Nigeria’s state governments have rejected deductions from their Federation Account allocations. Revenue available for sharing fell sharply in August 2026. FAAC documents showed the three tiers of government shared ₦2.339 trillion in September. That was ₦668.4 billion below the previous month. Distributable statutory revenue declined by ₦717.08 billion to ₦1.566 trillion.
FAAC distributes monthly revenue among federal, state and local governments. The allocations are a lifeline for states. Many depend on them for salaries and projects. Deductions for debts, Paris Club refunds and other obligations reduce the amounts. States have complained for years. In 2023, governors demanded a review of deductions. In 2024, the Nigeria Governors’ Forum raised the issue. The complaints persist because the deductions are opaque.
State Accountants-General called for ₦240 billion in proposed savings to be redistributed. They demanded a previously proposed ₦250 billion augmentation. They sought the suspension of Paris Club refund deductions to local governments. They argued that payments resumed without adequate consultation or reconciliation. Representatives from several states said the deductions were worsening fiscal pressures. They criticised communication from federal authorities. VAT revenue, however, increased to ₦773.23 billion from ₦724.46 billion.
The dispute reflects a structural problem. States rely on oil revenue. Oil revenue is volatile. The naira’s depreciation affects dollar-denominated revenue. The federation account is stretched. Deductions reduce what is available. States face salary arrears and project delays.
The timing is sensitive. The 2027 election is approaching. Governors need funds to campaign and deliver. They are pressing the federal government for relief.
Winners: The Federal Government, which collects the deductions. Creditors, who receive payments. Local governments, if they receive their share. Losers: States, which face lower allocations. Workers, if salaries are delayed. Residents, if projects stall. The Accountants-General, whose demands may be ignored.
Bottom Line: States rejected deductions. Revenue fell by ₦668.4 billion. The deductions are opaque. States need clarity. The federation account is under pressure. The federal government must respond.