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Big money, small impact: Non-Performing Govs on fire over N9tn FAAC windfall
FAAC allocations to states surged by over N2tn in one year, according to an analysis of Federation Account disbursement data published by the National Bureau of Statistics highlighting the scale of the revenue windfall that flowed to subnational governments in 2025 amid higher federation inflows.
The sharp rise has triggered criticism from organised labour and opposition political parties, with the Nigeria Labour Congress warning that higher allocations have failed to deliver meaningful improvements in citizens’ welfare due to weak governance, misplaced priorities, and corruption at the state level.
Civil society organisations have also faulted state governments, accusing them of mismanaging the inflows and failing to translate increased revenues into visible development outcomes, while calling for stronger accountability and oversight.
Economists, meanwhile, say the surge has expanded states’ fiscal space but caution that heavy dependence on federally shared revenue and poor revenue management continue to undermine sustainable development at the subnational level.
The Federation Account disbursement data show that state governments received a total of N7.315tn from the Federation Account Allocation Committee in 2025, compared with N5.186tn in 2024. The year-on-year increase of roughly N2.13tn represents a jump of about 41 per cent in direct FAAC allocations to states.
When the constitutionally mandated 13 per cent derivation revenue is added, total inflows attributable to states climbed to N8.934tn (about N9tn) in 2025, up from N6.533tn in 2024, a rise of N2.4tn or 36.74 per cent.
This surge came against the backdrop of a sharp expansion in total FAAC distributions. Aggregate allocations to the three tiers of government, including derivation, rose from N15.259tn in 2024 to N21.897tn in 2025.
States therefore captured a substantial share of the overall increase, both in absolute terms and as a proportion of total federation revenues. Without the 13 per cent derivation component, states’ N7.315tn allocation in 2025 accounted for about 33.4 per cent of the N21.897tn total FAAC disbursement for the year, compared with roughly 34.0 per cent in 2024.
When derivation revenue is included, total state-linked receipts of N8.934tn represented about 40.8 per cent of total FAAC disbursements in 2025, down from around 42.8 per cent in 2024, indicating that while inflows grew in nominal terms, their relative share declined as allocations to all tiers expanded.
A closer look at monthly disbursements shows that state allocations improved steadily throughout 2025. States received N498.50bn in January, well above the N396.69bn recorded in January 2024.
Monthly allocations continued to trend higher, peaking at N727.17bn in October before easing to N601.73bn in December. By contrast, only two months in 2024 recorded allocations above N500bn, with the highest monthly figure being N549.79bn in December.
By the end of June 2025, states had already received over N3.32tn, compared with about N2.33tn in the first half of 2024, easing short-term liquidity pressures, particularly for states with heavy wage bills and debt service obligations.
Derivation revenue also played a critical role. In 2025, derivation payments rose to N1.619tn from N1.347tn in 2024, an increase of about N272bn or just over 20 per cent. Monthly derivation inflows were especially strong in September 2025, when oil-producing states shared N183.01bn, compared with N99.47bn in September 2024.
Despite the surge, states did not disproportionately outpace other tiers. Federal Government allocations rose from N4.951tn in 2024 to N7.613tn in 2025, while local government allocations increased from N3.774tn to N5.351tn.
Nevertheless, the impact on states is particularly significant given their responsibility for delivering education, healthcare, and infrastructure. The additional N2.4tn received in 2025 alone is equivalent to nearly half of what states received from FAAC in total in 2024.
The 10th edition of the BudgIT State of States Report, titled ‘A Decade of Subnational Fiscal Analysis: Growth, Decline and Middling Performance’, revealed that over 30 states rely heavily on FAAC allocations.
An executive of BudgIT said on Channels Television’s Politics Today programme, “At least thirty states, excluding Lagos, Ogun, and Enugu, relied on FAAC for more than sixty per cent of their recurrent revenue. Lagos remains an outlier, but Ogun and Enugu also seem to be performing quite well.
“In total, 31 states depended on FAAC for at least 80 per cent of their current revenue, which shows just how challenging the fiscal situation has become for many of them.
“For example, Lagos’s FAAC allocation rose from N4.24bn to N11.38bn, a massive increase that highlights how significant federation account transfers have become within a single fiscal year. Still, credit should go to the states that recorded strong year-on-year growth, as well as those that grew consistently over the ten-year period we reviewed.”
