Nigeria’s 774 local government areas received a combined ₦4.3 trillion in net allocations from the Federation Account between January and August 2026, according to data compiled by Nairalytics, the research arm of Nairametrics. The report projects that local government allocations could reach ₦6.5 trillion by the end of 2026, representing a 22.7 per cent increase from the ₦5.3 trillion recorded in 2025.
The figure is also significantly higher than allocations in previous years. In 2022, local governments received ₦2.01 trillion, while the amount rose to ₦3.76 trillion in 2023 following the removal of petrol subsidies and the unification of foreign exchange rates. Higher oil revenues have also contributed to increased Federation Account receipts, with crude oil prices trading around $100 per barrel during the period.
The data showed that the ten local government areas with the highest allocations between January and August were all located in Lagos State. The state’s 20 local government areas received a combined ₦404.7 billion, representing 9.3 per cent of the total amount shared among councils nationwide.
The Federation Account allocation formula considers five factors: equal distribution, which accounts for 40 per cent; population, 30 per cent; landmass and terrain, 10 per cent; internally generated revenue, 10 per cent and social development indicators, including education, healthcare and water supply, which make up the remaining 10 per cent.
The increased allocations come amid efforts to strengthen oversight of how local governments and other subnational authorities spend public funds. Following President Bola Tinubu’s approval announced on October 28, 2026, the Economic and Financial Crimes Commission (EFCC) is expected to monitor the release, movement and use of Federation Account allocations.
The proposed monitoring framework will focus on suspected diversion of funds, questionable contracts, ghost workers and other financial irregularities. The EFCC is expected to work with the Office of the Accountant-General of the Federation, the Ministry of Finance, the Central Bank of Nigeria and the Independent Corrupt Practices and Other Related Offences Commission.
Proposed measures include tracking funds from their source to the receiving councils, checking projects reportedly financed with public money, investigating complaints and publishing compliance reports. The Supreme Court’s July 2024 judgment affirmed the constitutional right of local governments to receive their allocations directly from the Federation Account, a move intended to reduce state governments’ control over council funds.
However, the report noted that increased funding does not automatically translate into better living conditions for residents. Several communities continue to face poor roads, inadequate healthcare facilities, poorly equipped schools and unpaid salaries and pensions despite the rise in government revenue. It stressed the need for stronger monitoring that goes beyond confirming whether funds have reached council accounts. Such oversight would also involve checking project costs, construction quality, completion rates and procurement processes.
The report concluded that the ₦4.3 trillion allocation could support meaningful development at the grassroots if accompanied by transparency, effective monitoring and stronger accountability institutions.
