Chairman of the Alliance for Economic Research and Ethics, Dele Oye, has accused the federal government of retaining about N1.1 trillion from the federation account before disbursing May 2026 Federation Account Allocation Committee revenue to other tiers of government.

Oye described it as a major distortion of fiscal federalism, saying federal authorities effectively appropriated 32 per cent of total federation revenue at source before sharing the balance. He said FAAC records showed gross revenue of N3.40 trillion in May, of which only N2.30 trillion, about 68 per cent, was distributed to the three tiers.

The remaining N1.10 trillion was deducted upfront through intervention and statutory obligations, he said, further entrenching fiscal centralization and weakening states and councils. He proposed a mandatory savings threshold of five to 10 per cent of gross revenue channeled into the Sovereign Wealth Fund before distribution.

While the federal government officially received N818.68 billion, or 35.4 per cent of distributable revenue, Oye said its effective control was far higher once deductions were considered. States received N759.14 billion (33 per cent), the 774 local councils shared N534.28 billion (23.2 per cent), and oil producing states received N188.13 billion in derivation revenue.

He drew attention to the N500 billion National Security Emergency Fund, the largest single deduction, noting it nearly equaled the total shared by all local governments. Despite month on month revenue growth of 6.9 per cent, Oye warned the fiscal position remained fragile, citing a 51 per cent underperformance in mineral revenue and an eight per cent drop in VAT receipts signaling weaker consumer demand.

He said only N50 billion, or 1.5 per cent of gross revenue, was saved during the period, calling it inadequate. The group urged statutory limits on pre distribution deductions, stricter legislative oversight of intervention funds, a review of the revenue sharing formula and more realistic revenue projections.