The report added that 29 states relied on FAAC receipts for at least half of their total revenue, 28 relied on it for at least 55 per cent, and 21 relied on it for over 70 per cent.
The BudgIT executives expressed concern that rising FAAC inflows were discouraging states from expanding internally generated revenue. This is “concerning because the more FAAC money states receive, the less incentive some of them have to develop their own internal revenue sources”.
They noted that “the proportion of IGR within total recurrent revenue declined slightly from 25.27 per cent in 2023 to 20.27 per cent in 2024, indicating continued dependence on federal transfers”.
The Managing Director of Optimus by Afrinvest, Dr Ayodeji Ebo, said, “These revenues are volatile and largely outside state control, making budgets vulnerable to oil price shocks. Over time, this approach also discourages ingenuity, as states become dependent on external inflows rather than building durable local revenue sources.”
A development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, said subnational governments are creating challenges for the federation through how they manage FAAC allocations.
He suggested “counterpart funding,” where states that increase their IGR receive proportional benefits, warning that without incentives, states would continue to rely heavily on Abuja. Ilias said, “While FAAC allocations are at unprecedented levels, they are not necessarily translating into improved living standards.”
NLC speaks
The country’s biggest labour union said rising FAAC allocations have failed to deliver meaningful benefits to citizens, blaming weak governance, misplaced priorities, and persistent corruption at the state level.
“Very few states are doing well in terms of how they deploy what they receive,” Assistant Secretary-General of the NLC, Onyeka Christopher, said. “The idea behind federal allocations is to bring the government closer to the grassroots, but unfortunately, in many states, this has not translated into the desired results for well-known reasons.”
The NLC added that, “Once people know there are no consequences, they will continue to steal public funds,” warning that kleptocracy continues to undermine development. “For FAAC to truly benefit the people, the issue of kleptocracy must be addressed. What are the EFCC and ICPC doing?” it asked.
The Eastern Bar Forum (EBF), the umbrella body of legal practitioners from Nigeria’s old Eastern Region, has commended the administration of Governor Hope Uzodimma after inspecting major infrastructure projects across Imo State, describing the state’s transformation as “real, visible and verifiable.”
The endorsement followed an extensive tour of key government projects during the Forum’s 2026 Quarterly Meeting and Convention in Owerri, where members unanimously passed a vote of confidence in the governor’s leadership and development agenda.
The convention attracted senior advocates, judges, jurists and legal practitioners from Imo, Abia, Anambra, Ebonyi, Enugu, Rivers, Bayelsa, Cross River and Akwa Ibom states.
The inspection team, led by EBF Governor, Barr. D.O. Nosike, was received by the Imo State Attorney-General and Commissioner for Justice, Barr. Paul Obinatu. Accompanied by officials from the Ministry of Works and Infrastructure Development, the delegation visited several landmark projects executed by the Uzodimma administration.
Among the projects inspected were the Emmanuel Iwuanyanwu International Convention Centre, the Control Post Flyover, reconstructed roads within Owerri Municipality, the Orashi Power Distribution Company, the refurbished Concord Hotel and the Imo Digital City Hub.
Speaking after the tour, members of the Forum expressed satisfaction with the quality, scale and strategic importance of the projects, describing them as clear evidence of a government committed to transforming Imo into a hub for investment, commerce and innovation.
According to the Forum, the inspection disproved claims that the administration’s achievements existed only in media reports, noting that the infrastructure they observed reflected deliberate planning, effective execution and prudent governance.
The legal body praised Governor Uzodimma for consistently pursuing developmental projects capable of driving economic growth and improving residents’ quality of life.
It identified the Orashi Power Distribution Company as a major investment with the potential to enhance electricity supply and support industrial growth across the state.
The Forum also highlighted the Imo Digital City Hub as one of the administration’s flagship legacy projects, commending its efforts to equip young people with skills in software development, robotics, website design, computer engineering, digital entrepreneurship and other technology-related fields.
The delegation further applauded the administration for the construction and rehabilitation of major road networks, including the Owerri-Orlu Expressway, Owerri-Onitsha Road, Owerri-Okigwe Road, Owerri-Mbaise Road, Owerri-Port Harcourt Road, as well as several internal roads across the state.
Members observed that by investing in both physical infrastructure and human capital development, the Uzodimma administration was laying a solid foundation for sustainable economic growth.
Consequently, the Forum unanimously adopted a vote of confidence in Governor Uzodimma, applauding his leadership, developmental vision and commitment to rebuilding Imo State.
