🚨FG's Budget Implementation Report (H1 2025)

In the first half of 2025, the Federal Government realised about half of its projected revenue, while debt servicing was 97.2% of the Federal Government's retained revenue.
Oil revenue contributed 36.2% (₦3.43tn) to FG’s retained revenue in the first half of 2025 while non-oil revenue made up 35.6%% (₦3.38tn). Meanwhile, debt service was the highest expenditure item for FG at ₦9.23tn, accounting for 60.4% of total expenditure.

🚨 Continuing our budget implementation analysis: In 2024, Nigerian states earned ₦13.39tn in total revenue, ₦10.12tn (75.6%) from FAAC and ₦3.26tn (24.4%) from IGR. This shows most states still rely heavily on federal allocations for funding. Nigeria’s 36 states generated ₦13.39tn in revenue, surpassing the ₦12.76tn target by 4.9%, largely due to higher FAAC allocations. However, they underperformed on internally generated revenue (IGR), falling 7.4% below target.

🚨How and Why States Surpassed Federal Government in FAAC Allocations

A major highlight of the allocations by FAAC for the month of May 2025 is that the states received more money than the FG. In the period between June 1999 to May 2022, not one instance of this was recorded. Between June 2020 and May 2023, the states received more FAAC allocations than the FG in only two months (May 2022 and April 2023). However, the FG got lower allocations than the states in 14 months between June 2023 and May 2025.

🚨The charts below compare Gross FAAC revenue from the last two years of the previous administration to the first two years of the current one. FAAC revenue grew by 132% from ₦23tn (June 2021–May 2023) to ₦53.33tn (June 2023–May 2025) largely due to naira depreciation.
This compares the sources of Gross FAAC revenue over the period of 4 years.

🚨Simulation Based on November 2024 VAT Figures

Based on what states got from the VAT pool for the month of November, we did a quick simulation to check states likely to lose or gain if the proposed VAT formula had been applied.

This time, we explored two scenarios

🧵
In addition to changes in the horizontal part of the formula, the first scenario assumes change in the vertical part too, meaning states' share of VAT would have gone from 50% to 55%.

So instead of getting N292.85b, the 36 states would have had N322.13b to share in November.

🚨VAT Pool: What States Contributed and Received in 11 Months...

Between January and November 2024, the 36 states contributed N4.33t to the non-import VAT pool and shared a total of N2.83t.

Contribution by states ranged from N2.46t (Lagos) to N3.94b (Imo).

🧵 However, the picture is more even in terms of allocation.

What states received ranged from N414.52b (Lagos) to N52.52b (Nasarawa).

78% of states got between N50b and N69b, as shown below:

N50b-N59b: 10 states
N60b-N69.99b: 18 states
N70b-N79b: 4 states
>N80b: 4 states

🚨🚨Result of Simulation of Proposed VAT Formula...

Based on actual data for October 2024, our simulation indicates that:
1. States' share of VAT increases to N342.27b from N311.16b.
2. Despite overall increase, 14 states will be worse off while 22 states will be better off. 👇

https://twitter.com/AgoraPolicy/status/1863991700038791342

3. The gain ranges from N6.93b (Delta) to N74m (Kwara) while the loss is from -N7.44b (Lagos) to -N344m (Zamfara).
4. Percentage loss is between -26.49%(Taraba) to -5.08% (Zamfara) while gain range from 86.17%(Delta) to 1.16% (Kwara).

🚨Likely Gainers and Losers from Proposed VAT Formula...

To check figures shared on TV last night on possible impact of proposed VAT formula on states, we did a quick simulation.

We ran what states got for October 2024 with what they would have received under proposed formula. We assumed the following:

1. States' share of VAT increases from 50% to 55%.

2. Horizontally, the sharing formula changes to: 60% for derivation (from 20%); 20% for population (from 30%); 20% for equality of states (from 50%).

🧵 The Case against Domestic Crude Allocation Policy

Yesterday, Agora Policy called for the scrapping of the suboptimal and outmoded policy on domestic oil allocation that starves the country of forex supply and increases pressure on the Naira. Below is a thread on the evidence against the policy. ⬇️
📌 First, some context. Federation's share of oil produced in Nigeria has always been portioned into two: Federation Export (FE) and Domestic Crude Allocation (DCA). FE fetches dollars for the country while DCA is paid for in Naira.