The Federation Account Allocation Committee (FAAC) disbursed the sum of N327.68 billion to the 36 states and the 744 local governments in September 2019. This was disclosed after the monthly Federal Allocation Committee Meeting.
According to the communique released by FAAC chaired by the Accountant General of the Federation (AGF), Ahmed Idris, federal allocation to States and LGAs in Nigeria dropped to N327.68 billion in September 2019, from the N331.57 billion disbursed in the previous month (August). This means allocation dropped by 1.17%.
The breakdown showed that in the month of September, a total of N693.529 billion was disbursed among the three tiers of government. The Federal Government got the biggest share of N293.801 billion, states received N186.816 billion and the local government Councils shared N140.864 billion.
- Also, as part of the 13% derivation fund, the sum of N51.532 billion was disbursed to the oil-producing states while revenue-generating agencies received N20.517 billion.
- Also, the committee, in the communique, stated that as at 17th October 2019, the balance of the Excess Crude Account stood at $323.692 million.
- The amount disbursed comprised of N599.701 billion from the Statutory Account, N92.874 billion from Valued Added Tax (VAT) and N954 million exchange gain.
- The communique also stated that in September 2019, revenue from Petroleum Profit Tax (PPT) and Company Income Tax (CIT) decreased while Royalties, Import and Excise Duties, and Value Added Tax increased considerably.
Revenue Concerns: In the light of declining federal allocation revenue and growing debt stock of states, a quick check at the IGR numbers for half-year 2019 showed that some states in Nigeria borrowed over 700% of revenue generated within just 6 months.
- This implies that several states in Nigeria are technically bankrupt without debt financing and Federal Government monthly allocation.
- Also, the decline in FAAC could imply that there will be pressure on the government to use borrowing to fund recurrent expenditure instead of highly craved capital expenditure which is almost becoming the norm with state governments.
In the meantime, as earlier published on Nairamerics, the call for a review of the federal allocation sharing formula by state governments to adjust to the realities of dwindling revenue might get increasing attention, in the light of continuous decline in FAAC.
The State and LGAs are expecting to get more money if the revenue sharing formula are reviewed as planned by the Federal Government.