Lagos State has emerged as Nigeria’s highest recipient of Federation Account allocations in the first half of 2026, collecting N365.78 billion in net disbursements and overtaking oil-rich Delta, Rivers, Akwa Ibom and Bayelsa.

The development highlights the growing influence of Value Added Tax (VAT), commercial activity and consumption in determining state revenues, alongside the traditional advantage enjoyed by oil-producing states through the 13 per cent derivation fund.

Data from the Federation Account Allocation Committee (FAAC) show that the 36 states collectively received N4.54 trillion in the first half of 2026, compared with N3.61 trillion in the same period of 2025, representing a 25.77 per cent increase.

Lagos recorded the biggest increase among the leading beneficiaries, with its allocation rising from N236.92 billion to N365.78 billion, a 54.39 per cent increase.

The state’s performance was overwhelmingly driven by VAT. Lagos received N344.06 billion in net VAT, compared with N10.91 billion in statutory allocation. It also received N3.31 billion from the Electronic Money Transfer Levy and N5.05 billion in non-oil revenue augmentation.

Delta, which topped the H1 2025 ranking, fell to second position after receiving N331.43 billion, up 10.49 per cent from N299.96 billion.

The state benefited heavily from oil derivation, receiving N229.71 billion, the highest derivation allocation among the leading states.

Rivers ranked third with N295.99 billion, compared with N264.90 billion a year earlier. Its receipts included N117.33 billion in derivation revenue and N145.49 billion in VAT.

Akwa Ibom retained fourth position with N270.27 billion, while Bayelsa ranked fifth with N266.72 billion.

Kano received N152.57 billion, supported by N79.42 billion in VAT, while Oyo recorded N139.10 billion, including N97.09 billion in VAT.

Ondo, Jigawa and Borno completed the top 10, receiving N113.04 billion, N111.61 billion and N109.65 billion respectively.

Fiscal analysts say the figures demonstrate a gradual shift in Nigeria’s revenue landscape.

An economist noted that Lagos’ performance shows that “economic size can increasingly rival oil derivation as a driver of FAAC receipts,” particularly as VAT collection improves.

Another analyst said oil-producing states would remain major beneficiaries because of derivation payments, but states with strong commercial and consumer bases could increasingly close the gap.

Analysts, however, cautioned that higher FAAC receipts should translate into improved public services.

They said the key test for state governments would be whether additional revenues are converted into better infrastructure, healthcare, education, security and economic opportunities for residents.

The June 2026 FAAC meeting alone distributed about N2.55 trillion among the three tiers of government, reflecting stronger revenue flows into the Federation Account.