The Federation Accounts Allocation Committee (FAAC) disbursements to the federal, state, and local governments surged by 43 per cent in 2024, reflecting a major boost in government revenue inflows.
According to the latest FAAC Quarterly Review released in Abuja on Tuesday, the Nigerian Extractive Industry Transparency Initiative (NEITI) disclosed that a total of N15.26 trillion was allocated to the three tiers of government within the year under review.
NEITI’s Acting Director, Communication & Stakeholders Management, Obiageli Onuorah, described the disbursements as a historic high, noting that the allocations surpassed previous years by a remarkable margin.
Key Drivers of Revenue Growth
The report attributed the surge in FAAC disbursements to sustained fiscal reforms by the Federal Government, particularly the removal of fuel subsidies and foreign exchange rate adjustments. These policies have significantly boosted oil revenue remittances and overall government earnings.
Speaking at the official release of the report in Abuja, NEITI’s Executive Secretary, Dr Orji Ogbonnaya Orji, highlighted the impact of these reforms on national and subnational finances. He noted that the withdrawal of fuel subsidies in mid-2023 reshaped revenue distribution and affected debt repayment deductions from state allocations.
Dr Orji stated that the objective of the report was to assess the sustainability of government borrowing, the fiscal implications of resource dependence, and the economic realities confronting states benefitting from the 13% derivation revenue from oil, gas, and solid minerals.
“The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potential,” he added.
Breakdown of FAAC Allocations
According to the NEITI report, FAAC disbursements in 2024 were as follows:
Federal Government: N4.95 trillion
State Governments: N5.81 trillion
Local Governments: N3.77 trillion
Total FAAC Disbursement (Including Derivation Revenue): N15.26 trillion
State governments recorded the highest percentage increase in allocations, jumping by 62% from N3.58 trillion in 2023 to N5.81 trillion in 2024. Local government councils saw a 47% increase, while the federal government’s share rose by 24% from N3.99 trillion in 2023.
The report highlighted that FAAC allocations grew by 66.2% over three years, rising from N9.18 trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant leap occurring between 2023 and 2024.
Economic Risks and Challenges
Despite the revenue boost, NEITI cautioned that economic risks associated with fiscal reforms must be managed effectively. Key risks identified include:
Inflationary pressures
Possible rise in debt servicing costs
Fiscal uncertainty for oil-dependent states
The agency urged governments at all levels to adopt innovative measures to cushion the impact of these economic challenges.
State-by-State Allocation Analysis
Lagos received the highest FAAC allocation in 2024, with N531.1 billion, followed by:
Delta State: N450.4 billion
Rivers State: N349.9 billion
Conversely, the least allocations went to:
Nasarawa State: N108.3 billion
Ebonyi State: N110 billion
Ekiti State: N111.9 billion
The report also showed that six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, collectively accounting for 33% of total state allocations. Meanwhile, the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—received only 11.5% of total allocations.
Debt Deductions Raise Fiscal Concerns
A total of N800 billion was deducted from states’ allocations for foreign debt servicing and contractual obligations, representing 12.3% of total state allocations.
Lagos State had the highest debt deduction, with N164.7 billion, followed by:
Kaduna State: N51.2 billion
Rivers State: N38.6 billion
Bauchi State: N37.2 billion
NEITI warned that many states with high debt burdens were among the lower FAAC recipients, raising concerns about debt sustainability and overall fiscal health.
With the federal and state governments increasingly reliant on oil revenue, the report emphasized the need for economic diversification, stronger financial management, and sustainable debt practices to ensure long-term fiscal stability.
