Nigeria Economic Update, Issue 29

The Office of the Accountant-General of the Federation reported that a total sum of ₦1.818 trillion, was shared among all three tiers of government. This amount was 9.58% higher than the ₦1.659 trillion distributed for May 2025. The allocation included ₦645.383 billion to the Federal Government, ₦607.417 billion to state governments, and ₦444.853 billion to local governments. Additionally, ₦162.786 billion was earmarked for collection costs, while ₦2.251 trillion was allocated for total transfers, interventions, refunds, and savings. The total distributable revenue comprised ₦1.018 trillion in statutory revenue and ₦631.507 billion from the distributable Value Added Tax (VAT). The gross revenue of ₦678.165 billion available from VAT in June 2025 was lower than the ₦742.820 billion available in May 2025. From the distributable VAT revenue, the Federal Government received ₦94.726 billion, the State Governments received ₦315.754 billion, and Local Government Councils received ₦221.027 billion. The Electronic Money Transfer Levy (EMTL), which contributed ₦29.165 billion, was distributed as ₦4.375 billion to the Federal Government, ₦14.582 billion to the State Governments, and ₦10.208 billion to the Local Government Councils. The increase in revenue resulted from a ₦100 billion augmentation to shared revenue and significant increases in Companies Income Tax (CIT) and Petroleum Profit Tax (PPT). This increase in total distributable revenue implies improved tax collection. However, VAT declined during the period under consideration. Other tax measures, such as gas royalties, import duties, and excise duties, also experienced revenue declines. Such declines in VAT and trade-related taxes, such as import and excise duties indicate weakened consumer spending, lower import activity, rising inflation, reduced purchasing power, and a slower economy. Therefore, the government should implement targeted consumer stimulus programme or tax relief for low-income households to boost spending and expand the VAT base. The government should also strengthen tax administration and compliance in non-oil sectors while stimulating domestic production and consumption to reverse declines in VAT and trade-related revenues