Higher revenue distributions from the Federation Account Allocation Committee (FAAC) are strengthening the fiscal position of Nigerian states, raising expectations that subnational governments could expand infrastructure spending, improve service delivery and stimulate local economic activity.
The increased allocations are a result of the rising Value Added Tax (VAT) receipts and adjustments to the VAT sharing formula.
The new VAT sharing formula now allocates 55 percent of VAT revenue to states, up from 50 percent, while the federal government’s share has declined to 10 percent.
