FAAC disburses N606.2 billion in May, allocation drops by 22%

The Federation Account Allocation Committee (FAAC) disbursed the sum of N606.2 billion to the three tiers of government in May 2020, from the revenue generated in the previous month. This was revealed in the latest FAAC report released by the National Bureau of Statistics (NBS).

Checks by Nairametrics shows that N606.2 billion marks a decline of 22.4% when compared to N780.9 billion disbursed in April 2020. It however grew slightly by 4.2% compared to N581.6 billion allocated in March 2020. Meanwhile, a total of N3.33 trillion as being disbursed between January and May 2020.

Breakdown

1. The Federal Government received the highest share of N255.1 billion (42.1%) from the total disbursement, States received a total of N166.63 billion, local governments received N125.4 billion.

2. Oil-producing states received N37.4 billion as part of the 13% derivation fund.

3. The sum of N194.19 billion was disbursed to the FGN consolidated revenue account; N4.59 billion was shared as a share of derivation and ecology; N2.3 billion as stabilization fund; N7.71 billion for the development of natural resources; and N5.43 billion to the Federal Capital Territory (FCT) Abuja.

The amount disbursed comprised of N370.41 billion from the Statutory Account, N94.5 billion from Valued Added Tax (VAT), N1.12 billion from Excess Bank Charges Recovered for the Month, N8.89 billion from the Distribution of Solid Mineral Revenue for the month, N103.96 billion distribution for the Month and N27.3 billion Exchange Gain Differences.

States allocation: Delta State received the biggest share of the total allocation as it scooped a sum of N15.79 billion gross allocation followed by Lagos State, which received N13.05 billion in May. Akwa Ibom received N12.5 billion, Rivers State (N11.39 billion), and Bayelsa (N10.62 billion).

On the flip side, Kwara State received the lowest share (N3.73 billion) followed by Ekiti State with N3.74 billion allocation. Others include; Nassarawa (N3.82 billion), Ebonyi (N3.83 billion) while Osun State received N3.91 billion.

External debt deductions: In May 2020, a sum of N35.9 billion was deducted from the allocation disbursed to the states for the following reasons;

1. External debt deductions in the month stood at N4.46 billion, from which Lagos state accounted for 32.6% (N1.46 billion) of the total debt deductions.

2. Contractual obligation (ISPO) in May was N6.14 billion while other deductions stood at N25.21 billion.

3. Other deductions comprise of, National Water Rehabilitation Projects, National Agricultural Technology Support Programme, Payment for Fertilizer, State Water Supply Project, State Agricultural Project, and National Fadama Project.

Upshot

The Nigerian economy, being faced with the ripple effect of the COVID-19 pandemic which was characterized by lockdown measures and halt in most aspects of the economy has caused a plunge into the generation of revenue by the federation in 2020.

Also, the sharp decline in global oil prices has added to the cause of worry. A recent world bank report stated that the Nigerian economy is highly vulnerable to oil shocks as even nonoil sectors of the economy depend on the activities of the oil sector.

It should be noted that oil and gas represent over 80% of goods and services exported by Nigeria and forms a larger chunk of the government’s revenue.

it is therefore imperative that the three tiers of government develop more innovative ways of generating revenue so as to meet up with the financial demands that the smooth running of the economy requires.