Nigerian states are swimming in more cash now than ever before, thanks to Federal Account Allocation Committee (FAAC) largesse that has swelled their purses and created more fiscal space to fund key infrastructural projects.
However, while total distributable FAAC revenue in Africa’s most populous nation reached a record N12.08 trillion between January to August 2025, spending on these key infrastructural projects like schools, roads and hospitals remains suboptimal.
The seven-month earnings represent 78.19 percent of the total federally generated revenue of N15.45 trillion recorded last year. With this momentum, the revenue is on track to hit the highest level on record this year.
Analysts at FBNQuest Merchant Bank said the ‘solid revenue outturn’ reflects the impact of ongoing fiscal reforms and enhanced revenue mobilisation efforts by President Bola Tinubu’s administration.
“These reforms -ranging from improved tax collection mechanisms and digitalisation of revenue processes to tightening controls on leakages – have significantly boosted government earnings,” the Lagos-based research and advisory firm said in a note on Monday.
Nigeria’s FAAC revenue surge came after two years of the Tinubu government’s scrapping costly fuel subsidies, a policy shift that meant saving over $84 billion previously channelled to the erstwhile subsidies that evidently became unsustainable.
The three tiers of government have seen an upward move in revenues since 2023. Sub-nationals’ share of FAAC revenue has particularly seen a significant jump over the past three years. The combined revenue disbursed to the 36 states in the months through August soared to N4.08 trillion.
That’s far more than N3.58 trillion received throughout 2023 and accounts for 70.2 percent of the total N5.81 trillion seen last year, buoyed by an aggressive revenue mobilisation push, swelling oil receipts, and a windfall from exchange rate gains that’s gradually drying up.
The revenue distributed to the 774 local government councils also ballooned to N2.58 trillion in the period under review, but motorable feeder roads and quality basic education are scarce to come by.
Education struggles
The country accounts for 15 percent of the global out-of-school children, with 18.3 million children shut out of the four walls of the classroom due to worsening insecurity and deepening poverty, according to a 2024 report by the United Nations Children’s Agency (UNICEF). Sokoto, Kebbi, Yobe, Zamfara, Bauchi, Borno, Jigawa, Gombe, Katsina and Niger are states with the highest out-of-school children today.
A 2018 data by the Universal Basic Education Commission (UBEC) revealed that 47 percent of 570,188 classrooms in public schools in public primary and junior secondary schools were dilapidated. The situation has reached over 50 percent today, according to analysts.
Vanguard reported in June 2025 that students were sitting on the floor in Sokoto schools. MonITNG, a civil society organisation, said students of Government Secondary School Bachirawa, Ungogo LGA in Kano State, were sitting on the bare floor.
Dilapidated hospitals
The FAAC windfall is yet to trickle down to the country’s healthcare system, where its expenditure per person slumped from $102.4 barely 10 years ago to $90.92, according to the World Bank.
That is dwarfed by South Africa’s $569.84, nowhere near Egypt’s $170.98, and is almost one-thirds of the low and middle-income countries’ benchmark of $296, data from the Washington-based lender shows.
According to estate agent Knight Frank, Nigeria requires an extra 386,000 hospital beds at an estimated investment cost of $82 billion to bring the country up to the global average of 2.7 beds per 1,000 people.
More than 80 percent of primary health centres managed by states and local government facilities are non-functional, the Ministry of Health says.
State of states
Akwa Ibom, one of the top recipients of FAAC revenue this year, ranked third among states with more miserable citizens at 71.3 percent. It is followed by Adamawa and Imo with 72.9 and 74.03 percent, respectively, according to the National Bureau of Statistics (NBS).
Multidimensional poverty is also not retreating, with Sokoto, Bayelsa, and Gombe leading the charge. Meanwhile, states are embarking on infrastructure projects, but not the ones that are directly beneficial to the citizens they govern.
Ogun, with the worst road network in South West Nigeria, according to a BusinessDay’s survey in 2024, embarked on an $800 million cargo airport in what was described as the biggest investment in the country.
Zamfara, ravaged with insecurity and worsening poverty, also has an airport that will be in operation in less than four months. It is a state that is about a quarter of the population of Lagos.
Critics argue that many of the airports being built do not reflect the realities of the citizens who have endured the worst economic downturn in recent times.
Gestation period
But Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, said the bumper FAAC receipts may not immediately translate to investments in infrastructure due to a ‘gestation’ period, stressing that key investments may be seen after a 12 to 18-month cycle.
“All of those savings have to pile up to a particular amount before being allocated and then approved for certain investments,” Ibrahim said, urging the government to brief the public ‘as effectively as possible’ on project plans.
He noted that embarking on capital intensive constructions such as airports could encourage foreign investors to come to the country, according to Ibrahim who is an economist.
He argued that key infrastructure such as airports will help lure in much needed foreign direct investments.
“I think the problem we have is that we want quick wins. And honestly speaking, I’m not sure there is any administration that can make that materialise in this current Nigeria.”
States are failing
For Ikemesit Effiong, partner and head of research at Lagos-based consultancy and data analytics firm, SB Morgen Intelligence, the sub-nationals have not well utilised the money flowing into their coffers via FAAC .
“This windfall should be treated as seed capital, not pocket money. States can use it to crowd in private financing and build long-term infrastructure rather than chasing short-term populist projects,” Effiong said.
“If managed wisely, today’s FAAC largesse can lay the foundation for tomorrow’s growth.
(BusinessDay)
