States Receive 85% of Nigeria’s Resources, FG Gets Only 15%

Finance Minister Taiwo Oyedele has argued that state and local governments collectively receive about 85 per cent of Nigeria’s resources, leaving the Federal Government with approximately 15 per cent despite its extensive national responsibilities.

Oyedele made the remarks on Wednesday, October 21, 2026, while speaking at Chatham House in London during a discussion on Nigeria’s economic outlook, ongoing reforms and prospects for inclusive growth.

According to the minister, the Federal Government faces a mismatch between the resources available to it and the responsibilities it is expected to fulfil, including defence, internal security, foreign affairs and the conduct of elections.

He added that the Federal Government also intervenes in basic education and primary healthcare, despite these services being areas where state and local governments play significant roles.

“Based on data, the centre is the most deprived of resources yet it has the most responsibilities. Of all Nigerian resources, roughly 85 per cent are assigned to subnational. Only 15 per cent to the Federal Government,” Oyedele said.

The minister also highlighted the distribution of Value Added Tax (VAT), explaining that the Federal Government receives 10 per cent, while state and local governments collectively receive the remaining 90 per cent under the arrangement he described.

He argued that the Federal Government’s widely cited 52.68 per cent share of the Federation Account Allocation Committee (FAAC) revenue should be considered in context, because it applies to distributable revenue within the Federation Account rather than every source of public revenue.

Under the statutory allocation formula, the Federal Government receives 52.68 per cent of distributable revenue, while state governments receive 26.72 per cent and local governments receive 20.60 per cent. Other revenue streams and internally generated revenues follow different arrangements.

Oyedele said the Federal Government was considering transferring some responsibilities to states, which he described as better positioned to deliver certain services and development projects.

He explained that the centre could provide targeted funding to states for basic education, agricultural development and access roads connecting farms to markets.

According to him, such transfers could encourage states to prioritise projects with direct economic and social benefits while allowing the Federal Government to influence development outcomes without directly administering every programme.

The minister’s comments come amid renewed debate over Nigeria’s fiscal federalism and calls to review revenue allocation among the three tiers of government.

The Senate initiated moves in February to review the existing allocation formula, citing the Federal Government’s growing expenditure obligations.

The debate continues to raise questions about how public revenue should be distributed and how responsibilities should be shared among federal, state and local authorities.