The Federation Account Allocation Committee (FAAC) convened its August 2026 meeting in Owerri, the Imo State capital, on the margins of the ongoing National Council of Federation and Economic Development (NACOFED) – pairing the Committee’s routine monthly business with a broader push to strengthen fiscal fundamentals across Nigeria’s federating units.
Beyond approving the sharing of July 2026 revenue, the gathering was used to chart a path for states to convert Nigeria’s recent revenue growth into lasting fiscal strength, headlined by a dedicated retreat session for Commissioners of Finance and Accountant-General on subnational fiscal fitness.
FEDERATION TO TURN RISING ALLOCATIONS INTO LASTING FISCAL STRENGTH AND SOCIAL INVESTMENTS
The FAAC session discussed state of the economy, fiscal governance, and federal and subnational fiscal fitness. The session set out the scale of the recent revenue windfall and called for deliberate reform to convert it into durable fiscal strength rather than a temporary gain.
The meeting noted that gross FAAC have risen significantly over the past three years driven by subsidy removal, exchange-rate unification and tax reform.
The session highlighted the impact of the Nigeria Tax Act 2025, effective 1 January 2026: states’ share of VAT revenue rises from 50% to 55% (the Federal Government’s falls from 15% to 10%), while 30% of the states’ VAT pool is now allocated by place of consumption rather than a company’s registered headquarters – directly linking a state’s own economic activity to the size of its federation allocation.
SIX “VITAL SIGNS” FEDERAL AND STATES WERE URGED TO STRENGTHEN
* Revenue quality – diversifying own-source income beyond a narrow tax base.
* Asset strength – inventorying and putting idle state-owned assets to productive use.
* Growth engine – measuring and expanding the state and national economy, including through official state GDP data.
* Capital attraction – a stable, predictable business environment and structured investor engagement.
* Human capital – sustained investment in education and health as the foundation of future development.
* Institutional plumbing – timely, audited and transparent public accounts.All tiers of government were encouraged to use the current period of strong revenue growth to institutionalise reforms including comprehensive asset registers, payroll verification, and timely publication of audited accounts over the next twelve months.
BEYOND THE NUMBERS: STRENGTHENING THE FEDERATION’S FISCAL ARCHITECTURE
* Reaffirmed commitment to full, transparent and timely remittance of collectible revenue by all revenue-generating agencies into the Federation Account, ahead of the accounts reconciliation exercise for the period.
* Continued emphasis on diversifying the federation’s revenue base beyond oil, in line with ongoing tax administration and non-oil revenue mobilisation reforms.
* Alignment between FAAC’s technical work and the NACOFED platform, reinforcing coordination between the Federal Government and States on fiscal policy, revenue-sharing and shared economic development priorities.
* Continued monitoring of solid minerals and other non-oil royalty streams as a growth area for future federation revenue.
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 (MDAs), and reiterated its support for reforms aimed at improving the predictability and growth of allocations to all three tiers of government.
