The Federal Government, 36 states and 774 local government councils shared N2.338 trillion from the Federation Account in August 2026, even as Nigeria’s gross statutory revenue suffered a staggering N1.508 trillion month-on-month decline.

The sharp revenue contraction, disclosed at the September meeting of the Federation Account Allocation Committee (FAAC) in Abuja on Thursday, underscores renewed pressure on government finances despite stronger collections from Value Added Tax (VAT).

According to the FAAC communiqué, gross statutory revenue fell from N4.359 trillion in July to N2.850 trillion in August, representing a decline of about 35 per cent in one month.

The fall came despite significant increases recorded in Petroleum Profit Tax (PPT), Hydrocarbon Tax (HT), VAT, Customs and Excise Duty during the month.

The weaker statutory inflow was partly reflected in the overall revenue available for distribution. A total gross revenue of N3.685 trillion accrued to the Federation Account in August, but N125.142 billion was deducted as cost of collection, while N1.221 trillion went into transfers, refunds and savings, leaving N2.338 trillion for distribution.

The distributable amount comprised N1.565 trillion in statutory revenue and N773.233 billion from VAT.

In contrast to the statutory revenue decline, VAT continued to strengthen, with gross VAT collections rising to N834.843 billion in August from N793.968 billion in July, an increase of N40.875 billion.

The figures point to an increasingly important role for consumption-based taxation in sustaining government revenue as petroleum-related and other statutory revenue streams fluctuate.

From the N2.338 trillion shared, the Federal Government received N804.897 billion, while the 36 state governments received N794.313 billion.

The local government councils received N555.142 billion, while N184.388 billion was distributed to benefiting states as the 13 per cent derivation from mineral revenue.

A breakdown of the statutory allocation showed that the Federal Government received N727.573 billion, states N369.035 billion and local governments N284.511 billion. Another N184.388 billion went to mineral-producing states as derivation revenue.

From the N773.233 billion distributable VAT revenue, the Federal Government received N77.323 billion, states N425.278 billion and local governments N270.632 billion.

The revenue performance, however, was mixed across key tax and petroleum-related sources.

FAAC reported significant increases in Petroleum Profit Tax, Hydrocarbon Tax, VAT, Customs and Excise Tariffs, while Companies Income Tax, Capital Gains Tax, Stamp Duty Tax, petroleum royalties, mineral royalties, gas-flaring penalties, import duty, rental gas-flaring fees and miscellaneous oil revenue declined considerably.

The latest allocation means governments across the three tiers will have to contend with a revenue environment in which higher VAT collections are being accompanied by substantial volatility in statutory receipts.

The development is particularly significant for states and local governments, whose ability to finance salaries, infrastructure and social services remains heavily dependent on monthly Federation Account allocations.