More Money, More Misery: Why Rising FAAC Allocations Haven’t Reduced Poverty
By TIMOTHY HAGGERTY-NWOKOLO
NIGERIA’S public finances are awash with cash, yet its people are drowning in hardship. In less than four years, allocations to the federal, state and local governments have more than doubled, but poverty levels have climbed sharply, raising troubling questions about governance, accountability and the real impact of fiscal reforms.
Between 2022 and October 2025, total allocations shared through the Federation Account Allocation Committee (FAAC) surged from ₦9.18 trillion to ₦18.54 trillion. Altogether, ₦44.03 trillion has been shared among the three tiers of government in just 34 months. States alone received ₦7.54 trillion in the first ten months of 2025, compared to ₦3.58 trillion in 2023.
This revenue boom followed major policy shifts under President Bola Tinubu, including the removal of fuel subsidies and the floating of the naira. While these reforms boosted government receipts—helped by foreign exchange gains and higher oil earnings—they also triggered severe economic shocks. Fuel prices jumped from ₦197 per litre to over ₦1,000, inflation soared to 34.8 per cent in December 2024, and the naira briefly slid toward ₦1,900 to the dollar.
Despite unprecedented inflows, poverty has deepened. World Bank estimates indicate that 139 million Nigerians—61 per cent of the population—now live below the national poverty line of ₦376.50 per day. Inflation-adjusted incomes have shrunk, and basic necessities remain out of reach for millions.
President Tinubu himself has acknowledged the disconnect, urging governors to “wet the ground” and ensure that higher revenues translate into visible grassroots development. But economists warn that nominal revenue growth masks deeper structural problems. According to Muda Yusuf of the Centre for the Promotion of Private Enterprise, inflation has eroded the real value of allocations, while weak transparency and poor resource management continue to limit impact.
With FAAC inflows rising and poverty worsening, Nigeria faces an uncomfortable reality: more money alone does not guarantee better living standards—effective governance does.