The Eastern Bar Forum explained that its periodic inspection of government projects is part of its institutional responsibility to independently assess governance and development efforts across the states of the old Eastern Region.
The convention concluded in Owerri on Sunday with discussions on legal practice, constitutional issues, justice sector reforms and national development, with delegates maintaining that their findings in Imo underscored the value of transparent governance backed by measurable results.
Former Minister of Innovation, Science and Technology, Uche Nnaji, on Monday pleaded not guilty to a six-count charge bordering on alleged certificate forgery, false declaration and money laundering before the Federal High Court in Abuja.
Nnaji was arraigned by the Independent Corrupt Practices and Other Related Offences Commission (ICPC) before Justice Joyce Abdulmalik over allegations that he submitted forged academic credentials, including a University of Nigeria, Nsukka (UNN) degree certificate and a National Youth Service Corps (NYSC) discharge certificate during his ministerial screening in 2023.
The anti-graft agency also accused the former minister of fraudulently receiving about ₦29.5 million in salaries and emoluments, alongside money laundering-related offences.
After taking his plea, Nnaji’s counsel, Senior Advocate of Nigeria (SAN) Ogwu Onoja, applied for bail. The prosecution did not oppose the application, leaving the decision to the court.
Justice Abdulmalik subsequently granted Nnaji bail in the sum of ₦20 million with one surety in like sum.
The court ruled that the surety must be a federal civil servant not below Grade Level 15 with a verifiable residence of at least four years. The surety is also required to provide evidence of employment, including an appointment letter and salary slips for the last three months, subject to verification by the relevant authority.
The judge further directed Nnaji to surrender his international passport and all other travel documents pending the determination of the case.
The matter was adjourned until September 21, 2026, for the commencement of trial.
Nnaji’s prosecution follows his arrest by the ICPC on July 1 after the execution of a bench warrant issued by the Federal High Court. The commission alleged that he repeatedly failed to honour invitations during its investigation into the alleged forgery of his academic credentials.
The former minister resigned from office in October 2025 after the allegations became public. However, he has consistently maintained his innocence, insisting that his resignation was not an admission of guilt but a step taken to allow due process to take its course.
Minister of Works, Senator David Umahi, has announced legal action against individuals circulating what he described as false and defamatory reports surrounding the death of a nurse allegedly linked to his residence.
Speaking on Sunday while inspecting the Ebonyi section of the Calabar–Ebonyi–Benue–Nasarawa–Abuja Super Highway, Umahi said he had instructed his legal team to prosecute those responsible for spreading the claims.
Social media reports had alleged secrecy surrounding the death of nurse Mary Habila inside the minister’s compound in Ebonyi State.
Rejecting the allegations, Umahi explained that the deceased’s family became alarmed after she failed to respond to calls, forced open her room, and immediately sought medical assistance.
“The family broke the girl’s door, called doctors from DUFUTH, who took her to the hospital and did everything possible to revive her, but she could not be saved,” he said.
According to the minister, the incident was promptly reported to the police, making allegations of a cover-up baseless.
“The family reported the matter to the police, so where is the secrecy?” he asked.
Umahi disclosed that the deceased’s parents, who are currently in Ebonyi State, would address journalists and also institute legal action against those spreading what he described as false information.
He added that he had directed that an autopsy be conducted, subject to the approval of the deceased’s parents.
Condemning what he described as the exploitation of a tragic death for online content, Umahi warned against spreading unverified information.
“You don’t create content with someone’s death,” he said.
The minister described the late Mary Habila as a dedicated nurse at the David Umahi Federal University Teaching Hospital, noting that she had attended to him professionally for about three years.
Umahi also dismissed reports linking him to an alleged kidnap suspect said to have been recruited into the Ebonyi security outfit, Ebubeagu.
“Can those making these allegations produce a photograph showing me with the person?” he asked.
He maintained that he neither knew the suspect nor could reasonably be expected to know everyone recruited into the security outfit during his tenure as governor of Ebonyi State.
Reaffirming his opposition to kidnapping, Umahi said the crime deserves severe punishment and insisted the allegations against him were politically motivated. He vowed to continue defending his reputation through legal means.
Former Minister of Innovation, Science and Technology, Uche Nnaji, on Monday appeared before the Federal High Court in Abuja to answer charges of alleged certificate forgery and false declaration brought against him by the Independent Corrupt Practices and Other Related Offences Commission (ICPC).
