Between 2013 and 2016, the three tiers of government in Nigeria cumulatively lost about 40 per cent of the aggregate income they received from the Federation Accounts Allocation Committee (FAAC), the Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed.
The NEITI said in its latest quarterly review of disbursements from the FAAC in 2016 that the federal, states and local governments shared N5.12 trillion from the FAAC in 2016 as against the N6.01 trillion shared in 2015.
It added that disbursements from the FAAC fell by 15 per cent within the period alone, and over 40 per cent between an aggregated period of three years -2013 to 2016.
Nigeria largely depends on income from oil and gas sector to meet most of its obligations.
NEITI report however noted that the twin-blow of low oil prices and militant attacks on oil installations in the Niger Delta had impacted the country’s earnings from oil.
The review, which is the third in the series, focused on disbursements from the federation account, and indicated that payments to the three tiers of government have continued to decline.
The report stated that: “The Federal Government received N3.711 trillion in 2013 and this fell by 43.9 per cent to N2.08 trillion in 2016. Similarly, disbursements to State Governments totaled N3.095 trillion in 2013. In 2016, States received N1.642 trillion, which represented a 46.9 per cent decline on the 2013 figure. Local Governments received N1.011 trillion in 2016, representing over 40 per cent lower than the figure of N1.708 trillion received in 2013.”
It said on disbursements to the federal government in 2016, that the N2.08 trillion it got was against the N6.06 trillion it budgeted for the year, indicating a 20 per cent drop when compared to the 2015 figure of N2.6 trillion.
NEITI said the FAAC payment could only cover about 34 per cent of the budget and was not even enough to meet the recurrent expenditure needs of N2.6 trillion of the federal government in 2016.
The implication of this, NEITI said was that: “The federal government resorted to even higher debts to fund the budget. Debt service payments, which accounted for 24.3 per cent of the 2016 budget, increased.”
NEITI further revealed that revenues accruing to the state governments fell short of their budgets projections with some as much as 30 per cent.
“These disbursements comprise of gross statutory allocation, 13 per cent share of derivation, Value Added Tax, distribution of exchange gain, NLNG dividend, distribution of excess bank charges recovered and distribution of solid minerals revenue,” it explained.
It said some states like Lagos which had a budget of N662.60 billion against the total revenue of N410.5 billion that accrued to it, leaving a shortfall of about N252 billion, were left with huge debt figures.
On disbursements to the 774 local governments in Nigeria, it said Lagos state topped the table with a total of N69.29 billion to its 20 local governments, followed by Kano state’s 44 local governments that received a total of N56.16 billion while Bayelsa State received the lowest disbursement of N11.56 billion for its 8 local governments.
It said on the implications: “Considering that most states already have a high debt burden, the possibility of even higher debts for the states, remain quite high.
“All three-tiers of the Nigerian government have been subjected to dwindling and volatile revenue as a result of militant attacks in the Niger Delta and falling/unstable oil prices.”