morganable economy watch
The gains recorded in statutory revenues were partially offset by declines in other areas, including import duties, Common External Tariff levies, gas flaring rental fees and miscellaneous oil revenues.
KaNo—
The Federal Government, 36 states and 774 local government councils shared a record N3.007 trillion from the Federation Account Allocation Committee (FAAC) in July 2026, marking the highest monthly disbursement ever recorded, as improved statutory revenues pushed allocations beyond the N3tn threshold for the first time.
The landmark distribution, approved at the August 2026 FAAC meeting held in Owerri, Imo State, reflects a significant increase in revenue collections, particularly from petroleum-related sources and non-oil taxes, underscoring the impact of ongoing fiscal reforms.
According to 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, the gross statutory revenue rose sharply to N4.359tn in July from N3.700tn recorded in June.
The statement noted that the July allocation is not only the highest in 2026 but also the largest monthly distribution recorded in FAAC data spanning from 2019 to July 2026.
“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 statement read.
It added that the surge in statutory revenue reflects improved collection efficiency across both oil and non-oil sources, including Petroleum Profit Tax, Hydrocarbon Tax, Companies Income Tax, Capital Gains Tax, Stamp Duties, petroleum royalties, mineral royalties, excise duties and gas flaring penalties, all of which recorded notable increases during the period.
Decline In VAT Recorded
Despite the strong overall performance, the report indicated a marginal decline in Value Added Tax collections. Gross VAT revenue dropped slightly to N793.968bn in July from N799.746bn in June, representing a decrease of N5.778bn, or 0.7 per cent.
Analysts, however, noted that the modest dip suggests that consumption tax receipts remain relatively stable.
The gains recorded in statutory revenues were partially offset by declines in other areas, including import duties, Common External Tariff levies, gas flaring rental fees and miscellaneous oil revenues.
Mokwa said FAAC would continue to work closely with revenue-generating agencies to address collection gaps and improve remittance discipline across Ministries, Departments and Agencies.
“The committee will continue to monitor developments as it collaborates with revenue-generating institutions to enhance efficiency and ensure that all collectible revenues are duly remitted into the Federation Account,” he stated.
The surge in revenues comes amid sweeping fiscal reforms introduced in recent years, including the removal of petrol subsidy, foreign exchange liberalisation and ongoing efforts to widen the tax base.
Fiscal Reforms Boost Govt Revenues
These measures have significantly boosted government revenues, particularly from oil-linked sources and taxation.
Beyond the figures, however, discussions at the Owerri meeting focused on a broader concern,whether the rising allocations would translate into tangible economic improvements, better infrastructure and enhanced social services across the country.
The FAAC session, held on the sidelines of the National Council of Federation and Economic Development, brought together finance commissioners and accountants-general from across the federation to deliberate on fiscal sustainability and strategies for converting revenue gains into long-term economic growth.
These include improving internally generated revenue, commercialising public assets, expanding economic activities, attracting private sector investment, investing in human capital and enhancing transparency in public financial management.
States were also advised to take advantage of the current revenue windfall to implement structural reforms such as developing comprehensive asset registers, conducting payroll verification exercises and ensuring the timely publication of audited financial statements.
“The FAAC convened its August 2026 meeting in Owerri on the margins of the ongoing National Council of Federation and Economic Development, combining its routine allocation duties with a broader push to reinforce fiscal discipline and governance,” the statement added.
“The session highlighted the scale of recent revenue gains and emphasised the need for deliberate reforms to transform these gains into sustainable economic strength rather than temporary windfalls.”
Nigeria Tax Act 2025 Performance Reviewed
The meeting also reviewed the implications of the Nigeria Tax Act 2025, which came into effect on January 1, 2026, introducing significant changes to the distribution of VAT revenue among the three tiers of government.
Under the new framework, states now receive 55 per cent of VAT proceeds, up from the previous 50 per cent, while the Federal Government’s share has been reduced from 15 per cent to 10 per cent.
The reform is expected to encourage states to stimulate local economic activities and attract businesses, as revenue allocation becomes more closely tied to economic performance within each state.
Experts say the shift could intensify competition among states to improve their business environments, enhance infrastructure and create jobs, thereby boosting economic productivity nationwide.
FAAC also reaffirmed its commitment to ensuring the full and timely remittance of revenues by all government agencies, stressing that improved compliance remains essential to sustaining the current revenue momentum.
The committee underscored the importance of diversifying Nigeria’s revenue base beyond crude oil, identifying solid minerals and other non-oil sectors as key areas for future growth.
It noted that building a more resilient revenue structure would require consistent policy implementation and stronger institutional capacity.
While the record allocation signals improved fiscal inflows, stakeholders warned that the real challenge lies in translating the funds into meaningful development outcomes.
“The focus should not only be on sharing higher revenues but on how effectively those resources are utilised to improve public services, reduce poverty and stimulate economic growth,” a senior finance official at the meeting said.
FAAC concluded by urging all tiers of government to use the current period of increased revenues to institutionalise reforms that would enhance fiscal stability, improve transparency and ensure that allocations are deployed toward productive investments.
“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,” the statement said.
It added that the ultimate goal is to make federation allocations more predictable while building a solid foundation for long-term economic development.