Understanding FAAC’s Allocation Formula
FAAC distributes federal revenue to states based on several key factors:
- Population – More populous states receive larger shares.
- Land Mass – Larger states get additional funds for administrative costs.
- Derivation Principle (13%) – Oil-producing states earn extra revenue.
- Equality (Social Development Factor) – Ensures minimum allocations for all states.
- Internally Generated Revenue (IGR) Effort – Rewards states that improve local tax collection.
States without oil, with smaller populations, or weaker economic activity often end up with the lowest allocations.
The Bottom 10: States with Lowest FAAC Allocations in 2025
1. Nasarawa State – ₦78.23 Billion (Lowest Overall)
Nasarawa received the smallest FAAC allocation in 2025, primarily due to its small population and lack of oil resources. Despite its proximity to Abuja, the state struggles with low IGR and limited commercial activity. The absence of major industries or a thriving agricultural export sector further restricts its revenue potential.
2. Ekiti State – ₦82.15 Billion
Ekiti, known for its education sector, lacks the population size or mineral resources to compete with larger states. While it has made efforts to boost agriculture, its revenue streams remain weak compared to industrial or oil-producing states.
3. Ebonyi State – ₦85.40 Billion
Ebonyi’s low ranking stems from its small population and underdeveloped economy. Although the state has made strides in rice production, its internal revenue generation remains insufficient to supplement its FAAC share.
4. Gombe State – ₦87.62 Billion
Gombe’s allocation reflects its modest population and landmass. The state has limited industrial activity, and its agricultural sector, while growing, has not yet translated into significant VAT or IGR contributions.
5. Yobe State – ₦89.33 Billion
Yobe’s fiscal challenges are compounded by its security issues, which have hindered economic growth. With a largely agrarian economy and low population density, the state struggles to attract investments that could boost its revenue base.
6. Zamfara State – ₦91.05 Billion
Zamfara’s gold reserves have not significantly impacted its FAAC allocation due to illegal mining and weak formalization of the sector. Security challenges further deter economic activities that could improve VAT and IGR.
7. Kebbi State – ₦93.20 Billion
Despite being a major rice producer, Kebbi’s FAAC share remains low because agriculture contributes minimally to VAT. The state also lacks the population size or industrial base to compete with larger states.
8. Taraba State – ₦95.75 Billion
Taraba’s vast landmass does not translate into high revenue due to low population density and underutilized agricultural potential. The state’s internal revenue efforts have been insufficient to offset its low FAAC allocation.
9. Jigawa State – ₦97.84 Billion
Jigawa State’s position among Nigeria’s 10 lowest FAAC recipients in 2025 reflects several structural and economic challenges that limit its revenue potential under the current allocation formula.
10. Plateau State – ₦98.10 Billion
Plateau’s mining sector has not been fully harnessed to boost revenue. While Jos was once a thriving commercial center, economic stagnation has kept its FAAC allocation among the lowest.
Why These States Ranked Lowest
- No Oil Derivation Benefits – None of these states are oil producers, missing out on the 13% derivation fund.
- Small Populations – States like Nasarawa, Ekiti, and Ebonyi lack the demographic weight to secure larger shares.
- Weak Economic Activity – Limited industrialization and low VAT generation restrict their revenue potential.
- Security Challenges – States like Zamfara and Yobe face instability, deterring investments.
- Low IGR – Most struggle to generate significant internal revenue, making them heavily dependent on FAAC.
The 2025 FAAC allocations reveal a troubling trend: Nigeria’s fiscal system continues to favor resource-rich and populous states, leaving others behind. While some disparities are inevitable, deliberate policy shifts—such as incentivizing IGR growth and revising the revenue formula—could create a fairer distribution. Until then, states at the bottom of the FAAC table will remain trapped in a cycle of dependency and underdevelopment.
