Local governments receive N4.3 trillion in 8 months from federation account

Nigeria’s 774 local governments received a total net allocation of N4.3 trillion from the Federation Account between January and August 2026, according to data compiled by Nairalytics, the research arm of Nairametrics.

On an annualised basis, local government allocations are projected to reach N6.5 trillion in 2026, a 22.7% increase on the N5.3 trillion recorded in 2025. Compared with pre-reform years, the allocation has more than tripled.

In 2022, the 774 councils received a net allocation of N2.01 trillion. That figure jumped to N3.76 trillion in 2023 following the removal of petrol subsidies and the unification of exchange rates, both of which significantly expanded the naira value of federation revenue.

The federation has also benefited from a bullish oil market, with crude trading around $100 per barrel, boosting oil receipts and enlarging the purse shared among the three tiers of government.

The data shows that the ten local governments with the highest allocations over the period were all in Lagos State. Collectively, Lagos’ 20 local governments received N404.7 billion in the eight months, accounting for 9.3% of total net allocation to councils.

In fact, all 20 Lagos LGAs ranked among the top 20 recipients nationwide, underscoring the weight of Nigeria’s commercial hub in the country’s economic and fiscal architecture.

This is not a new pattern. In 2022, before the current administration’s reforms, Lagos LGAs received a combined N146.39 billion, or 7.2% of total payments, and 18 of the top 20 recipients were in Lagos, with the remaining two in Abuja. What has changed is the scale: the Lagos councils’ share has risen even as the overall pie has grown.

The distribution largely reflects the FAAC revenue-sharing framework, which weighs population size, revenue-generating capacity, terrain and other factors.

Notably, allocations to individual states and LGAs are shared, based on five factors: equal distribution (40%), population (30%), landmass and terrain (10%), internal revenue generation (IGR) (10%), and social development indicators covering education, health and water (10%).

These criteria are intended to account for differences in population, geographical characteristics, revenue-generation capacity and development needs across local governments.

Given Lagos’ large population estimated at over 13 million people and its IGR capacity, it is evident that LGAs in the state would receive the largely chunk of the pie.

The President’s approval, announced on 28 October 2026, comes amid growing scrutiny of how subnational governments spend their monthly allocations in the wake of the subsidy and foreign exchange reforms. Under the proposed framework, the EFCC will monitor the release, movement and utilisation of FAAC funds, with particular attention to suspected diversion, questionable contracts, ghost workers and other financial irregularities.

The commission is expected to work with the Office of the Accountant-General of the Federation, the Ministry of Finance, the Central Bank of Nigeria and the Independent Corrupt Practices and Other Related Offences Commission (ICPC).

Proposed measures include tracking allocations from source to destination, verifying projects reportedly financed with public funds, investigating citizens’ complaints and publishing periodic compliance reports.

The Supreme Court’s July 2024 judgment affirmed the constitutional right of local governments to receive their allocations directly from the Federation Account, a ruling intended to curb state governments’ control over council funds. But autonomy only moves money closer to the people; it does not guarantee that it reaches them.

Ultimately, the N4.3 trillion disbursed is not just a fiscal statistic but a promise to Nigerians at the grassroots. If EFCC monitoring is backed by transparency, a clear legal footing and stronger local institutions, including active councillors, independent auditors and engaged citizens, it could help turn rising allocations into visible development. If not, it risks becoming one more layer of oversight on a system whose deeper problem is weak accountability at the point of spending.

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