How FAAC’s Record N22.4trn Windfall Reshapes Nigeria’s Economy in 2025
The Federal Account Allocation Committee (FAAC) disbursed a total of N22.44 trillion to the Federal Government, States, and Local Governments in 2025, marking a sharp increase from the previous year.
Data from the Office of the Accountant General of the Federation showed allocations rose strongly across all tiers: the Federal Government received 55.73% more, States 42.21% more, and Local Governments 43.09% more year-on-year. The surge was driven by subsidy removal, stronger oil receipts, and improved non-oil revenue collection.
Monthly disbursements trended upward through most of the year, climbing from N1.70 trillion in January to a peak of N2.23 trillion in August, before easing slightly toward year-end. The August peak reflected elevated statutory revenues and stable VAT inflows.
By revenue source, the Statutory Account contributed N13.22 trillion, a 141.8% increase from 2024. VAT collections rose to N7.97 trillion, up 30.6%, supported by stronger consumption and improved tax administration. Exchange gains, however, fell sharply to N699 billion, down 88.4% year-on-year, normalising after the large currency windfalls of 2024. EMTL receipts remained stable at N452 billion.
Investment firm Cowry Asset Limited noted FAAC inflows grew 44.26%, while derivation payments to oil-producing states rose 14.15%, showing that broader revenue gains were not solely oil-driven. The firm said improved inflows reflected stronger fiscal performance and reduced dependence on exchange-related gains.
Analysts added that sustaining the revenue trajectory will depend on structural reforms, digital tax systems, and disciplined expenditure management. They warned that fiscal risks remain elevated, with Nigeria’s budget deficit estimated at N25.3 trillion, raising concerns over borrowing and debt sustainability.
Global energy market volatility also poses risks. While higher oil prices could boost FAAC inflows, analysts stressed the importance of accelerating non-oil revenue reforms to ensure fiscal stability.
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