FG, States, LGAs share N3.879 trillion in H1 2020 – NEITI

The Federation Accounts Allocation Committee (FAAC) shared N3.879 trillion to the Federal Government, states, local government areas and other statutory recipients in the first half of 2020.

This was disclosed by the Nigeria Extractive Industries Transparency Initiative (NEITI) in its quarterly report released on Tuesday.

Breakdown

While FG got N1.53 trillion, 4.28% lower than N1.599 trillion recorded in H1 2019; the states got N1.29 trillion, 2.8% lower than the N1.35 trillion received in H1 2019 and the 774 local government areas received N771.34 billion.

For local government areas, the 2020 first half disbursements were 2.64% lower than the corresponding disbursements for 2019.

It stated, “FAAC disbursements in the second quarter of 2020 stood at N1.934 trillion. This was made up of N739.2 billion to the Federal Government, N629.3 billion to state governments, and N375.4 billion to the 774 local government areas.”

According to the report, the total FAAC disbursements in the second quarter of 2020 was slightly lower than the N1.945 trillion disbursed in the first quarter of 2020.

This aligned with the projections made in the previous issue of the NEITI Quarterly Review, which projected lower FAAC disbursement in the second quarter.

Why the drop

The 0.55% decrease in Q2 2020 could be attributed to a couple of factors. They are rebound in oil prices in the second quarter as a result of ease of lockdowns by countries across the world.

The other was the adjustment of the official exchange rate by the CBN from N307 to a dollar to N360 to a dollar in March resulting in higher naira disbursements.

Quarterly disbursements

FAAC disbursements in the first and second quarter of 2020 were very volatile, with the difference in total disbursements between months ranging between N58.9 billion and N199.3 billion.

“During this period, the disbursements were very volatile in the first half of 2020, compared to 2018 and 2019.

“Unlike 2018 and 2019 where aggregate disbursements increased and decreased in successive months, in 2020 they fell for two straight months, increased in one month, and then decreased for two straight months,” it added.

In the months under consideration in 2020, aggregate disbursements fluctuated by large amounts, compared to 2018 and 2019.

“Aggregate disbursements were N716.3 billion in January and this fell to N647.4 billion in February.

“Thereafter, disbursements fell to N581.6 billion in March, before increasing to N780.9 billion in April. Disbursements then fell to N606.2 billion in May and to N547.3 billion in June,” it added.

The figures indicate differences of N68.9 billion between January and February, N65.7 billion between February and March, N199.3 billion between March and April, N174.7 billion between April and May, and N58.9 billion between May and June.

For comparison, the highest inter-month difference in the first half of 2018 was N62.9 billion, while the corresponding figure for 2019 was N63.5 billion.

Thus, there have been very wide fluctuations in aggregate disbursements so far in 2020.

NEITI in the report also disclosed that from January to May 2020, actual government revenue was N1.62 trillion, representing 62 per cent of the expected pro-rata revenue of N2.62 trillion from the revised budget.

Thus, the NEITI explained a shortfall of 38% in government revenue for the first five months of the year.

What it means: As oil prices continue to rise, and with the increased pace of economic activities, it means that Government revenue will perform better in the second half of 2020, with the possibility of shortfalls in revenue compared to budgeted figures.

Disbursements, deductions for states

There was wide disparities in the total net FAAC disbursements and deductions for states for H1 2020.

Osun State had the lowest net disbursement of N13.13 billion, while Delta State had the highest net disbursement of N100.81 billion.

What it means: This implies that Delta State received seven times the disbursement that Osun State received.

Total net disbursements received by Delta State (N100.81 billion) was higher than the combined total net disbursements of N99.47 billion received by Osun, Cross River, Plateau, Ogun, Gombe and Ekiti.

Also, the combined total net disbursements of N321.29 billion received by the four highest receiving states of Delta, Akwa Ibom, Rivers, and Bayelsa were higher than the combined total net disbursements of N314.08 billion received by 16 states.

The States are Osun, Cross River, Plateau, Ogun, Gombe, Ekiti, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Ondo, Bauchi, and Abia.

While Lagos State had the highest deductions, Yobe State had the lowest.