By Ade Adesokan
Nigeria’s Federation Account Allocation Committee distributed a record-breaking ₦1.818 trillion in June 2025, marking the highest monthly allocation in the nation’s history. This dramatic surge from April’s ₦1.681 trillion represents an 8.2% increase within two months, signaling either a transformative economic breakthrough or the precursor to dangerous inflationary pressures that could destabilize the economy.
Central Bank Governor Olayemi Cardoso has sounded the alarm about this massive liquidity injection, warning that such unprecedented revenue flows could trigger price surges across critical sectors including banking, insurance, and security. The question facing Nigeria today is whether this windfall will catalyze sustainable development for manufacturers, farmers, and street traders, or unleash inflationary forces that erode the purchasing power of ordinary citizens.
The numbers tell a compelling story of fiscal transformation. April’s distribution of ₦1.681 trillion was followed by May’s slight dip to ₦1.659 trillion, then June’s explosive jump to ₦1.818 trillion. This trajectory far exceeds typical monthly variations and suggests fundamental shifts in Nigeria’s revenue generation capacity rather than a temporary windfall.
For Nigeria’s manufacturing sector, this sustained growth presents unprecedented opportunities. Increased government spending translates directly into expanded public contracts and stronger consumer demand driven by improved public sector salaries. Entrepreneurs and small business owners are positioning themselves to capitalize on enhanced government procurement activities, while the consistent revenue stream provides confidence for long-term investment planning.
The banking industry stands to benefit significantly from this fiscal surge through continued deposit growth and enhanced lending capacity. Financial institutions can now pursue longer-term lending strategies with greater confidence, potentially leading to interest rate reductions as liquidity concerns diminish. However, bankers are acutely aware that rapid revenue growth validates Governor Cardoso’s inflation warnings, as sustained liquidity injection historically creates upward pressure on prices throughout the economy.
Insurance companies are witnessing a parallel transformation as the fiscal boom suggests broader asset ownership and rising income levels across Nigeria. This environment drives increased demand for insurance products across all sectors, enabling companies to confidently expand their offerings and adjust premium structures to reflect improved economic conditions. The sustained nature of the revenue growth provides the stability insurance companies need for accurate risk assessment and product development.
Nigeria’s agricultural sector, which received significant investment following April’s ₦1.681 trillion distribution, now has access to an additional ₦137 billion for expanded rural infrastructure development. Farmers are demonstrating increased confidence in adopting advanced agricultural techniques and investing in upgraded equipment, supported by the promise of continuous funding streams. This agricultural revival could prove crucial for Nigeria’s food security and export potential.
Security sector improvements have gained momentum as steady funding growth enables states and local governments to shift from emergency response measures to comprehensive long-term infrastructure development. Enhanced citizen safety through sustained investment in security apparatus represents one of the most visible benefits of the increased allocations.
Yet the shadow of inflation looms large over these positive developments. The swift increase in available funds intensifies the risk of price inflation that could undermine the purchasing power gains experienced by ordinary Nigerians. Market women, artisans, and small traders face the prospect of rising input costs that could erode the benefits of economic growth, creating a paradox where increased prosperity leads to reduced affordability.
The Central Bank of Nigeria confronts an extraordinarily delicate balancing act in managing this fiscal abundance. While higher revenue signals improved national fiscal capacity, it simultaneously demands sophisticated monetary policy coordination to prevent inflation from neutralizing economic progress. Governor Cardoso and his monetary policy team must calibrate their interventions with precision to ensure that increased liquidity drives genuine economic growth rather than runaway price increases.
For Nigeria’s workforce, the sustained revenue increase implies continued salary improvements and fewer payment delays that have historically plagued government employees. However, these wage gains could be offset by escalating living costs if inflationary pressures materialize. Self-employed professionals and informal sector workers must navigate emerging opportunities while preparing for potentially volatile pricing environments.
Paradoxically, despite these unprecedented FAAC allocations, several state governments continue to default on their pension obligations to retirees. A stark illustration of fiscal mismanagement emerges when examining states that receive substantial federal allocations yet fail to honor commitments to their retired workforce. Recent reports indicate that 32 states collectively owe contractors and retirees ₦933 billion, with ₦524.63 billion representing unpaid pensions and gratuities alone.
