Nigeria’s three federating units – federal, states and local governments shared N8.5 trillion from the Federation Allocation Account Committee (FAAC) in the 2018 financial year, the highest disbursed by the FAAC in the last two years, a report from the Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed.
NEITI, said in the report – Quarterly Review – made available to THISDAY by its Director of Communications and Advocacy, Dr. Orji Ogbonnaya Orji that the N8.52 trillion shared among the three tiers of government in 2018 represented a 32.8 per cent increase when compared to N6.418 trillion disbursed in 2017 and was 67.1 per cent higher than N5.1 trillion shared in 2016.
The report showed that while the federal government got N3.483 trillion in the 2018 FAAC disbursements cycles, representing 41 per cent, the 36 states in the country collectively received N2.85 trillion, representing 33.4 per cent. All the 774 local governments in the country got N1.667 trillion, representing 19.6per cent.
According to report, government revenues have been on the increase since 2017, as well as disbursements.
It explained for instance, that in the first quarter of the year, FAAC shared N1.938 trillion, while N2.008 trillion was disbursed in the second quarter. Disbursements in the third and fourth quarters were N2.278 trillion and N2.299 trillion respectively.
The rebound in federation revenue contianued as a result of increases in both oil and non-oil revenue,” said NEITI, in its explanation of reasons for the steady rise in government revenue.
NEITI also noted there were three consecutive quarters in 2018 when total disbursements exceeded N2 trillion, pointing out that the last time this happened was in the third quarter of 2014.
“With the exception of the third quarter of 2017, the N2.299 trillion disbursed in the fourth quarter of 2018 was the highest quarterly disbursement since the second quarter of 2014,” the report added.
On the states’ share of the FAAC disbursements, the NEITI disclosed that five states received higher than N100 billion each in 2018. The top beneficiary states it noted, were Lagos, which got N119 billion; Bayelsa -N153.1 billion; Rivers – N172.6 billion; Akwa Ibom – N202.4 billion; and Delta which got N213.6 billion.
It further disclosed that 23 states received less than N60 billion each as total FAAC receipts in 2018. They included Cross River; Ekiti; and Ogun states which received N37 billion; N39.3 billion; and N39.6 billion respectively.
Eight states namely: Zamfara; Gombe; Plateau; Kwara; Ebonyi; Nasarawa; Taraba, and Adamawa, received between N40 billion and N49.9 billion.
Twelve states, it indicated received between N50 billion and N59.9 billion, and they were Yobe; Enugu; Kogi; Bauchi; Imo; Sokoto; Kebbi; Anambra; Abia; Benue; Niger and Oyo.
In addition, six states – Jigawa; Katsina; Borno; Ondo; Kaduna and Edo, received between N60 billion and N69.9 billion, while Kano state received a total of N84.2 billion in 2018.
NEITI said a close look at the disbursements to states indicated a wide disparity, where Osun state received the lowest net allocation of N22.8 billion and Delta received the highest net allocation of N213.6 billion, suggesting that net disbursement to Delta was 935 per cent of that of Osun.
The publication however noted with concern that despite the upward trajectory in FAAC disbursements to the three tiers of government, the disbursements were inadequate to meet states’ budgetary requirements.
It explained thus: “Clearly, there was no state that could adequately finance its budget solely from FAAC disbursements. There were three states where FAAC disbursements were more than 50 per cent of their budgets: Delta; Enugu; Yobe. For all other states, disbursements were less than 50 per cent of their budgets.”
On internally generated revenues (IGR), the NEITI noted that it was highly unlikely that IGR would be able to make up for the shortfall in FAAC disbursements to states.
According to the report, only four states – Cross River; Lagos; Ogun; and Rivers, had estimated IGR that was more than 50 per cent of their FAAC allocations, adding that out of these states, only Lagos and Ogun had IGR that was actually higher than their FAAC allocations.
The NEITI review further revealed that estimated IGR in six states of Enugu; Kaduna; Kano; Kwara; Osun; and Oyo, was more than 40 per cent of their FAAC allocations.
On revenue projection in 2019, the Quarterly Review predicted an upward trend in revenue receipts into the government coffers from oil and gas sector as well as the attendant increases in FAAC disbursements.
It said in this regards: “FAAC disbursements will increase further in 2019. This is largely due to expected increase in Nigeria’s oil production and further consolidation of efforts by OPEC to keep oil prices from falling.
“With the concerted efforts by the Organisation of Petroleum Exporting Countries to limit oil production, coupled with sanctions on Iran and Venezuela oil exports, it is expected that oil prices will not fall to the very low levels experienced from 2014 to 2017.”
On the domestic front, NEITI said it was optimistic oil production will increase in 2019 given the take-off of Egina offshore field, which started production in December 2018, with optimum production capacity of 200,000 barrels per day (bd).
“Production from this field and other shut-in fields whose production is expected to come back on-stream will increase the nation’s oil production,” it explained.
NEITI equally said that the Quarterly Review was designed to provide timely information and data as tool to support citizens’ engagement; advocacy; constructive debate; information sharing and enlightenment in tracking the utilisation of extractive revenue funds for purposes of development.