FAAC Shares N2.103tn in September Revenue; VAT Surge Masks Oil Weakness

FAAC disbursed N2.103tn for September 2025. VAT and EMTL drove gains but statutory and oil receipts fell. What the numbers mean for states, LGAs and fiscal reform.

Atlantic Post

October 18, 2025

3–5 minutes

EMTL, FAAC, Federation Account, Fiscal Policy, Local Government, Nigeria Economy, OAGF, Revenue Transparency, state finances, VAT

FAAC Shares N2.103tn in September Revenue: Federal Take N711bn as VAT Surge Masks Oil Weakness

The Federation Account Allocation Committee (FAAC) on Friday approved the distribution of N2.103 trillion in revenue to the Federal Government, the 36 states and 774 local government councils for September 2025.

The disbursement is among the largest monthly allocations this year. It was disclosed in a communique. The communique was signed by the Office of the Accountant General of the Federation.

At first glance the numbers read well for Abuja and state capitals. Of the N2.103tn shared the Federal Government received N711.314bn, states secured N727.170bn, while local government councils took N529.954bn.

Oil producing states received N134.956bn as the 13 per cent derivation. These official line items were published after FAAC’s October meeting and corroborated across national media.

A closer look reveals meaning and misdirection. The distributable pool comprised N1.239tn from statutory allocations, N812.593bn from Value Added Tax and N51.684bn from the Electronic Money Transfer Levy.

Gross revenue available in September stood at N3.054tn, but after deductions for collection costs and mandated transfers and interventions only N2.103tn remained to be shared.

The OAGF communique shows N116.15bn was taken as cost of collection while N835bn was reserved for transfers, interventions, refunds and savings before sharing.

What is striking is the composition of the rebound. VAT collections surged to N872.63bn in September, an increase of about N150bn from August, while EMTL receipts also strengthened.

The FAAC record shows improved receipts from import duty and other non-oil levies. This signals that consumption and digital transactions have underpinned this month’s gains. At the same time gross statutory receipts fell, and several corporate and customs lines stay volatile.

The reported distributable total also shows an increase from immediate past months. FAAC’s statement and press reporting show September’s allocation is roughly 16 per cent higher than the N1.813tn shared in August and about 22 per cent higher than July’s N1.728tn, marking the fourth consecutive monthly upswing in 2025.

But this arithmetic masks structural fragility. Gains are concentrated in consumption based taxes and a single digital levy. Traditional drivers, like Companies Income Tax and petroleum related levies, stay subdued.

For states and local governments the implications are double edged. On paper, the state share rose. Still, the mushrooming of conditional transfers and set asides means a significant slice of gross revenue never reaches subnational treasuries.

The N835bn sequestered for transfers and interventions in September serves as a reminder. Headline disbursements do not equate to unfettered fiscal space.

Local councils rely significantly on statutory allocations. They also depend on the steady flow of VAT shares to pay salaries and basic services. Any dip in consumer demand or a tightening of monetary conditions quickly erode their lifeline.

The FAAC pattern this year raises at least three urgent questions for policymakers and watchdogs.

First, how sustainable is a recovery pivot that rests largely on VAT and digital levies rather than broad based growth in corporate profits and oil receipts

Second, are the rules and timing around transfers, interventions and refunds sufficiently transparent

Third, given the recurring volatility in oil related receipts are states and LGs being nudged to deepen their own revenue mobilisation rather than rely on the federation account

An investigative overlay is required now. FAAC communiques give topline numbers. They offer little information on the purpose of large transfers. The composition of refunds and interventions is also not detailed.

Journalists and auditors should demand line by line disclosures of transfers labelled interventions and savings.

Parliamentarians must press for a public roll call of what the N835bn relates to. They must also demand an explanation of why some funds are ring fenced before sharing.

Citizens deserve to know whether transfers support capital projects or recurrent obligations that should lawfully sit with the Federal Government.

Policy reform is also overdue. The VAT surge shows the power of consumption taxes and digital levies to lift short run receipts. But overreliance on consumption taxes raises equity questions. VAT is regressive and in the Nigerian context it shifts the tax burden onto low and middle income households.

A sustainable fiscal path requires widening the tax net. It involves modernising CIT administration and tackling base erosion. Additionally, it focuses on rebuilding oil sector production and contracting transparency.

FAAC’s September dispatch will be cheered in many state capitals but applause should be cautious. The headline N2.103tn hides a dependency on volatile revenue streams. There are also sizeable pre-sharing charges. These factors weaken the fiscal autonomy of states and councils.

The Centre and subnational governments must deliver on salaries, schools, and primary health budgets in 2026. They need to treat September’s windfall as a prompt for structural reform. It should not be seen as a justification for recurrent splurge.