiscal reforms.
He recommended that part of the revenue windfall be used to reduce government borrowing and settle outstanding loans and bonds, which, if properly managed with support from the Central Bank of Nigeria, could lower interest rates and strengthen credit availability to businesses.
Oye also emphasized the need for transparency in social welfare interventions, calling for independent verification of the government’s claim that 8.5 million Nigerians benefit from ongoing cash transfer programs. “Targeted and verifiable social protection measures are crucial to cushioning the effects of these reforms on the most vulnerable citizens,” he said maintaining that with prudent resource allocation, investment in infrastructure, and effective oversight, Nigeria could turn its current fiscal momentum into genuine economic progress that benefits ordinary citizens rather than deepening inequality.
Social goods still elusive despite huge allocations — Adonri
Adding his voice, Mr. David Adonri, Vice Chairman, Highcap Securities, lamented that the government at all levels have failed to leverage the increase in FAAC allocations to deliver social goods to the people.
He argued that with the exception of Abia State government which had judiciously applied the funds from revenue allocations for developmental purposes, other states have failed in this regard.
“Sequel to the removal of fuel subsidy and floating of the Naira in 2023, accretion to the consolidated revenue account of government increased tremendously. As a result, the statutory distribution to the various tiers of government also increased”, Adonri said.
“This enabled several state governments to extinguish their short term liabilities which strangulated them hitherto.
“The balance left is what has been deployed to finance recurrent and capital expenditures. Whether the application of these revenues are geared towards alleviation of hardship is a question that is begging for answers.
“A state like Abia has proven to be a good example in the efficient utilization of resources”.
Continuing, he said: “The efficiency in the management of the allocations by the states and LGA is seriously in doubt as the social goods they are expected to provide remains largely elusive.
“The duty of government is to make macroeconomic policies that will make the environment conducive for wealth creation and generation of productive employment. “They also provide the necessary social goods from application of their financial resources to enhance the well-being of their citizens.
“However, the situation on ground does not show that these governments are effectively discharging these responsibilities.”
There’s need for improved fiscal discipline — Chiazor
In his submission, Victor Chiazor, Head of Reseach at FSL Securities, said that the fact that economic hardship remained prevalent despite the huge receipt from allocations was concerning and highlights the need for improved fiscal discipline by all tiers of government.
He said: “Since President Tinubu assumed office, significant policy reforms have been designed and implemented, including the removal of fuel subsidies, exchange rate adjustments and the new tax policy expected to soon go live.
“These reforms, coupled with increased VAT revenue collection efforts, have increased government revenue also driven by the devaluation of the naira.
“According to the August 2025 FAAC communiqué, the revenue contribution was Statutory Revenue (80%), Value Added Tax (17.96%), Exchange Gain (1.04%), and Electronic Money Transfer Levy (1.02%).
“Despite the increase in revenue, economic hardship persists, as inflation and devaluation has weakened the purchasing power of the naira.
“This now raises concerns over the real value of the naira and lack of effective fund utilization and prudent financial management amongst all tiers of government.
“In addition to this, some states are faced with high debt burdens, underscoring the need for improved fiscal discipline, channeling funds to productive sectors, and adopting a transparent and accountable process to build trust and efficient fund utilization.”
States more financially buoyant now – Oyebanji
Speaking on the increased allocation to states, Governor Biodun Oyebanji of Ekiti State thanked Tinubu for freeing more resources to the states, especially Ekiti, to carry out people-oriented and legacy projects in the last three years of his administration.
Oyebanji, who spoke during the commissioning of the ultra-modern Ekiti Revenue House in Ado Ekiti, penultimate Wednesday, disclosed that his administration had been commissioning a wide range of projects including roads, electricity, hospitals and water to commemorate his third anniversary in office.
Oyebanji disclosed that his government has not taken any loan to finance the various projects embarked upon by his government in the last three years, said that his administration is committed to sustaining the state’s development goals stressing that IRS plays pivotal role in propelling the state’s economic growth and contributing massively to the well-being of its citizens.
His words: “I can stand here to boast and beat my chest that every project we have done in Ekiti state up to now, we have not taken a loan to do any one of them. And that speaks to the fact that we have a president who is transparent, who allows the resources to be shared the way it should be shared.
“One thing is for you to have the money at the centre, another thing is for the centre to give it to you, but for once, in our history, Mr. President has given to us more than our fair share of the federation allocation.”
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