State allocations rose 25.8% to N4.54tn in H1 2026, with Lagos emerging as the biggest beneficiary despite receiving no oil derivation revenue……
Lagos State emerged as Nigeria’s biggest beneficiary of Federation Account allocations in the first half of 2026, overtaking Delta State as stronger Value Added Tax (VAT) receipts reshaped the ranking of the country’s top recipients.
The 10 highest-earning states received a combined N2.16 trillion in net Federation Account Allocation Committee (FAAC) disbursements between January and June 2026, up from N1.74 trillion in the corresponding period of 2025.
That represents an increase of N416.83 billion, or 23.97 per cent, year-on-year.
Across all 36 states, however, the increase was even stronger. Total net FAAC disbursements climbed from N3.61 trillion in H1 2025 to N4.54 trillion in H1 2026, representing a 25.77 per cent increase.
Despite the higher allocations, the share going to the top 10 states declined slightly, from about 48.16 per cent to 47.47 per cent.
In other words, roughly N48 out of every N100 distributed to state governments went to just 10 states during the period.
Lagos takes the lead
Lagos recorded the biggest jump among the leading states, receiving N365.78 billion in net FAAC disbursements during the six-month period.
The figure represents a N128.86 billion increase, or 54.39 per cent, from the N236.92 billion received in H1 2025.
The performance pushed Lagos from third place last year to the top of the 2026 ranking.
Unlike the oil-producing states that benefit substantially from the 13 per cent derivation principle, Lagos’ position was driven overwhelmingly by its contribution to the VAT pool.
The state received N344.06 billion in net VAT, alongside N10.91 billion in net statutory revenue, N3.31 billion from the Electronic Money Transfer Levy (EMTL) and N5.05 billion in non-oil revenue augmentation.
Lagos alone accounted for 16.96 per cent of the total net FAAC disbursement to all 36 states during the period.
Its performance underscores the growing importance of economic activity and VAT generation in determining how much states receive from the Federation Account.
Delta slips to second despite N331bn allocation
Delta State dropped from first place in H1 2025 to second in the latest ranking, despite receiving a larger allocation.
The state received N331.43 billion, compared with N299.96 billion a year earlier, representing a 10.49 per cent increase.
Delta’s position remained heavily influenced by its oil-producing status. It received N229.71 billion in derivation revenue, the highest derivation inflow among the states in the top 10.
Its net statutory allocation stood at N262.54 billion, while VAT contributed N63.39 billion.
The state also received N3.83 billion in non-oil revenue augmentation and about N510.42 million from EMTL.
Rivers remains third
Rivers State retained a strong position but fell from second place in H1 2025 to third this year after Lagos surged ahead.
The state received N295.99 billion, compared with N264.90 billion in the previous year, representing an increase of N31.09 billion, or 11.74 per cent.
Rivers received N117.33 billion in derivation revenue, reflecting its status as one of Nigeria’s major oil-producing states.
It also recorded N145.49 billion in net VAT, making it one of the strongest beneficiaries of the VAT pool among the states reviewed.
Its net statutory disbursement stood at N144.63 billion, while non-oil revenue augmentation added N4.07 billion.
Akwa Ibom and Bayelsa hold their positions
Akwa Ibom remained fourth, with its net FAAC allocation rising to N270.27 billion from N230.99 billion in H1 2025.
The increase of N39.28 billion represented 17 per cent growth.
The state received N169.29 billion in derivation revenue, alongside N207.73 billion in net statutory allocation and N57.13 billion in VAT.
Bayelsa also retained fifth place, receiving N266.72 billion, up from N229.56 billion in the corresponding period.
Its allocation increased by N37.16 billion, or 16.19 per cent.
Bayelsa’s position was similarly boosted by oil-related revenue, with N169.26 billion coming from derivation. Its net statutory disbursement stood at N203.91 billion, while VAT contributed N58.13 billion.
Kano and Oyo benefit from VAT strength
The middle of the ranking shows that large oil production is not the only route to substantial FAAC receipts.
Kano retained sixth place after receiving N152.57 billion, compared with N120.04 billion in H1 2025.
The state’s allocation increased by N32.52 billion, or 27.09 per cent.
Kano’s performance was supported by N79.42 billion in VAT, as well as N63.49 billion in net statutory allocation and N5.98 billion in non-oil revenue augmentation.
Oyo remained seventh but recorded one of the strongest growth rates among the leading states.
Its allocation jumped from N95.28 billion to N139.09 billion, representing a 45.99 per cent increase.
The state’s biggest source was again VAT, which contributed N97.09 billion to its net allocation.
Oyo’s net statutory disbursement stood at N34.92 billion, while non-oil revenue augmentation contributed N4.23 billion.
Ondo, Jigawa and Borno complete the top 10
Ondo moved from 10th to eighth place after its net FAAC disbursement increased to N113.04 billion from N88.11 billion.
The state’s allocation rose by 28.29 per cent, supported by both statutory revenue and its oil-related derivation receipts.
Ondo received N21.73 billion in derivation revenue, while net statutory allocation stood at N57.12 billion and VAT at N50.58 billion.
Jigawa recorded one of the biggest improvements in the rankings, jumping from 13th place in H1 2025 to ninth in H1 2026.
The state received N111.61 billion, up from N85.62 billion, representing a 30.36 per cent increase.
Its allocation included N49.01 billion in net statutory revenue and N55.89 billion in VAT.
Borno completed the top 10 after moving up from 11th place.
The state received N109.65 billion, compared with N87.94 billion in H1 2025, representing a 24.69 per cent increase.
Borno’s allocation consisted largely of N48.69 billion in net statutory revenue and N53.57 billion in VAT, with another N4.69 billion coming from non-oil revenue augmentation.
Oil still dominates derivation revenue
Despite Lagos’ dramatic rise, oil-producing states continued to dominate the derivation component of FAAC distributions.
Delta, Akwa Ibom, Bayelsa, Rivers and Ondo collectively received more than N707 billion in derivation revenue during H1 2026, accounting for the overwhelming majority of derivation funds shared during the period.
The picture is markedly different when VAT is considered.
Lagos’ N344.06 billion VAT allocation illustrates how states with large commercial and consumer markets can generate substantial FAAC receipts without relying on oil derivation.
Kano and Oyo also ranked strongly on the back of VAT, reflecting their large populations, commercial activity and consumption bases.
Across the top 10 states, the group accounted for 92.66 per cent of derivation revenue, 53.25 per cent of net statutory disbursements, 44.02 per cent of net VAT disbursements and 41.04 per cent of EMTL distributions.
Overall, the top 10 states represented 46.49 per cent of total gross disbursements to states during the period.
What the H1 figures reveal
The latest FAAC figures point to a changing pattern in the distribution of federally collected revenue.
Oil-producing states remain major beneficiaries because of the constitutional 13 per cent derivation arrangement. However, the growing contribution of VAT means states with large formal economies and strong consumption bases can also command significant shares of federally distributed revenue.
Lagos provides the clearest example.
Its rise from third place to first was not driven by derivation revenue but by the sheer scale of VAT generated within the state.
At the same time, the overall increase in state allocations suggests that the pool available for distribution expanded considerably in the first half of 2026.
With total net FAAC disbursements to states rising by 25.77 per cent to N4.54 trillion, the latest figures show that a combination of oil production, statutory revenue, VAT generation and other federally collected revenues is increasingly shaping the financial position of Nigeria’s state governments.
For state governments, the implication is significant: while oil remains a major source of federal revenue, the ability to generate economic activity and capture VAT is becoming an increasingly important factor in determining how much money ultimately flows into state coffers.