Nnaji arrived at the court ahead of proceedings before Justice Joyce Abdulmalik, where he was scheduled to be arraigned on allegations bordering on forgery and the submission of false information during his ministerial appointment process.
The ICPC accused the former minister of presenting allegedly forged academic credentials and making false declarations in documents submitted to relevant public authorities while seeking nomination and screening for ministerial office in 2023.
The charges followed the conclusion of an investigation launched after a petition questioned the authenticity of the certificates reportedly presented by Nnaji during his nomination and confirmation.
Before filing the charges, the anti-graft agency had obtained a 14-day remand order against the former minister in June, alleging that he repeatedly failed to honour several invitations for questioning despite multiple notices.
Nnaji subsequently challenged the remand order, seeking to have it set aside, but the commission proceeded with criminal prosecution after completing its investigation.
The allegations attracted national attention following an investigative report published in October 2025, which claimed that the former minister forged the academic certificates allegedly used to secure his appointment.
Despite the accusations, Nnaji has consistently denied any wrongdoing and is expected to enter his plea as the case begins before the Federal High Court.
Shettima’s confirmation for the 2027 presidential election has reopened debate over the APC’s Muslim-Muslim ticket, with political parties and stakeholders divided over whether religion or competence should shape leadership choices.
The APC’s decision ended months of speculation that Tinubu could replace Shettima with a Northern Christian, while reviving arguments that dominated the build-up to the 2023 election.
Although critics had argued that the same-faith ticket undermined Nigeria’s religious balance, Tinubu and Shettima won the presidency, and the ruling party has now opted to retain the combination for a second term.
While some opposition parties, including the All Progressives Grand Alliance and the Young Progressives Party, have downplayed concerns over the same-faith ticket, others have warned that religious balance remains an important factor in Nigeria’s politics.
The renewed debate followed the APC’s confirmation on Friday that Tinubu would contest the 2027 election with Shettima, a move that effectively ended months of speculation that the President could pick a Northern Christian as his running mate.
Ahead of the announcement, several names had been linked to the position, including the Minister of Defence, Gen Christopher Musa (retd.); the Catholic Bishop of Sokoto Diocese, Most Rev Hassan Kukah; and former Speaker of the House of Representatives, Yakubu Dogara.
The APC’s decision has revived arguments that dominated the 2023 election after Tinubu, a Muslim from the South-West, selected Shettima, also a Muslim from the North-East, as his running mate.
Critics had argued that the ticket broke with Nigeria’s tradition of balancing presidential tickets along religious lines to reflect the country’s diversity. However, Tinubu and Shettima went on to win the election, defeating candidates of the Peoples Democratic Party, Atiku Abubakar; the Labour Party, Peter Obi; and the New Nigeria Peoples Party, Rabiu Kwankwaso.
Reacting to the development, APGA said the focus of elections should be on leadership capacity rather than religion.
The party’s National Publicity Secretary, Ejimofor Opara, said Nigeria must move beyond identity politics and judge leaders by their performance.
“Competence should remain the defining issue in 2027, not whether candidates are Muslims or Christians,” he said.
The Young Progressives Party also argued that character, competence and integrity should outweigh religious or ethnic considerations in leadership selection.
Its spokesman, Wale Egbeola-Martins, said Nigeria’s major challenge had been poor leadership rather than the religious identities of those in power.
“The real challenge confronting our nation since the return to democratic rule has not been the ethnic or religious identity of those in power, but the persistent deficit of purposeful and accountable leadership,” he said.
The party said it would continue to support politics based on merit, service and national interest rather than religious or ethnic considerations.
APC defends retention
Meanwhile, the APC has defended its decision to retain Shettima, insisting that the choice was based on national interest and a careful assessment of political realities.
The party’s Director of Publicity, Bala Ibrahim, said the Muslim-Muslim ticket had not produced the religious tensions predicted by critics ahead of the 2023 election.
“The decision was reached after a careful assessment of the situation. The party is conscious of religious sensitivities but is also mindful of the broader interests of Nigerians,” he said.
Ibrahim dismissed fears that the ticket could fuel religious division, arguing that the administration had promoted interfaith harmony since assuming office.
The National Chairman of the Action Democratic Party, Yabagi Yusuf, and a leader of the Coalition of United Political Parties, Mark Adebayo, also argued that issues such as security, the economy and governance performance would dominate the 2027 campaign rather than religious identity.
