By Francis Ajuonuma, Anthony Otaru and Ben Adoga
Growing public frustration is trailing the huge Value Added Tax (VAT) revenues accruing to states and local governments, as many citizens say they have yet to see visible projects that justify the massive inflows into sub-national coffers.
The anger follows a historic surge in VAT revenue, with total collections hitting N1.08 trillion in January, raising fresh questions about how the funds are being utilised by state and local government authorities across the country.
Under the revised VAT sharing formula, states and local governments jointly received about N903 billion, while the Federal Government got N100.32 billion from the distributable pool.
A breakdown of the distribution shows that states received N551.77 billion, representing 55 per cent, while local governments received about N351 billion, representing 35 per cent of the total distributable VAT.
The new inflow represents about N50.16 billion more than the previous earnings of N501.61 billion, reflecting rising tax inflows into sub-national government coffers.
Despite the windfall, however, many Nigerians say the impact of the funds is hardly visible across most states and local government areas, where infrastructure deficits, unemployment and poverty remain widespread.
A detailed breakdown of VAT distribution among states shows that Lagos State retained N101.34 billion as net VAT, while its local governments collectively received N70.57 billion.
Oyo State ranked second with N24.04 billion, followed by Rivers State with N23.57 billion. Kano received N17.37 billion, while the Federal Capital Territory (FCT) got N15.76 billion.
Other major beneficiaries include Bayelsa (N15.07 billion), Katsina (N13.89 billion), Jigawa (N12.92 billion), Delta (N12.89 billion), and Kaduna (N12.73 billion), among others.
Given the scale of the allocations, analysts say many parts of the country should ordinarily be witnessing visible development projects such as road construction, improved healthcare facilities, housing schemes, expanded educational infrastructure and job-creating initiatives.
Instead, residents in many communities say development projects remain sparse, even as the cost of living continues to rise.
The development has renewed concerns about transparency and efficiency in public spending at the state and local levels, especially at a time when increased revenues were expected to stimulate grassroots economic activity.
*CSOs push for transparency, urge Nigerians to deploy FOI Act to track VAT spending
Civil society organisations say the surge in VAT revenues must translate into tangible projects and improved public services, warning that citizens must begin to demand accountability from sub-national governments.
Executive Director of Yala Watch, Joe Onah, said his organisation has begun tracking how the funds are being spent in Cross River State, insisting that the windfall must not be lost to opaque government spending.
According to him, the sudden increase in revenue should compel state governments to adjust their budgets to reflect the new inflows.
“The governor is supposed to submit a supplementary budget capturing the excess amount that has come in. This money should not be seen as a bazaar; critical projects like roads and water must be provided,” he said.
Onah highlighted the deplorable condition of roads in the Boki Local Government Area, describing it as a major agricultural hub whose economic potential is hindered by poor infrastructure.
“Boki is a food basket producing yams, cocoyams, palm oil and the famous ‘Okazi’ leaf, yet most communities there are inaccessible,” he said.
He also noted that communities in Yala Local Government Area, including Ijegu, Gabu and Okpoma, lack basic infrastructure and potable water.
“The local governments should also develop existing community markets to grow the local economy for the benefit of the people,” Onah added.
Similarly, the Coalition of Civil Society Network of Nigeria and the Civil Society Coalition on Human and Economic Interests (CSCHEI) have questioned how states and local governments are deploying the increased revenues.
The groups urged authorities to ensure that the funds are channelled into healthcare, education, infrastructure and security programmes, in line with the Sustainable Development Goals (SDGs).
Fiscal transparency organisation BudgIT has also cautioned state governments against diverting the additional revenues into political activities or non-essential projects.
In a statement signed by its Secretary, Muhammad Alhasan, the group warned that the utilisation of the funds must be closely scrutinised.
“Spending of the windfall by states remains to be properly interrogated to ensure funds are not wasted or mismanaged,” the statement said.
The organisation stressed that the surge in VAT allocations must translate into measurable public investments that directly benefit citizens.
The Civil Society Legislative Advocacy Centre (CISLAC) said its preliminary investigation into public spending in Kano State found no specific projects funded by VAT proceeds.
According to Ahmed Yakubu, CISLAC’s Kano office representative, the organisation’s review of government expenditure raised serious concerns.
“On their budget lines, VAT spending was not specified. There were no planned expenditures directly reflecting the VAT proceeds, yet they received the allocation,” he said.
Yakubu stressed that the funds originate from taxes paid by citizens nationwide.
“This money is from the consumption of everybody, including the poor. It should not be stolen; the people of Kano must benefit from their derivation,” he said.
He also criticised the silence of state legislatures on the matter.
“State Houses of Assembly are silent on VAT income, yet such windfall demands proper appropriation or supplementary budgets to ensure transparency.”
*‘Corruption, bloated political structures blamed’
Public affairs analyst, Eduzor Ifeanyi, attributed the lack of visible development to corruption and bloated government structures across many states.
According to him, the increase in revenues following the removal of the petroleum subsidy was expected to stimulate infrastructure development and job creation.
“One would have thought that with the increased revenue to states and local governments, there would be visible infrastructure development and job creation, but the reverse appears to be the case,” he said.
He described corruption as the major obstacle to development.
“The biggest problem facing Nigeria today is corruption and people not being held accountable for their actions,” he said.
Ifeanyi also blamed excessive political appointments in many state governments.
“Some governors have close to 300 aides, many without defined functions, earning huge salaries that drain state resources,” he said.
He further criticised what he described as white-elephant projects, citing the construction of airports in states with limited air traffic.
“It is absurd for a state to build an airport that will only be used during festive periods,” he said.
According to him, citizens want governments to prioritise roads, healthcare, education, security, and job creation over projects that offer little economic value.
*Citizens urged to demand transparency
The Centre for Social Justice (CSJ) also called on Nigerians to actively demand transparency from their leaders.
Lead Director of the organisation, Eze Onyekpere, urged citizens to make greater use of the Freedom of Information (FOI) Act to demand accountability from government officials.
“Citizens should continue to make noise and use the FOI Act to demand accountability from governments at all levels,” he said.
He stressed that public pressure remains one of the most effective ways to ensure responsible governance.
“People can write letters to governors, organise lawful protests, or even go to court to demand accountability for how their money is spent,” he said.
According to him, silence from citizens could encourage mismanagement of public resources.
“If citizens keep quiet, leaders may continue to embezzle public funds illegally.”
*Give governments time- Economist.
However, an economist and former Vice-Chancellor of the University of Uyo, Professor Akpan Ekpo, urged Nigerians to exercise patience, noting that the new VAT framework is relatively new.
“The new VAT formula has just been implemented, and this is the first time governments are receiving such bumper revenues, so citizens should give them time before drawing conclusions,” he said.
Ekpo nonetheless advised governments to prioritise healthcare, agriculture, education, road infrastructure, and power supply to stimulate economic growth and attract investment.
“Investing in these sectors will help create jobs and improve the welfare of citizens,” he said.
While urging patience, he also supported citizens’ right to demand accountability.
“Citizens should not be docile. They can organise lawful protests, meet their leaders or even challenge the government in court to demand accountability,” he said.
