States, LGs face reduced allocations over push for N100bn monthly deductions

State and local governments could experience a reduction in their monthly statutory allocations from the Federation Account following a new funding request made by the Nigeria Sovereign Investment Authority (NSIA).

The Managing Director and Chief Executive Officer of NSIA, Aminu Umar-Sadiq, proposed that the agency be allocated N100bn monthly to strengthen Nigeria’s residual funds and drive economic expansion.

The proposal was presented at the Federation Account Allocation Committee (FAAC) meeting, held between April 14 and 15, 2025. A copy of the presentation was obtained by our correspondent on Friday.

During the session, Umar-Sadiq urged the committee, which is made up of state finance commissioners, to approve the request, with plans for disbursement to begin from the March FAAC allocation.
Titled “Activating Residual Funding for the Nigeria Sovereign Investment Authority – Unlocking Opportunities for Large-Scale Investments to Drive Nigeria’s Economic Growth,” the presentation outlined the details of the proposal.

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According to the document, the NSIA seeks a structured monthly disbursement of N100bn from Residual Funds — revenues in the Federation Account exceeding projected hydrocarbon income — to build a Naira-denominated pool of investible capital.

The authority said the initiative would bolster its ability to finance vital infrastructure projects across the country.

“The funding would position the authority as a leading sovereign wealth fund globally, promoting responsible and strategic investments for Nigeria’s economic development and enhancing its threefold mandate to build a savings base for the country, enhance the development of infrastructure, and provide stabilisation support,” Umar-Sadiq said.

He further explained that the residual funds represent a legitimate funding source for the authority, with the stipulation that the derivation component of the revenue sharing formula would not be included in the disbursement.