By Keem Abdul
When he announced the abolition of the fuel subsidy regime on May 29, 2023, Nigeria’s President Bola Ahmed Tinubu listed the potential benefits of the measure to include the prospect of increased allocations to the country’s subnational entities (states and Local Governments) for use in strengthening their economies via spending on infrastructure and social services. A long-standing advocate for stronger federating units with robust financial autonomy, the President followed through by approving exponential increases in allocations (comprised of improved earnings from oil exports, a revamped tax code, and other statutory allocations) to the country’s 36 states and 774 LGAs.
Last month (August 2025) alone, according to the office of the Accountant-General of the Federation, the Federation Account Allocation Commission (FAAC) disbursed a total of N2.23trn among the three levels of government. This comprised the following: N1.48trn in statutory revenues; N672.90bn in Value Added Tax (VAT); N32.34bn in Electronic Money Transfer Levies (EMTL); and N41.28bn in the form of Exchange Difference. A breakdown of the allocations shows that from the distributable statutory revenue of N1.48trn, the FG received N684.46bn, states got N347.17bn, and LGs N267.65bn. An additional N179.31bn (representing 13% of mineral revenue) was shared with oil-producing states as derivation. For VAT revenue distribution, the FG received N100.94 bn, while states and LGs received N336.45bn and N235.52bn respectively. From EMTL collections of N32.34bn, the FG received N4.85bn, states got N16.17bn, and LGs took N11.32bn. The N41.28bn Exchange Difference was also shared, with the FG receiving N19.80bn, states N10.04bn, LGs N7.74bn, while N3.70bn was paid as 13% derivation revenues to oil-producing states.
The above figures, mind you, are for August 2025 alone. Now, multiply that by the over 25 months since mid-2023, when these disbursements took effect. From 2023, in fact – when total monthly allocations for states and LGs stood at an average of N760bn – the figure surged to N3.2trn in 2024 (an almost threefold increase!). For the first time since the 1960s, the sub-nationals – combined – got more money than the FG, ending the top-heavy arrangement that had prevailed before the Tinubu administration came on board.
Two years on, though, Nigerians are, for the most part, yet to see the tangible benefits of those increases to sub-nationals – whether in new or rehabilitated infrastructural projects, or in the quality of public sector service-delivery, or in the area of social investments. They are, in short, seeing little or no improvements in their standard of living, let alone their quality of life. And across the length and breadth of the country, they are wondering: Where and how is this money actually being utilized? More importantly, what form of accountability mechanisms are in place to ensure that these funds are spent judiciously? For them, these funding increases have become what the street calls ‘audio money.’
No thanks to the dramatic spike in inflation occasioned by President Tinubu’s initial action in pulling the plug on the subsidy regime, Nigerians are asking their respective state Governors to justify the increased allocations. According to them, the majority of state Governors have simply not done enough to cushion the impact of the fuel subsidy removal on their citizens. “If anything,” says a spokesman for the Nigeria Labour Congress (NLC) “things are getting worse. The quality of life is degenerating at an alarming rate. There is clear and present danger ahead unless [the Governors] change their trajectory.”
On his part,a spokesperson of the Joint Service Council had this to say: “Even those of us who are working, our salaries cannot cope with the situation … You can imagine the plight of those who … are jobless.”
No thanks to the sorry plight of the average Nigerian, some stakeholders have now gone as far as questioning the very rationale for the increased (and increasing) allocations in the first place. Why throw money, they ask, at people who are not – by their nature and the lack of strong accountability mechanisms – accountable? It is a sad example, they say, of flushing money down the sink into bottomless pit of corruption.
The recent behaviour of a large number of these state Chief Executives has led critics to charge that most of them are now prioritizing personal luxuries– in the form of choice real estate (in foreign lands), private jets and other personal indulgences – over public welfare. The stark contrast between the lavish lifestyles of Governors, their aides and other associates and hangers-on, on the one hand, and the poverty-stricken nature of the states they’re supposed to be governing, on the other, is too glaring to ignore. As we speak, 20 out of the 36 Governors (accompanied in most cases by their entire families) are reportedly abroad on vacation – jamborees fully funded by their impoverished (but cash-rich) states.
To some observers, most of the monies have also disappeared down the rabbit-hole of patronage networks. “Most of the time,” said one analyst, “the money is a consolation prize for political allies through procurements and contracts … State Governors are using these funds to build their political enterprises, not to provide quality basic services …”
Other observers have blamed this cavalier, bull-in-a-china-shop attitude of state Governors and their lackeys to public funds on the lack of strong institutions to monitor disbursements and utilization of the funds – and to hold the culpable to account. As long as there are no consequences for mismanagement of these funds, they say, this malfeasance would not only continue, it will grow into another hydra-headed monster populating the Hobbesian jungle that life in Nigeria has become for the common man. This situation is not helped, they say, by the prevailing perception that even the FG does not appear to show any interest in enforcing accountability at the level of states and LGs.
Though President Tinubu has, on various occasions in the past, appealed to Governors to utilize funds responsibly – to “let the poor breathe” in his own words, and to “spend the funds, not the people” – there is little he can do, short of declaring a state of emergency, or withholding funding to offending states, at least for a while. Even then, he would have to contend with the Constitution of the Federal Republic of Nigeria, which mandates that the country’s funds be distributed among its constituent units (without pre-conditions).
For the time being, then, he – and the vast majority of hapless Nigerians – can only ask the million-dollar question: “Where’s the money?”
The answer, as the old song goes, is blowing in the wind.
