FAAC Allocations as Constitutional Rights, Not Charity

Obinna Chima

During President Bola Tinubu’s working visit to Abia State a few days ago, the Deputy Speaker of the House of Representatives, Hon. Benjamin Okezie Kalu, the country’s number six citizen, made some remarks that betrayed a troubling ignorance of the workings of Nigeria’s federal structure and the constitutional principles guiding revenue allocation from the Federation Account.

The President, who was represented by the Minister of Works, Mr. David Umahi, inaugurated projects undertaken by the State Government in Umuahia and Aba, respectively.

In his speech at the ceremony, Kalu, who is one of the leaders of the legislature, an independent arm of government whose role is to oversight the executive, displayed a disturbing misunderstanding of legislative duty.

Hear him: “As a leader in this country and as a citizen of Abia, I want us to be very vocal in praising the President of the Federal Republic of Nigeria, on how he has made resources available to the States. When he removed oil subsidy, he did not keep the money in Abuja, but he sent it to the States.

“So, it is my challenge to the Commissioner of Information and all the media houses in Abia State, to please give credit to whom credit is due. The one that the President has done, make sure that Abians know that our President is supporting his friend, the Governor of Abia State. If we need more from the President, we must give credit to the President so that he will release more to Governor Otti, to do more for Abia State.”

It is worrisome that a high-ranking lawmaker, who should know better and who a lot of Nigerians look up to, will hold such an opinion. Such statements from persons like Benjamin Kalu, completely reduce a constitutional role to an act of benevolence from President Tinubu, when it ought not be so.

For better understanding, the Nigerian government’s financial system operates a structure where funds flow to the three systems of government from the Federation Account. The Federation Account serves as the central pocket through which the Federal, State, and Local Governments fund developmental projects, as well as maintain their respective workforce and meet their recurrent expenditure.

The flow of revenue into the Federation Account includes oil revenues and related taxes, revenues generated from the Nigerian Customs Service trade facilitation activities, company income tax(CIT), any sale of national assets, surplus, and dividends from State Owned Enterprises (SOE).

Fundamentally, there are two components of the revenue allocation formula used for the disbursement of funds from the Federation Account to the three tiers of government. The Vertical Allocation Formula and the Horizontal Allocation Formula.

The current formula sees the Federation Account Allocation Committee at its monthly meeting allocate 52.68 percent of whatever amount generated to the federal government; 26.72 percent to the State Governments and 20.60 percent to the Local Governments.

Undoubtedly, accruals into the federation account have more than doubled since 2023, after President Tinubu announced that “fuel subsidy is gone” during his inauguration speech. For instance, June this year recorded the highest monthly allocation so far this year as FAAC shared N1.818 trillion among the federal, state, and local governments.

Naturally, the expectation from citizens is that with increased allocations to States, the Governors are to deliver more in terms of governance, infrastructure, social welfare, so as to address poverty and ensure that the teeming young population in the respective States are actively engaged. Additionally, citizens look to their governors for visible improvements in roads, schools, healthcare, and other essential services that directly impact daily living. The era of excuses is over; with the significant boost in revenues, every state government must show tangible results that justify the increased inflow of funds from the Federation Account.

While there are reports that due to the increased FAAC allocation, some State Governors now engage in reckless and frivolous spending, like in Kano, where the State Government has approved N1.6 billion for the sponsorship of mass wedding for intending couples, Governors that have been able to effectively utilise theirs by investing in infrastructure should be commended.

But that does not warrant commentaries from persons like Kalu that seek to distort constitutional governance and fiscal federalism. Federation Account Allocations are not gifts, handouts, nor rewards from the President, but are constitutionally guaranteed entitlements, derived from revenues that belong collectively to the three tiers of government. Public funds.

The House of Representatives, where Benjamin Kalu is one of the leaders, is constitutionally empowered to oversee revenue collection and allocation, ensuring that funds are used efficiently and equitably. To keep presenting these funds as a presidential act of goodwill is to insult the intelligence of poor Nigerians, especially those in Abia State, who today directly bear the burden of the fuel subsidy removal through higher cost of petrol, food prices, and are faced with excruciating poverty.