By Firdaus Jibril
The Federation Account Allocation Committee (FAAC) has urged state governments to use the recent growth in federal allocations to build lasting fiscal strength rather than treat increased revenue as a temporary windfall.
The Committee made the call at its August 2026 meeting in Owerri, Imo State, where Commissioners of Finance and Accountants-General participated in a dedicated session on subnational fiscal fitness.
FAAC stated that the increase in revenue over the past three years, driven by subsidy removal, exchange-rate unification, and tax reforms, provides states with an opportunity to undertake reforms that can strengthen their finances over the long term.
The Committee identified six areas it described as vital signs of fiscal fitness for the Federal Government and the states.
These include improving the quality of internally generated revenue, strengthening government assets, expanding economic activity, attracting private capital, investing in human capital, and improving the transparency of public financial records.
FAAC urged states to diversify their own-source revenue beyond narrow tax bases, identify idle or underutilized government-owned assets, and put them to productive use.
It also called for stronger measurement and expansion of state economies, including the development of official state Gross Domestic Product (GDP) data.
On investment, the Committee urged governments to provide stable, predictable business environments and adopt structured approaches to engaging investors.
It further stressed the need for sustained investment in education and healthcare, describing human capital as a foundation for future development.
FAAC also called for timely, audited, and transparent public accounts across all levels of government.
The Committee encouraged all tiers of government to use the current period of stronger revenue growth to institutionalize reforms, including establishing comprehensive government asset registers, conducting payroll verification, and ensuring the timely publication of audited accounts within the next 12 months.
FAAC noted that the overarching objective is to convert increased revenue into durable fiscal capacity and stronger social and economic outcomes for citizens.