…2 years after increased FAAC allocations to FG, states
• N18.57trn shared in 1year under Tinubu
From Adanna Nnamani, Abuja
With no sugar-coated words, President Bola Tinubu had summarily announced the end of petrol subsidy during his inaugural speech on May 29, 2023.
His simple and firm message was that Nigeria could no longer afford to fund a policy that costs trillions of naira annually while yielding minimal developmental returns.
What followed was swift and sweeping. The downstream petroleum sector was deregulated, fuel prices tripled, and inflation surged.
But in return, the Federal Government pledged to redirect the savings into infrastructure, education, health, and, most critically into the hands of sub-national governments.
Today, two years on, the numbers show that statutory allocations to states have ballooned. But has the money made any difference? It is mixed feelings in the states.
Data from the Federation Account Allocation Committee (FAAC) show that total monthly disbursements to states jumped significantly after the subsidy removal.
For context, in the last two years of President Muhammadu Buhari’s administration (2021–2023), average monthly allocations to the 36 states hovered around N590 billion.
Under President Tinubu (2023–2025) monthly allocations have averaged over N900 billion, with some months exceeding N1 trillion, especially after the removal of petrol subsidies and unification of exchange rates.
This represents a minimum 50 per cent increase in direct federal revenue to the states within two years.
States like Lagos, Rivers, Delta, Akwa Ibom, and Bayelsa, already top earners, received even more due to their oil-producing status.
Meanwhile, non-oil states like Kano, Kaduna, and Borno also saw significant jumps.
For instance, a record N2.326 trillion was disbursed in March 2024, making it the highest single‑month allocation in the past two years. June 2024 followed closely with N2.32 trillion, while the third highest was in January 2025 at N1.703 trillion.
In contrast, allocations during Buhari’s time peaked at N990.19 billion in December 2022, followed by N954.10 billion in July 2022 and N905.50 billion in August 2022.
Between April 2022 and April 2023, FAAC disbursed a total of N10.63 trillion to the three tiers of government under former President Muhammadu Buhari.
In contrast, allocations surged to N18.57 trillion between April 2024 and April 2025 under President Bola Tinubu, marking a 75 per cent increase.
Despite the increased inflows, many Nigerians say they are yet to feel the impact.
According to Dr. Kemi Adebayo, a fiscal governance expert, states have received more money in two years than they did in any comparable period since 1999.
“But where are the new hospitals? Where are the roads? Where is the investment in agriculture and youth employment?” he queried.
In many states, wage disputes have lingered, pensioners are still owed, and capital projects have slowed.
Analysts say this points to a larger issue of governance, not revenue.
“Increased allocations without reforms in transparency, budgeting, and fiscal discipline simply means more money to mismanage,” Adebayo added.
The original justification for subsidy removal was to stop hemorrhaging trillions of naira annually on petrol imports, and instead strengthen fiscal stability at all levels. The Tinubu government kept its part, fuel subsidy payments reportedly dropped from over N4.39 trillion in 2022 to near zero by mid-2024.
But while the Federal Government launched some intervention programmes like the N5 billion palliative grants to states and the N100 billion CNG bus initiative, critics say the momentum is slowing.
From Enugu to Lagos, down to Gombe, citizens are growing restless.
“They told us to be patient, that the subsidy money would bring change. But it has been two years, and prices are still high. Salaries have not increased. What are they doing with all the money?” asked Mariam Audu, a secondary school teacher in Abuja.
According to the Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf, the surge in revenue allocations should reflect in tangible development across all tiers of government.
“Money is never enough. However, the funds allocated should make a lot of difference, given where they are coming from,” Yusuf said.
He noted that prior to this administration, many states and local governments were grappling with unpaid salaries, pensions, and contractor debts.
“But under this new administration, because of the improvement in revenues as a result of the economic reforms, the allocation has increased in some states by over 85 per cent. This surge has put them in a better position to deliver standard infrastructure across all sectors,” he said.
The economist stressed the need for visible progress in critical areas such as schools, healthcare, roads, transportation, and agriculture.
“If not completed, a level of progress should be revealed and reported to justify the increase in FAAC revenue as a result of the naira devaluation, and fuel subsidy removal, amongst others,” he added.
He, however, pointed out that despite the improved funding, salary increases may not happen.
“Even though they have more money, they are not likely to increase workers’ salaries because of the bloated workforce. Some of the staff are referred by either the minister, permanent secretary, or commissioner. The size of the bureaucracy is a problem, so the issue is not to increase, but to implement the increase,” he said.
Economics and development expert, Dr Aliyu ilias, warned that the much‑touted mega allocations to states have been rendered largely meaningless by currency depreciation and subsidy removal.
“From the outset, these allocations were never going to amount to much, because the value of the naira has been eroded. When the dollar drops from N1,500 to N1,600, yesterday’s allocation is worth far more than today’s. You cannot remove subsidy, increase allocations and float the naira all at once and expect real impact.
“So far, only Lagos claims to be seeing any benefit, but even its internal revenues alone could explain their progress. After all, a road that cost N1 billion before now goes for N3 billion.
“There is no direct impact on the average Nigerian. The money may be in circulation, but it does not translate into development,” he said.
Civil society groups have also intensified calls for stronger public financial management laws at the state level and for the enforcement of open budgeting systems to track how the increased federal revenue is being spent.
With the nation’s debt stock nearing N100 trillion and inflation at record levels, the stakes are higher than ever.
President Tinubu’s gamble to remove subsidies and increase revenue to states was meant to lay the groundwork for deeper development at the grassroots.
Experts caution that unless state governors match the revenue surge with visible reforms, prudent spending, and strategic investment, Nigeria risks squandering yet another fiscal opportunity.