Value-added tax (VAT) allocations to Nigerian states rose to N423.25 billion in January 2026, a 74% increase from the N242.92 billion disbursed in December 2025. The sharp month-on-month growth reflects improved revenue collection and disbursement by the Federal Inland Revenue Service. The Federation Account Allocation Committee (FAAC) confirmed the figures in its latest monthly distribution report. This marks one of the highest VAT allocations to states in recent years, offering subnational governments more financial flexibility. The increase follows efforts to expand the tax net and improve compliance across sectors. States are expected to receive a larger share of the VAT proceeds under the current revenue-sharing formula. The federal government also benefits from the improved haul, with its own allocation rising in tandem.
\nThe 74% spike in VAT allocations suggests short-term relief for cash-strapped states, but it doesn't reflect structural reform in revenue generation. With N423.25 billion now reaching state coffers, governors like those in Lagos and Kano have more room to fund projects without new borrowing. However, reliance on federally collected VAT still leaves states vulnerable to future fluctuations. This uptick changes nothing about the fragility of Nigeria's revenue base.
