By Kehinde Ibrahim, Lagos
Nigeria’s drive to diversify government revenue away from crude oil continued to gather momentum in February 2026, as non-oil revenue surged to N2.40 trillion, accounting for 76.57 per cent of total federation revenue generated during the month, according to the latest Economic Report released by the Central Bank of Nigeria, CBN.
The report showed that provisional gross Federation Account revenue increased by 16.94 per cent to N3.14 trillion in February, compared with the preceding month, reflecting stronger revenue mobilisation driven largely by improved collections from non-oil sources.
According to the apex bank, the improved performance was an indication that the Federal Government’s tax reform initiatives introduced in 2025 were beginning to yield positive results by broadening the revenue base and improving tax compliance.
The CBN stated that “provisional data indicated improved revenue performance, largely on account of higher non-oil receipts, which reflected early gains from the 2025 tax reforms.”
A detailed breakdown of the revenue profile showed that non-oil receipts rose by 28.85 per cent, increasing from N1.86 trillion recorded in January to N2.40 trillion in February. The substantial increase reinforced the growing contribution of the non-oil sector to public finances amid sustained efforts to reduce the country’s heavy reliance on oil proceeds.
The report attributed the remarkable growth primarily to stronger collections from Corporate Income Tax, CIT, and Value Added Tax, VAT, which recorded increases of 94.00 per cent and 18.51 per cent, respectively, during the period under review.
Value Added Tax remained the single largest contributor to non-oil revenue, generating N1.08 trillion, equivalent to 45.07 per cent of total non-oil receipts. Corporate income tax followed with N912.38 billion, representing 37.97 per cent of non-oil revenue, highlighting the increasing importance of tax administration reforms and improved compliance among businesses.
Despite the strong performance recorded by non-oil revenue, earnings from the oil sector declined during the month.
The CBN reported that oil revenue fell by 10.18 per cent to N735.13 billion, largely due to weaker receipts from Petroleum Profit Tax, PPT, and oil royalties, despite improvements in international crude oil prices during the period.
According to the report, “oil revenue of N0.74 trillion, declined by 10.18 per cent compared with the level in the preceding month, owing to lower receipts from petroleum profit tax and royalties.”
The development further underscored the continued volatility associated with oil-dependent revenue and reinforced the need for sustained efforts to strengthen alternative sources of government income.
The stronger revenue performance translated into higher distributable funds for the three tiers of government under the Federation Account Allocation Committee, FAAC.
Out of the N3.14 trillion generated as gross federation revenue in February, a net sum of N1.90 trillion was distributed to the Federal Government, the 36 state governments and the 774 local government councils after statutory deductions, transfers and other revenue adjustments.
The Federal Government received N525.23 billion, while the states shared N767.29 billion. Local government councils received N517.29 billion, while oil-producing states received N90.19 billion as 13 per cent derivation revenue in line with constitutional provisions.
The report also highlighted disparities in the allocation received by individual states.
Lagos State emerged as the highest recipient of federation allocation with N195.09 billion, reflecting its significant economic activities and statutory entitlements. Rivers State followed with N63.57 billion, while Delta State received N61.73 billion. Oyo State was allocated N54.86 billion, with Kano State completing the top five recipients at N52.17 billion.
At the lower end of the allocation table, Ebonyi State received the least allocation at N21.56 billion, followed by Nasarawa State with N22.41 billion, Gombe State with N22.56 billion, Ekiti State with N23.00 billion, and Taraba State with N23.45 billion.
The February revenue figures underscored the growing role of non-oil taxes in sustaining public finances as the government intensified fiscal reforms aimed at boosting domestic revenue mobilisation. The strong growth in VAT and corporate income tax collections suggested that ongoing reforms are beginning to strengthen the country’s fiscal resilience, even as fluctuations in oil receipts continue to expose the vulnerabilities of Nigeria’s dependence on crude oil earnings. Going forward, analysts believe that sustaining the momentum in non-oil revenue generation will be critical to improving fiscal stability, financing infrastructure development, and reducing the nation’s exposure to external shocks in the global oil market.
