Gross Federation Account Allocation Committee (FAAC) revenue in the first half of 2026 stood at N18.72 trillion, while actual disbursements to the three tiers of government totalled N12.59 trillion, or 67 per cent of aggregate revenue generated in the reference period, according to a report released at the weekend by Agora Policy.
The remaining sum of N6.13 trillion (33 per cent) was deducted for savings, interventions, refunds, transfers, and collection costs.
The report showed that Lagos State remained the largest recipient of Gross FAAC allocations in the first half of 2026, receiving N477.05 billion, while Nasarawa State received the least at N72.78 billion.
According to the report, statutory revenue remained the dominant source of FAAC receipts, contributing N13.95 trillion – equivalent to 75 per cent of the total gross revenue. In comparison, Value Added Tax (VAT) accounted for N4.77 trillion (25 per cent).
The N12.59 trillion total distributable revenue and augmentation for the first half of 2026 was shared across the three tiers of government.
Available figures showed that year-on-year distributable revenue rose by 24.4 per cent from N10.12 trillion in H1 2025 to N12.59 trillion in H1 2026.
Over the same period, FAAC deductions declined by 16 per cent, falling from N7.30 trillion in the first half of 2025 to N6.13 trillion in the corresponding period of 2026.
However, of the N12.59 trillion distributable revenue in the first half of 2026, the federal government received N4.57 trillion, the 36 states shared N4.47 trillion, while the 774 local government councils received N3.13 trillion.
A total of N864.89 billion or 13 per cent derivation allocation went to oil-producing states.
Also, the distribution of Gross FAAC revenue shifted in favour of the federal government in the first half of 2026. Unlike the corresponding period of 2025, when the 36 states collectively received a slightly larger share of distributable FAAC allocations than the federal government, the federal government regained the top spot in H1 2026.
In H1 2025, the states received a combined N3.43 trillion, marginally exceeding the federal government’s N3.39 trillion.
But a further breakdown of the N6.13 trillion deducted for savings, interventions, refunds, transfers, and the cost of collection showed that Savings and Interventions accounted for the largest share, at N2.30 trillion and N2.14 trillion, respectively.
These two accounted for the bulk of deductions made during the half-year period; refunds totaled N714.51 billion, while the Cost of Collection stood at N665.48 billion. Transfers, at N311.84 billion, were the smallest deduction in the review period.
It also emerged from the report that between the first half of 2021 and the first half of 2026, gross FAAC revenue increased significantly by 323 per cent from N4.43 trillion to N18.72 trillion.
The N18.72 trillion generated in just the first six months of 2026 exceeded the entire gross FAAC revenue recorded in 2021, 2022, and 2023 in nominal terms.
Also significant is that the N18.72 trillion generated between January and June 2026 accounted for 52 per cent of the N35.81 trillion in gross FAAC revenue recorded for the whole of 2025.
“If this trend of revenue performance continues in the second half of the year, the gross FAAC revenue for 2026 may exceed that of 2025,” Agora Policy observed.
But a notable highlight in FAAC revenue during the first half of 2026 was the sharp decline in refunds, which fell by 80 percent compared with the corresponding period in 2025, significantly reducing their share of FAAC deductions.
“In H1 2025, refunds, largely comprising payments to states and local governments, accounted for 47% of total FAAC deductions. By H1 2026, that share had dropped to just 12%.
On the other hand, savings from Gross FAAC revenue increased substantially by 151%. They became the largest component of FAAC deductions in H1 2026, accounting for 37% of total deductions from 15% in the corresponding period of 2025.
Despite this, more money was allocated to Interventions between April and June 2026, particularly for national and state security, and state infrastructure.
“The breakdown of allocations to Interventions in the first half of 2026 is as follows: National Security Fund (N 1 trillion), Infrastructure Development Fund for States (N777 billion), Military Intervention Fund (N250 billion) and Intervention for State Security (N108 billion),” the report said.
As in the first half of 2025, June recorded the highest Gross FAAC revenue in H1 2026, at N4.50 trillion. This was likely driven by higher Company Income Tax (CIT) collections and other annual tax remittances typically due in June, the report noted.
In contrast, February recorded the lowest Gross FAAC revenue at N2.23 trillion, mirroring the trend observed in the corresponding period of 2025.
In terms of year-on-year growth, Lagos and Oyo states recorded the largest increases in Gross FAAC allocations at 41.5 per cent and 36.4 per cent, respectively.
By contrast, Edo and Delta states posted the lowest increase, with their allocations rising by 16.4 per cent and 16.8 per cent, respectively.
Meanwhile, Lagos remained the largest recipient of Gross FAAC allocations in the first half of 2026, receiving N477.05 billion, while Nasarawa received the least at N72.78 billion.
The composition of the top and bottom recipients changed slightly compared to H1 2025. Ondo entered the top 10 states by Gross FAAC allocation, replacing Edo, which dropped out of the top 10.
At the lower end of the ranking, Ogun joined the bottom 10 states, while Zamfara moved out of the group.
Twenty of the 36 states received between N100 billion and N300 billion in gross FAAC allocation.
Nine states received less than N100 billion, while Lagos, Delta, Rivers and Akwa Ibom each received over N300 billion.
The report found that having more local governments does not necessarily translate into higher FAAC allocations.
Although Kano has the highest number of local governments (44), its combined gross FAAC allocation of N163.5 billion, in proportion to its local governments, was only the second-highest and was nearly half of the N310.85 billion received by the 20 local governments of Lagos.
Similarly, Rivers, with 23 local governments, received a higher gross FAAC allocation to its local governments than Oyo and Katsina, despite having 33 and 34 local councils, respectively.
“This pattern appears recent, and is likely on account of the growing prominence of Value Added Tax (VAT) as a source of FAAC revenue. LGAs receive 35% of VAT revenue, and states with urban and commercial LGAs with a high level of consumption, like Lagos and Rivers, stand at an advantage, even with fewer numbers of LGAs,” the report noted.
According to the report, the first half of 2026 saw a marginally better FAAC performance than the corresponding period in 2025, with higher gross FAAC revenue, a larger distributable pool, and lower deductions.
Ndubuisi Francis
