Lagos Got More VAT Than 8 States Combined, and VAT Now Beats Statutory Allocation

Ask most Nigerians where state governments get their money and they'll say "oil." For a long time, that was mostly true.

Now look at the numbers for the last 10 FAAC sharing months (September 2025 to July 2026):

• States' VAT allocation: ₦3.80 trillion

• States' statutory allocation: ₦3.10 trillion

Over this period, VAT paid states ₦700 billion more than the main statutory allocation from the Federation Account. (Statutory allocation is the regular share of oil and non-oil revenue such as company tax and customs duties, not counting the 13% derivation that goes only to oil states.)

How the gap moved month by month

February 2026 stands out. States got ₦536 billion of VAT, more than 2.5 times their statutory share that month. VAT made up 62% of everything states received in February.

But VAT is not shared evenly

This is where it gets interesting. Across all 36 states, VAT beat statutory allocation. But when you check state by state, only 16 of the 36 received more from VAT than from statutory allocation over the 10 months.

That's because a big chunk of VAT goes to a few states, and one in particular.

Lagos: ₦624 billion of VAT in 10 months

• Lagos received ₦624.1 billion in gross VAT

• That's 16.4% of all VAT shared to states

• Its VAT was about 5.7 times its statutory allocation (₦109.6bn)

• In February 2026 alone, Lagos received ₦111.2 billion of VAT, its biggest month

Here's how big that is. The eight states with the smallest VAT allocations over the same period were:

Lagos alone got ₦35 billion more VAT than these eight states put together.

The rest of the VAT top 5

Where statutory allocation still matters more

For 20 states, statutory allocation was still bigger than VAT over the 10 months. They include Kaduna, Katsina, Borno, Niger, Bauchi, Sokoto, Kebbi, Kogi and Benue. For these states, a fall in oil prices or oil output still hurts more than a slowdown in spending.

Why this matters

1. States now depend on Nigerians spending money

VAT rises when people and businesses buy things. As it becomes a bigger part of state income, state budgets depend more on the real economy (trade, services, consumption) and less on crude oil alone.

2. VAT is volatile too

Don't assume VAT is "stable money." States' VAT ranged from ₦274.6 billion (April 2026) to ₦536.0 billion (February 2026). A state that plans around a big VAT month could be in trouble in the next one.

3. Big cities win

Lagos, Rivers (Port Harcourt), Oyo (Ibadan) and Kano have big markets, lots of companies and dense populations. As VAT grows, the gap between commercial states and the rest is likely to grow too, unless the sharing formula keeps a strong equality component.

Final takeaway

For the last 10 sharing months, VAT, not statutory allocation, was the biggest single source of FAAC money for Nigeria's states as a group. But most of the gain went to a handful of commercial states, led by Lagos with ₦624 billion.

If you live in a state where VAT is now bigger than statutory allocation, your state's income depends more on local businesses and consumers than on oil. That's a good reason to watch how your state treats its small businesses.

Data source: OAGF FAAC disbursement tables (Table III), September 2025 to July 2026, as reported by the NBS. December 2025 was not in the data set we reviewed. VAT figures are gross VAT allocations to the 36 states (Lagos's monthly "VAT deduction" not subtracted). Statutory allocation excludes the 13% derivation. If any figure looks off to you, please reach out and we'll check it again.