State governments may see a reduction in their monthly statutory allocations from the federation account following a request by the Nigeria Sovereign Investment Authority (NSIA) to secure N100 billion monthly. The funds, NSIA says, are crucial for stimulating large-scale investments aimed at boosting Nigeria’s economic growth.
Aminu Umar-Sadiq, the Managing Director and CEO of NSIA, made this request at the March revenue-sharing meeting of the Federation Account Allocation Committee (FAAC) held between April 14 and 15, 2025. According to sources, Umar-Sadiq presented the proposal during the meeting, which involved state commissioners of finance and other key stakeholders in Nigeria’s financial ecosystem.
The request from NSIA comes at a time when the country’s economic situation requires careful financial planning and restructuring. If approved, the N100 billion monthly disbursements would come from the nation’s residual funds, which are revenues collected in the Federation Account that exceed projected hydrocarbon income. The move is intended to create a Naira-based capital pool that NSIA can use to finance critical infrastructure projects across Nigeria.
In his presentation titled “Activating Residual Funding for the Nigeria Sovereign Investment Authority – Unlocking Opportunities for Large-Scale Investments to Drive Nigeria’s Economic Growth,” Umar-Sadiq explained that this initiative is necessary to strengthen the NSIA’s ability to support large-scale domestic infrastructure projects. He noted that the authority’s capacity to help finance these projects could substantially improve Nigeria’s economic standing.
The N100 billion monthly request is designed to make NSIA a leading sovereign wealth fund globally. According to Umar-Sadiq, the funds would help the agency fulfill its threefold mandate: building a savings base for the country, supporting the development of infrastructure, and providing stabilization support for Nigeria’s economy.
NSIA has positioned itself as an important vehicle for strategic investments aimed at fostering long-term economic growth. The proposed funding would allow the authority to take a more active role in financing key sectors that are critical to Nigeria’s economic transformation, such as healthcare, transportation, energy, and technology.
The Managing Director added that the residual funds would enable NSIA to drive more responsible and impactful investments within Nigeria. The goal is to ensure that these funds are used for sustainable projects that provide both economic and social value in the long run. However, the request has been met with concern from some stakeholders, particularly state governments that rely heavily on monthly allocations to meet their financial obligations.
Umar-Sadiq clarified that the residual funds NSIA is requesting will not include the derivation portion of the revenue allocation formula. This means that while state governments will still receive their share of the derivation fund, the overall monthly allocation to the states could decrease due to the disbursement to NSIA.
The move raises concerns about how state governments, especially those heavily dependent on FAAC allocations, will manage the reduction in funds. With many states already facing budgetary constraints, the request for N100 billion could put additional strain on their finances, making it harder for them to meet obligations such as salaries, infrastructure projects, and social welfare programs.
Although NSIA’s request has yet to be officially approved, it has sparked debate among financial experts, politicians, and state governors. Some have expressed concerns that the initiative, while beneficial for long-term economic development, could cause short-term challenges for state governments already grappling with funding issues.
As the debate continues, it remains to be seen how the FAAC will respond to the request. There is also speculation that state governments may seek to resist the proposal or renegotiate its terms if they believe the cutbacks will negatively impact their operations.