Abia State presents a particularly troubling case, with pensioners owed 48 months of pension arrears and 30 months of gratuity arrears, forcing retirees to resort to prayer and fasting to press demands for payment. Despite Governor Alex Otti’s administration beginning monthly pension payments upon assuming office, the inherited backlog remains substantial. Similarly, states across the Southeast including Anambra, Ebonyi, and Enugu continue to struggle with pension payment delays, creating a situation where federal windfall allocations do not translate into relief for suffering retirees.
The contradiction is particularly sharp when considering that some states receiving enhanced FAAC distributions simultaneously fail to remit their contributions under the Contributory Pension Scheme, effectively creating zero pension outcomes for current workers at retirement. This systematic failure to honor pension obligations, even amid increased federal allocations, highlights deeper governance challenges that transcend mere revenue availability.
The pension sector stands to experience mixed implications from this revenue surge. Under the Defined Benefit Scheme (DBS), current pensioners may benefit from improved funding for outstanding obligations and potential increases in monthly payments as government revenues strengthen. Similarly, those under the Contributory Pension Scheme (CPS) could see enhanced government contributions and improved funding for pension administration. However, a stark divide persists as pensioners from seven defunct federal agencies remain excluded from these benefits despite the increased allocations.
The most affected are NITEL-MTEL pensioners, who remain the only class of retirees from defunct federal agencies yet to receive their outstanding entitlements, with 35 months in arrears despite other agencies being fully settled. The defunct Nigeria Telecommunications (NITEL/MTEL) accounts for the largest outstanding liability at ₦73 billion, representing 81% of total unfunded obligations to defunct agencies.
Beyond NITEL-MTEL, the excluded agencies include NICON Insurance Corporation, Delta Steel Company Limited, New Nigerian Newspapers, Nigeria Reinsurance Corporation, Federal Housing Authority (FHA), and Savannah Sugar Company Limited. Nigerian Defense Academy (Civilians) also falls within this category of agencies with unresolved pension obligations. The exclusion of NICON ex-staff from pension adjustments and wage increases is based on claims that they do not fall within the listed salary structures of eligible agencies, as government agencies argue these defunct parastatals previously received super salary structures.
This pension disparity highlights a troubling inequality within Nigeria’s retirement system, where increased FAAC allocations benefit current pensioners while leaving thousands from privatized or liquidated agencies in financial limbo. The irony is particularly sharp as these enhanced revenues could easily address the estimated ₦90 billion total liability owed to defunct agency pensioners, yet bureaucratic and structural barriers continue to deny them access to relief.
The regional impact of this fiscal surge reveals significant disparities in readiness and capacity. States that invested their April allocations productively in infrastructure and productive capacity are now better positioned to maximize the benefits of June’s increased distributions. Conversely, states that directed their resources primarily toward consumption may experience more severe inflationary pressures, lacking the productive infrastructure necessary to absorb fresh liquidity without triggering price increases.
This April through June progression represents Nigeria’s transition from managing chronic revenue scarcity to navigating unprecedented fiscal abundance. The fundamental challenge facing policymakers, business leaders, and citizens is ensuring that these record revenues foster sustainable economic growth rather than speculative bubbles that could destabilize the entire economy.
The economic data suggests that Nigeria has crossed a threshold where revenue generation is no longer the primary constraint on development. Instead, the quality of fiscal management, the wisdom of spending decisions, and the coordination between monetary and fiscal policy will determine whether this windfall becomes a foundation for lasting prosperity or a catalyst for economic instability.
As Nigeria grapples with this new reality, the stakes could not be higher. The difference between sustainable growth and inflationary chaos may depend on decisions made in the coming months by government officials, central bankers, and business leaders across the country. Success will require unprecedented coordination, strategic thinking, and the discipline to prioritize long-term stability over short-term gains.
More revenue is no longer Nigeria’s goal. What matters now is the wisdom with which this abundance is managed.
Adesokan is a public affairs commentator and an international human rights activist
