SPECIAL REPORT: Huge FAAC Allocations, Little Development in States
By Abdul Ozumi
For years, public anger over Nigeria’s economic hardship has been directed almost entirely at the federal government. Whether it is inflation, poor roads, unemployment, collapsing schools or weak healthcare, Abuja has become the default target. Yet the numbers tell a different story.
Since President Bola Tinubu removed petrol subsidy in May 2023 and unified the foreign exchange market, the amount of money shared monthly among the three tiers of government has increased dramatically.
State governments are among the biggest beneficiaries of these reforms, receiving record allocations from the Federation Account Allocation Committee (FAAC).
The question Nigerians should now ask is simple: Where has all the money gone?
Before subsidy removal, total monthly FAAC distributions generally ranged between ₦700 billion and ₦1 trillion. After the reforms, monthly allocations surged to between ₦1.3 trillion and over ₦2 trillion, with several months setting new records.
The impact on states has been significant.
According to the Nigeria Extractive Industries Transparency Initiative (NEITI), state governments received ₦2.75 trillion in FAAC allocations in 2022. That rose to ₦3.92 trillion in 2023, and climbed further to about ₦5.38 trillion in 2024, an increase of almost 95 percent in just two years.
NEITI also found that in the first seven months of 2024 alone, states received ₦3.5 trillion, representing 42.6 percent of all FAAC distributions, the largest share among the three tiers of government.
Several states recorded particularly sharp increases after subsidy removal. Data compiled from official FAAC figures showed that Nasarawa, Enugu, Anambra, Ogun, Ebonyi, Kogi, Bauchi, Plateau, Niger and Sokoto experienced some of the highest growth in monthly allocations.
Yet many citizens see little difference
Despite this unprecedented increase in revenue, many communities continue to struggle with poor roads, unpaid salaries, inadequate hospitals, failing schools and a lack of potable water.
This disconnect raises uncomfortable questions.
If states are receiving nearly twice what they collected before subsidy removal, why are development outcomes not improving at the same pace?
The answer cannot always be Abuja.
While inflation has increased the cost of governance, it has also expanded government revenues. The challenge is no longer only about how much money is available but how effectively it is spent.
Perhaps the biggest casualty of Nigeria’s governance crisis is the local government system.
The 774 local governments were created to bring governance closer to the people. Primary healthcare, basic education, rural roads, markets, sanitation and community development all fall largely within their responsibilities.
Yet in many states, local governments exist only on paper. For decades, allocations meant for councils have passed through state-local government joint accounts, giving governors significant influence over local government finances.
The consequences are visible across Nigeria: abandoned health centres, uncompleted rural roads, non-functional markets, poor sanitation and weak primary schools.
Official data show that between January 2022 and June 2024, local governments received nearly ₦6.92 trillion through FAAC. Alallocations also increased substantially after subsidy removal.
However, many communities say they have seen little evidence that these larger allocations translated into improved grassroots services.
The Supreme Court’s landmark judgment affirming the financial autonomy of local governments was widely welcomed as a potential turning point.
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The court ruled that funds belonging to local governments should not be withheld by state governments. Yet implementation has remained uneven, with reports indicating that allocations in several instances continued to pass through joint accounts months after the judgment.
Without genuine financial autonomy, local governments cannot function as effective engines of development.
Projects that should take months often take years, or never happen at all.
For ordinary Nigerians, governance is experienced not in Abuja but in their communities: the health centre where a pregnant woman seeks treatment, the primary school a child attends, the road a farmer uses to transport produce and the borehole that supplies drinking water.
These are largely local government responsibilities,
and this is why accountability should not stop at the presidency
Public debate in Nigeria often treats every problem as a federal responsibility.
While the federal government certainly bears responsibility for macroeconomic policy, security and national infrastructure, governors also control enormous budgets.
Many states now receive billions of naira every month from FAAC in addition to internally generated revenue, loans and grants.
Yet scrutiny of governors remains far weaker than scrutiny of the President.
Citizens frequently know federal ministers and presidential advisers but cannot identify how much their own state receives every month or how it is spent.
That imbalance weakens democracy. Accountability works best when citizens ask difficult questions at every level of government.
President Tinubu has argued that subsidy removal and exchange-rate reforms were necessary to stabilise Nigeria’s economy and improve public finances.
The data show that these reforms have indeed expanded revenues available to governments across the federation.
But economic reforms ultimately succeed or fail based on whether citizens experience tangible improvements in their daily lives.
If state governments fail to convert increased FAAC allocations into better roads, schools, hospitals and jobs, many Nigerians will conclude that the reforms have produced only more money for politicians.
That would undermine public confidence not only in state governments but also in the reforms themselves.
If the federal government wants Nigerians to appreciate the benefits of its economic reforms, it must match fiscal reforms with governance reforms.
One of the clearest demonstrations of political commitment would be ensuring that local government autonomy is fully implemented across all 774 councils.
Direct access to constitutionally allocated funds, stronger auditing, transparent procurement and regular public disclosure of local government finances would make it easier for citizens to monitor projects and demand results.
At the same time, state assemblies, civil society organisations, journalists and citizens must intensify oversight of governors and local government officials.
Nigeria’s governance debate must move beyond blaming Abuja alone.
Federal allocations have grown substantially. States have received unprecedented financial resources. Local governments are constitutionally entitled to significant funding.
The missing ingredient is not merely money, it is accountability.
Every month, billions of naira leave the federation account for state and local governments. Every month, citizens deserve to know what that money delivers.
The future of Nigeria’s democracy depends not only on what happens in Aso Rock, but also on what happens in every Government House and every local government secretariat across the country.
Only when accountability extends from the Presidency to the states and the grassroots will Nigerians begin to see the full benefits of the resources already flowing into the federation.
