Every North-East state received at least 2× what they contributed (₦46.68 billion in total), a 211.6% increase

Key Takeaways

  • The North-East remitted only ₦14.98 billion but received ₦46.68 billion, showing a 211.6% gain due to sharing.
  • Taraba, the lowest contributor (₦0.94 billion), saw the highest percentage gain (635%) with an allocation of ₦6.91 billion, reinforcing that smaller economies benefit the most from VAT sharing.
  • Bauchi, despite remitting just ₦2.44 billion, received the highest allocation (₦8.93 billion), a 266% increase, illustrating how VAT is shared based on equality and population, not economic activity.
  • Every state in the region received at least 2× what they remitted, highlighting the North East’s reliance on VAT sharing and fuelling the fiscal federalism debate on whether VAT should be retained at the state level.

The VAT remittance and sharing pattern in the North-East geopolitical zone of Nigeria reveals a significant reliance on the federal VAT sharing system. The six states collectively remitted ₦14.98 billion but received an allocation of ₦46.68 billion, representing a 211.6% increase in revenue through federal allocation. This trend showcases how the VAT sharing formula, which prioritises equality and population over direct revenue generation, disproportionately benefits states with lower economic activity.

Borno led remittance with ₦3.91 billion (26.1% of the zone’s total VAT), yet it received ₦8.74 billion, a 123% gain. However, the biggest beneficiary in terms of percentage increase was Taraba, which remitted the least (₦0.94 billion, just 6.3% of the total) but received ₦6.91 billion, a massive 635% increase. Bauchi, despite contributing only ₦2.44 billion, received the highest allocation in the region at ₦8.93 billion, a 266% boost, further confirming that VAT allocation is based on sharing metrics beyond just remittance levels.

With every state in the North-East receiving at least double their remittance, this shows a significant fiscal imbalance that continues to drive ongoing discussions about VAT decentralisation. As high revenue states push for VAT retention at the source, states in regions like the North-East, which benefit significantly from sharing, may face economic pressure if the system is altered.

Source:

Federal account allocation committee (FAAC)

Period:

January 2025
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The South-West remitted ₦341.18B in VAT but received only ₦106.85B, getting back just ₦0.31 for every ₦1 remitted.
  • Lagos carried the South-West VAT burden, remitting ₦305.52B (89.6% of the region's total) but receiving only ₦62.59B (20.5% return), making it the highest net contributor in Nigeria.
  • Osun had the most disproportionate gain, remitting a mere ₦590M but receiving ₦7.73B, an astronomical 1,211% return—the highest redistribution gain in the South-West.
  • The entire South-West remitted ₦341.18B but received only ₦106.85B, meaning it got back just ₦0.31 for every ₦1 contributed, highlighting a severe VAT allocation imbalance.
  • Ondo and Ogun remitted only ₦3.3B but received ₦16B combined, far exceeding their generated VAT, while Lagos alone subsidised most of the allocations across the country.
Abia State generated just 1.9% of the South-East’s VAT revenue but took home 18.6% of the total the region received
  • The South-East remitted ₦10.94 billion in VAT but received ₦39.15 billion, a 257.7% increase, showing a high reliance on VAT sharing.
  • Abia, the lowest contributor (₦734M), received ₦7.29B, nearly 10× its remittance, making it the biggest relative beneficiary in the region.
  • Anambra, the highest contributor (₦3.56B), received only ₦8.72B, showing a sharing trend where high-contributing states do not necessarily receive the most.
  • Every South-East state received at least 2× what they remitted, with an average allocation of ₦7.83B despite an average contribution of just ₦2.19B.
Zamfara, the lowest contributor, received over 5× its input, while Kano, the highest contributor, had the lowest relative gain
  • The North-West region received ₦66.55 billion, more than double its remittance (₦28.31B), showing a heavy reliance on federal VAT sharing.
  • Zamfara, the lowest contributor (₦1.45B), received the highest percentage gain (+433%), getting ₦7.72B, while Kano, the highest contributor (₦9.59B), had the smallest relative gain (+41.5%).
  • Kaduna and Katsina, despite remitting ₦3.50B and ₦3.86B, received ₦10.18B and ₦10.01B, respectively, nearly tripling their remittance.
  • Kano remitted 34% of the zone’s VAT but received only 20.4% of the total allocation, reinforcing that VAT is distributed based on equality and not economic strength.
South-west remitted ₦341.38B but received only ₦99.85B
  • South-West drives Nigeria’s VAT but gets little back. The region remitted ₦341.38B (53%) but received only ₦99.85B (29% return).
  • South-South remitted ₦121.84B but got ₦52.49B (43% return); Rivers alone gave ₦90.21B but got just ₦11.01B.
  • The North enjoyed the highest VAT gains, remitting ₦66.18B and receiving ₦161.11B (240% return); the North-West got ₦66.75B from ₦28.31B (235% return).
  • South-East and North-East got the biggest VAT boost. South-East: ₦10.94B remitted, ₦39.13B received (357.6% return); North-East: ₦14.94B remitted, ₦46.68B received (312.5% return).
Lagos State’s IGR skyrocketed 112% from ₦384.26B in 2013 to a record ₦815.86B in 2023
  • Lagos State’s IGR grew by 112%, from ₦384.26B in 2013 to a record ₦815.86B in 2023.
  • Revenue dipped to ₦268.22B in 2015 before recovering and steadily increasing.
  • A major jump occurred in 2019, with IGR rising from ₦382.18B to ₦646.61B in one year.
  • Despite a dip in 2022, IGR hit an all-time high in 2023, signalling a strong economic recovery.
The South-South region got back just ₦0.43 for every ₦1 remitted, one of the lowest VAT returns in Nigeria
  • The South-South remitted ₦121.84B, making it one of the biggest net donors to the national VAT pool.
  • The region received only ₦52.49B, meaning it got back just 43% of its VAT contributions.
  • Rivers State alone remitted a staggering ₦90.21B (74% of the region’s total) but received only ₦11.01B (12.2% return), marking one of the worst VAT allocation disparities in Nigeria.
  • Cross River had the lowest VAT contribution (₦1.55B) but received ₦7.45B, a 380% gain, while Bayelsa, despite remitting ₦12.8B, received only ₦8.02B, less than lower-remitting states like Delta (₦9.05B).
  • Every state in the South-South received more than it remitted, except for Bayelsa and Rivers, with the latter being the only state to suffer a massive VAT deficit.
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