Lagos Tops States With N365.8bn FAAC Allocation In First Half Of 2026

Lagos State received N477.05 billion in gross Federation Account Allocation Committee (FAAC) revenue in the first half of 2026, the highest among Nigeria’s 36 states, as allocations to states increased during the period, according to a report by Abuja-based policy think-tank Agora Policy.

The report showed that Lagos’ gross FAAC allocation increased by 41.5 per cent year-on-year, the highest growth recorded among the states alongside Oyo, whose allocation rose by 36.4 per cent.

At the other end of the scale, Edo and Delta recorded the slowest growth in gross FAAC allocations, at 16.4 per cent and 16.8 per cent respectively.

The increase came as total gross FAAC revenue reached N18.72 trillion in the first half of 2026, with statutory revenue accounting for N13.95 trillion, or 75 per cent, while VAT contributed N4.77 trillion, representing 25 per cent of gross revenue.

The mid-July FAAC disbursements, covering revenue generated in June, marked the end of the first half of the fiscal year and provided a basis for comparing allocation patterns across states.

Lagos Leads as Four States Cross N300bn

Lagos State led Nigeria’s 36 states in gross Federation Account allocations in the first half of 2026, receiving N477.05 billion, according to an analysis by Abuja-based policy think-tank Agora Policy.

Only three other states, Delta, Rivers and Akwa Ibom, crossed the N300 billion mark during the period, placing the four states at the top of the allocation table.

At the other end, Nasarawa received N72.78 billion, the lowest gross allocation among the states.

The distribution shows a significant gap in access to federally collected revenue. Lagos’ N477.05 billion was more than six times Nasarawa’s allocation, underscoring the uneven distribution of fiscal resources across the states.

The report classified 20 states within the N100 billion to N300 billion range, while nine states received less than N100 billion.

The ranking also recorded some changes from the first half of 2025. Ondo entered the top 10, replacing Edo, while Ogun moved into the bottom 10 and Zamfara exited the group.

Lagos’ position was supported by a broader increase in its FAAC receipts. Its gross allocation rose 41.5 per cent year-on-year, the strongest increase among the states covered by the report. Oyo followed with a 36.4 per cent increase.

By comparison, Edo and Delta recorded the lowest growth rates, at 16.4 per cent and 16.8 per cent respectively.

The divergence in growth rates indicates that the increase in federally distributed revenue did not translate into uniform gains across the states.

The distribution was also shaped by the growing contribution of VAT to the Federation Account.

Gross FAAC revenue stood at N18.72 trillion in the first half of 2026. Statutory revenue accounted for N13.95 trillion, or 75 per cent, while VAT contributed N4.77 trillion, representing 25 per cent of gross revenue.

The growing weight of VAT is particularly significant for states with large consumer markets and concentrated commercial activity.

This is evident in the local government allocation figures.

Lagos’ 20 Local Government Areas received a combined N310.85 billion in gross FAAC allocations during the period, compared with N163.5 billion received by Kano’s 44 LGAs.

Rivers, with 23 LGAs, also received more at the local government level than Oyo and Katsina, which have 33 and 34 LGAs, respectively.

The pattern suggests that the number of local government areas is becoming less decisive in determining the size of FAAC receipts as VAT assumes a greater role in the revenue-sharing formula.

Local governments receive 35 per cent of VAT revenue, according to the report, giving states with larger urban and commercial economies an advantage in the distribution of consumption-based revenue.

For Lagos, this has strengthened its position at both state and local government levels.

The figures also highlight the continuing importance of oil revenue. Delta, Rivers and Akwa Ibom remain among the largest state recipients, supported by the 13 per cent derivation principle for oil-producing states.

But Lagos’ lead demonstrates that the growing VAT pool is creating another route to higher FAAC receipts for states with large economies and high consumption levels.

Lagos, Oyo Record Fastest Growth

Beyond the size of the allocations, the pace of growth provides another indication of how state revenues changed during the period.

Lagos recorded a 41.5 per cent increase in gross FAAC allocation compared with the first half of 2025, while Oyo recorded a 36.4 per cent increase.

The growth came ahead of Edo and Delta, whose allocations increased by 16.4 per cent and 16.8 per cent respectively.

The difference suggests that states did not benefit equally from the increase in the Federation Account during the period.

States with stronger participation in VAT-generating economic activity appear to have gained from the growing contribution of VAT to the distributable pool.

VAT Gives Lagos an Advantage at Local Level

The role of VAT becomes more pronounced when the allocations to local governments are examined.

Kano has the highest number of Local Government Areas in the country, with 44, but its 44 LGAs collectively received N163.5 billion in gross FAAC allocation during the first half of 2026.

That was only the second-highest amount among the states.

The 20 LGAs in Lagos, meanwhile, received N310.85 billion, almost twice Kano’s allocation despite having less than half the number of LGAs.

The difference reflects the growing importance of VAT in FAAC revenue distribution.

Local governments receive 35 per cent of VAT revenue, according to the Agora Policy report.

This gives states with densely populated and commercially active local government areas an advantage in the distribution of VAT revenue.

Lagos, with its concentration of businesses, consumers and formal economic activity, therefore receives a substantial share of the VAT pool despite having fewer LGAs than Kano.

The same pattern was visible in Rivers.

Rivers, with 23 LGAs, received a higher gross FAAC allocation at the local government level than Oyo and Katsina, which have 33 and 34 LGAs respectively.

The report described the pattern as relatively recent and linked it to the growing prominence of VAT as a source of FAAC revenue.

VAT Becomes More Important to State Allocations

The increasing contribution of VAT is significant for the distribution of federal revenue.

Total gross FAAC revenue reached N18.72 trillion in the first half of 2026, of which statutory revenue contributed N13.95 trillion, and VAT contributed N4.77 trillion.

VAT therefore accounted for one-quarter of gross FAAC revenue during the period.

For states with large commercial centres and high consumption levels, the growing VAT pool can translate into larger allocations.

This partly explains why Lagos has remained at the top of the state allocation ranking despite not benefiting from the same level of oil derivation revenue as states such as Delta and Rivers.

It also means changes in consumption, formal economic activity and VAT collection could increasingly influence the distribution of federally collected revenue among states.

FAAC Revenue Improves, But Spending Remains the Test

Overall, Agora Policy said FAAC performance in the first half of 2026 was marginally better than the corresponding period of 2025.

The improvement was reflected in higher gross FAAC revenue, a larger distributable pool and lower deductions.

However, the report cautioned that higher allocations alone would not necessarily translate into better development outcomes.

It called for stronger transparency and accountability in the management of FAAC receipts, arguing that the focus should shift from the size of allocations to how effectively governments use the funds to improve infrastructure, public services and citizens’ welfare.

For Lagos, the N477.05 billion gross allocation provides additional fiscal capacity at a time when the state is implementing major infrastructure, transport and urban development projects.

But its performance also illustrates a broader change in Nigeria’s fiscal landscape.

As VAT becomes a more prominent component of the Federation Account, states with larger consumer markets and stronger commercial activity could increasingly compete with oil-producing states for a larger share of federally collected revenue.

The first-half figures therefore show that the distribution of federal revenue is not being shaped by oil alone.