NEITI: FG, States, LGs Shared N1.945tn FAAC Disbursements in Q1 of 2020
- Projects revenue fall in second quarter
By Emmanuel Addeh
The Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed that the Federation Accounts Allocation Committee (FAAC) disbursed N1.95 trillion to the federal, states, local government areas and other statutory agencies in the first quarter of 2020.
The organisation said that the federal government got N791.4 billion, N669 billion was shared by the states, while about N395 billion was shared by the 774 local government areas in the country.
NEITI, in the report, which covers the first three months of this year, said the balance went to the North East Development Commission (NEDC), the Excess Crude Account (ECA), Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS) and the Department of Petroleum Resources (DPR).
According to the latest review, which was released in Abuja on Monday, the Q1 2020 FAAC disbursements were the highest first quarter disbursements since 2014, compared to N1.648 trillion in Q1 2015, N1.132 trillion in Q1 2016, N1.411 trillion in Q1 2017, N1.938 trillion in Q1 2018, and N1.929 trillion in Q1 2019.
The report, which was signed by the Director of Communications and Advocacy, NEITI, Dr Ogbonnaya Orji, also made projections on the possible impacts of Covid-19 on government revenues.
It explained that the total FAAC allocations during the period under review comprised gross disbursements to the federal government, states, local government councils and the 13 per cent derivation as well as cost of collections by the NCS, the FIRS, DPR and other allied handling charges.
NEITI noted that from the previous years, with the exception of 2018, the general trend since 2015 had been that total disbursements fell in the second quarters, before rising in the third quarter, noting that with the Covid-19 pandemic, it is almost certain that total disbursements will fall in the second quarter of 2020.
“On FAAC disbursements to states between January and March this year, there was a wide disparity between states as Osun State with the lowest allocation received N6.44 billion and Delta State with the highest disbursement received N52.03 billion, a difference of 708 per cent.
“Delta State’s net FAAC disbursements were higher than the combined total net disbursements of N50.67 billion of the six lowest receiving states, comprising Osun, Cross River, Plateau, Ogun, Ekiti and Gombe. Further analysis revealed that combined disbursements to four states (Delta, Akwa Ibom, Rivers and Bayelsa) with the highest net FAAC disbursements were higher than the combined net disbursements for the 17 states with the lowest disbursements.
“The combined total net disbursement to these four states was N167.76 billion. This figure is higher than the combined total of N159.99 billion received by the 17 lowest receiving states (Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Bauchi, Abia, and Kogi),” the review stated.
According to the report, 31 states received less than N20 billion as total net FAAC disbursements in the first quarter of this year while only five states received more than N20 billion listing the states as Lagos (N26.23 billion), Bayelsa (N35.14 billion), Rivers (N39.99 billion), Akwa Ibom (N40.61 billion) and Delta (N52.03 billion) respectively.
Furthermore, the review disclosed wide disparity in the amounts deducted from the states as their debt obligations, with Lagos State having the highest deductions of N14.92 billion, while Yobe had the lowest deductions of N820.18 million.
On the prospects of FAAC disbursements for the rest of the year as a result of the impact of Covid-19, the review explained: “In light of the ‘double whammy’ of declining oil demand and oil prices as a result of the Covid-19 pandemic, government revenue would likely continue to fall in subsequent months.
“As global crude oil prices plummet in the midst of the global oil supply glut arising from lockdown of economic activities in many countries of the world, all tiers of government will struggle to fund their 2020 budgets.”
NEITI projected revenue for the federal government for the year as N8.42 trillion, comprising oil revenue of N2.64 trillion, non-oil revenue of N1.81 trillion, and revenue from other sources of N3.97 trillion, adding that oil remained the dominant single source of revenue, with the figure of N2.64 trillion making up 31.35 per cent of total projected revenue.
It added: “The interesting point to note is that while the share of oil revenue represents the direct revenue, there are also indirect sources of revenue from oil. These include signature bonus and renewals and share of dividend from NLNG. In addition, taxes and customs duties, which are based on economic activities will suffer in the light of the lockdown of the major activity hubs of the country.”
The review called for innovative and concerted actions on the part of governments at all levels to mitigate the impact of COVID-19, not just on revenues but also on the economy as a whole.
It welcomed the proactive measures already being taken, including the approval to withdraw $150 million from the stabilisation fund to supplement FAAC disbursements; initiating modalities for states to benefit from debt and interest moratorium, the review of this year’s budget to reflect current economic realities and a $3.4 billion facility by the International Monetary Fund (IMF).
The agency urged state governments to revise their budgets and prepare for lower FAAC disbursements, advising that states might need to rely more on internally generated revenue (IGR) to service their budgets.
“However, it must be said that IGR depends largely on personal incomes, which will likely fall as the lockdown is prolonged and economic opportunities become scarce,” the report stated.
