Nigeria’s three tiers of government received a total of N10.45tn from the Federation Account Allocation Committee between January and May 2026, representing a 25.85 per cent increase from the N8.30tn shared in the corresponding period of 2025, as the Nigeria Labour Congress and private sector stakeholders criticised governments at all levels over worsening living conditions, infrastructure decay and rising insecurity.

An analysis by The PUNCH showed that the allocations to the Federal Government, 36 states, the Federal Capital Territory, and 774 Local Government Areas were distributed from the gross government revenue of N13.76tn realised during the period, up by 4.32 per cent from N13.19tn recorded in the first five months of 2025.

The increase in distributable revenue occurred amid stronger Value Added Tax collections, higher oil-related tax receipts, and an aggressive drive by the Nigeria Revenue Service to achieve its revenue target of approximately N40tn for the federation.

Analysis of FAAC data in 2026 showed that the Federal Government received N3.72tn from the five-month allocation, while state governments got N3.56tn. Local governments received N2.51tn, while the 13 oil-producing states shared N673.17bn as derivation revenue.

A breakdown of monthly allocations showed that the amount shared rose from N1.96tn in January 2026 to N2.30tn in May 2026.

Month-on-month, allocations declined by 3.37 per cent in February to N1.89tn, then rebounded by 7.50 per cent to N2.04tn in March. The distributable pool increased further by 10.85 per cent in April to N2.26tn and rose by another 1.91 per cent in May to N2.30tn.

Compared with the corresponding months of 2025, January 2026 allocation increased by 15.09 per cent from N1.70tn to N1.96tn. February rose by 12.87 per cent from N1.68tn to N1.89tn, while March jumped by 28.86 per cent from N1.58tn to N2.04tn.

April recorded a 34.35 per cent increase from N1.68tn to N2.26tn, while May rose by 38.55 per cent from N1.66tn to N2.30tn, indicating stronger revenue mobilisation as the year progressed.

Gross government revenue also climbed steadily. It stood at N2.59tn in January, declined to N2.23tn in February, before rising to N2.36tn in March, N3.18tn in April, and N3.40tn in May.

The Federal Government emerged as the largest beneficiary of the five-month allocation with N3.72tn, exceeding the total allocation to local governments by N1.21tn or 48.2 per cent. State governments received N3.56tn, which was N1.05tn or 41.8 per cent higher than the N2.51tn allocated to local councils.

The gap between the Federal Government and states remained relatively narrow, with the Federal Government receiving N160.71bn more than states during the period, representing about 4.5 per cent.

Labour reacts

In a phone interview with The PUNCH, reacting to the development, the Assistant General Secretary of the Nigeria Labour Congress, Chris Onyeka, said the increase in revenue had not translated into improved welfare for Nigerians.

“It is not the quantum of revenue available to the government that translates to impact on the welfare of citizens and workers,” Onyeka said. “It is the willingness of the people who occupy positions of leadership that determines how these resources impact the lives of the citizenry.”

He accused the three tiers of government of failing to channel public resources into projects that improve citizens’ lives.

He lamented the political problem, stating: “The answer is simply that 99 per cent of those in government will not let it impact positively on the lives of Nigerians. Because if they do, our lives will not be the way they are. Infrastructure all over the nation has deteriorated significantly.”

However, some states are performing above board. According to the NLC official, “It is only in one or two states where you see improvement because the people occupying positions of leadership have decided to allow some of the resources to touch the lives of the people.”

The labour leader argued that insecurity remained the biggest indicator of government failure despite rising revenues. “You cannot talk about infrastructure development or the welfare of the citizenry if you cannot address insecurity. If I cannot move from point A to point B without having my heart in my mouth, then you cannot talk about any other thing. The Constitution talks about the security and welfare of citizens. Security is paramount,” Onyeka said.

He added, “If I cannot go to my farm and come back safely, if I plant and cannot return to harvest, then it has multiplier effects on the welfare of the citizenry. Nigerians are scared. As you are saving money, you are also saving money for ransom payments.”

Onyeka lamented that workers had not benefited from the increased allocations, citing soaring transportation, housing and food costs.

“We do not feel better off. We do not use better roads. We do not pay cheaper transport fares. We do not have better access to health care, education or nutrition. We cannot feed ourselves better. So how do you measure the impact?” he asked.

He further declared, “Nigeria is not working. Nigeria is not working.”

Also commenting, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said some states had used increased revenues to support citizens, but many had failed to prioritise projects that directly improve livelihoods.

“Some states have invested in projects that really impact the lives of the people, such as providing mass transit, supporting farmers with fertiliser and inputs, investing in health care services and developing rural communities,” Yusuf said.

However, he noted that many governments focused on projects with limited impact on living standards. “Many states prefer to embark on physical projects people can see, like express roads, flyovers and airports. Those things are not bad, but their developmental impacts in terms of livelihoods and living standards are very limited,” Yusuf stated.

He warned against a situation where rising government revenues coexist with worsening poverty. “States should focus on things that directly impact livelihoods and welfare so that we do not have a situation where there is prosperity in terms of revenue and fiscal outcomes while so many people are left behind. Inclusion is very critical,” Yusuf said.

The economist also urged state governments to take greater responsibility for security, saying they should continue supporting security agencies rather than leaving the burden solely to the Federal Government.

New sharing formula

The growth in allocations comes months after the implementation of a new VAT sharing formula under the tax reforms signed into law by President Bola Tinubu. The reforms reduced the Federal Government’s VAT share from 15 per cent to 10 per cent while increasing the states’ share from 50 per cent to 55 per cent.

The PUNCH had earlier reported that states received N1.18tn from VAT revenue in the first quarter of 2026, an increase of N214.78bn or 22.35 per cent compared to the corresponding period of 2025.

The Federal Capital Territory also made history in January 2026 when it received N15.8bn from the VAT pool for the first time despite being a consistent contributor to VAT collections.

However, despite the improvement in allocations, revenue generation has remained below government expectations. The PUNCH previously reported that the Nigeria Revenue Service generated N7.44tn in the first quarter of 2026 against a target of N9.68tn, leaving a shortfall of N2.24tn and achieving a performance rate of 76.87 per cent.

The NRS has since intensified compliance enforcement. Speaking recently at a tax compliance workshop in Abuja, Executive Director of the Government and Large Taxpayer Directorate, Amina Ado, warned that unremitted taxes by ministries, departments, agencies, states and local governments could trigger direct deductions from their FAAC allocations.

Ado said, “Section 80 empowers the Accountant General of the Federation to deduct all unremitted revenues due from any MDA or government from its budgetary allocation and remit such deductions to the relevant tax authority, whether a federal or a state tax authority, after a specific due process has been followed.”

She added, “If a federal, state, or local government treats that withholding tax as someone else’s responsibility, the law provides a mechanism for that neglect to return immediately through deductions from allocations by the Accountant General of the Federation.”

According to her, the agency is targeting about N40tn in tax revenue and sees stronger compliance by public institutions as critical to achieving the goal.