Yusuf said the APC’s decision was largely influenced by electoral considerations, particularly the need to secure support across key voting blocs.
He argued that while religious considerations remain part of political discussions, parties ultimately consider the electoral strength and acceptability of their candidates when making strategic decisions.
Yusuf said the APC’s decision was driven by electoral calculations rather than religious considerations.
According to him, political parties are primarily concerned with assembling tickets capable of attracting the broadest electoral support.
“It’s politics. They must have done their calculations and concluded that this is their best chance of winning. In the end, elections are about where the votes are,” he said.
The immediate past National Publicity Secretary of the Coalition of United Political Parties, Mark Adebayo, also argued that the Muslim-Muslim ticket is unlikely to generate the level of controversy it did in 2023.
He said issues such as security, the economy and governance would dominate the 2027 campaign.
The Ijaw Youths Council also dismissed religious identity as the basis for evaluating political leaders.
The President of IYC Worldwide, Jonathan Lokpobiri, said Nigerians should focus on competence and good governance rather than the faith of candidates.
“What we need is a competent, focused and compassionate leader who can take difficult decisions and improve the lives of Nigerians. Religion should not be the yardstick for leadership,” he said.
Groups oppose ticket
However, the Coalition of South East Youth Leaders criticised the APC’s decision, describing the retention of the Muslim-Muslim ticket as insensitive to Nigeria’s religious diversity.
Its President-General, Goodluck Ibem, said overlooking the opportunity to nominate a Northern Christian could deepen feelings of exclusion among many Nigerians.
“In a nation as religiously and culturally diverse as ours, leadership must not only be fair but must also be seen to be fair,” he said, urging the APC to embrace greater inclusiveness.
Similarly, the South-South Youths Initiative rejected Shettima’s renomination.
Its National President, Imeabe Oscar, argued that the APC’s decision was politically motivated and alleged that the party retained the Vice President largely for electoral advantage in Northern Nigeria.
‘Christians feel excluded’
The National President of the Middle Belt Forum, Dr Pogu Bitrus, criticised the APC’s decision, describing the retention of the Muslim-Muslim ticket as a slight on Christian Nigerians.
“To retain a Muslim-Muslim ticket after 2023 sends the wrong signal in a country as religiously diverse as Nigeria,” he said, urging the APC to reconsider its decision in the interest of national unity.
The Chairman of the Centre for Accountability and Open Leadership, Debo Adeniran, however, said fears expressed over the Muslim-Muslim ticket before the 2023 election had not materialised.
“The fears widely expressed in 2022 did not happen. The President and the Vice President have worked together, and that relationship appears to have remained stable,” he said.
Adeniran added that Shettima’s loyalty and working relationship with Tinubu may have influenced the President’s decision to retain him.
APC backs Shettima
Stakeholders of the APC in Abia State also defended the President’s decision.
The state chairman of the party, Chijioke Chukwu, said there was no justification for replacing Shettima, describing the President and Vice President as a team that had worked harmoniously since assuming office.
“It’s unreasonable to drop him (Shettima). Tinubu is a Muslim from the south and has been supporting Christians. Going for his second tenure, it is proper for the President to pick from the North. They have collaborated well without any problems between the Vice President and the President. There is no reason for a new VP. To us, this is a wonderful decision,” he said.
Similarly, Ohanaeze chieftain Justice Rowland Ajuzieogu said Tinubu was constitutionally entitled to choose his running mate, adding that Shettima had remained loyal throughout the administration.
“Tinubu looks at loyalty. Shetima is loyal.”
Industrialist and politician Sam Ohuabunwa also backed the decision, saying the Tinubu-Shettima ticket had already secured victory in 2023 and there was no compelling reason to alter it.
“Since Tinubu made the choice, heaven did not fall. He can do it again, and I believe that is the right thing to do.”
Afenifere faults decision
A faction of Afenifere led by Oba Olaitan Oladapo, however, faulted the renomination of Shettima.
Its National Publicity Secretary, Justice Faloye, said retaining another Muslim-Muslim ticket failed to reflect fairness, religious balance and inclusiveness in a multi-faith country.
Speaking on Tinubu’s choice of Shettima, Faloye said “President Tinubu has continued to show disregard for federal character and religious balance and fairness.
“Most important is that we can expect more of the same if he chooses to coronate himself in 2027. May God save Nigeria sociopolitically and economically from this regime.”
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