FG, States, Others Shared N8.15 trn in 2019 — Economic Confidential

February 13, 2020 Mary

FG, States, Others Shared N8.15 trn in 2019.
….2018 figures higher than 2019 disbursements by 4.42%,

The sum of N8.15 trillion was shared between the Federal, States, Local Governments and other statutory recipients by the Federation Accounts and Allocation Committee (FAAC) in 2019.

This figure is N377billion or 4.42% lower than the 2018 figure of N8.524trillion, but N1.728trillion or 26.92% higher than the total disbursements of N6.419trillion made in 2017.

Out of this amount, the Federal Government received N3.37 trillion, representing 41.4% of total disbursements; the 36 states got N2.761 trillion (33.9%) while the 774 local governments shared N1.649 trillion (20.2%) of the total disbursements.

The information and data are contained in the latest edition of the NEITI Quarterly Review released in Abuja today by the Nigeria Extractive Industries Transparency Initiative.

The publication which examined FAAC Disbursements to the Federal, States and Local governments in 2019, compared the disbursements of the previous years and made projections for the year 2020.

From the publication, and in line with the revenue sharing formula, the FG received the highest disbursements from FAAC while local governments got the lowest.

It further disclosed that revenue shared to the three tiers of government in the two previous years 2018 and 2017 followed the same pattern. “For 2018, total disbursements to FG, states, and local governments were N3.483 trillion, N2.850 trillion, and N1.667 trillion, respectively. For 2017, disbursements were N2.563 trillion to FG, N1.859 trillion to states, and N1.502 trillion to local governments”.

A comparative analysis of the disbursements made by FAAC to the federation in 2019 as against the sharing in the two previous years of 2017 and 2018 shows that the total disbursements to the Federal Government in 2019 were 3.08% lower than the disbursements in 2018, but 31.69% higher than those in 2017.

Also, while the disbursements to the states in 2019 were 3.12% lower than those in 2018, they were 48.54% higher than those in 2017. The scenario was the same for the local governments in 2019, as their disbursements were 1.08% lower than those in 2018, but 9.75% higher than what was recorded in 2017.

The NEITI Quarterly Review compared total FAAC disbursements between 2013 and 2019 and revealed that “The total disbursements fell in three consecutive years from 2013 to 2016. Thereafter, total disbursements increased until 2018. However, the increase in total disbursements stopped in 2019, as there was a decrease in 2019 over 2018 figures”.

The Report further disclosed that over the seven-year period (2013 – 2019), 2013 recorded the highest disbursements of N9.742 trillion, followed by 2014 (N8.595trillion). 2018 came third with N8.524 trillion while 2019 had the fourth highest disbursements of N8.147 trillion.

During the same period (2013-2019), 2019 witnessed the lowest percentage decline in disbursements (-4.42%) while 2018 had the highest percentage increase of 32.8%.

The report identified a general rising trend in FAAC disbursements from the beginning of the year till about August 2019 when disbursements either fell slightly or remained relatively stable. These figures, the report noted, “highlighted the volatile nature of government revenue in Nigeria owing to high fluctuations in oil prices. A central feature of these figures was that disbursements were higher in the second half of 2019 than the first half”.

The NEITI Quarterly Review also disaggregated disbursements to the various tiers of government. The figures presented in the review show a wide disparity between net disbursements received by states.

According to the report, Osun and Cross River states have the lowest allocation of N24.14billion and N36.22Billion. Delta State received the highest disbursement of N218.58 billion. “Put differently, if we assume that the net disbursements received by both states were fairly constant, then, the amount received by Delta State in 2019 alone can be used to cover disbursements to Osun State in nine years”, the Report further explained.

Three states received less than N40billion, nine states received between 40billion-49billion while fourteen states received between 50billion-59billion respectively. Four states: Borno, Katsina, Edo and Kaduna got between 60-69billion and Kano State with N82.34 billion. Four states of the Niger Delta Region plus Lagos were among the big league of states that received over N100billion from FAAC allocations. The Report noted that this is “Owed largely to the effects of 13% derivation”.

The NEITI publication also highlighted other important aspects of the FAAC disbursements during the period under review. These include significant increases in net disbursements to states between 2017 and 2018, in which for instance Ebonyi State recorded the lowest percentage increase in net disbursements in 2017 while the highest percentage increase occurred in Osun State with 118.8% increase in 2018. Besides, for most states (28 of them), the percentage increase of the 2018 disbursements over the 2017 allocations were between 30% and 49%.

On the deductions from states’ allocations, the NEITI Quarterly revealed that Yobe State had the lowest deductions of N2.16 billion while Lagos State had the highest deductions of N44.45 billion. According to that Report, “It is striking that the two states with the lowest net disbursements (Osun and Cross River) had the highest deductions (N27.19 billion and N18.55 billion respectively) after Lagos State. However, deductions for most states (22 of them) were below N10 billion”.

Another significant issue highlighted by the NEITI Quarterly Review was the inadequacy of the net FAAC disbursements to cover the full budgets of all the states. “The figures clearly indicated that no state was able to finance its total budget based on FAAC disbursements alone. These states would need Internally Generated Revenues (IGR) to fulfil this purpose”, the NEITI report stated.

The report added that in 21 states of the federation, “Net FAAC disbursements alone could not service their recurrent expenditure. The NEITI report also compared the total revenue accruable to each state of the federation to the states budgets and concluded that “Even with the addition of IGR to FAAC disbursements, no state can independently finance its budget. Thus, all states would be faced with the option of either not fully implementing their budgets or borrowing to achieve this”.

Some positive projections for 2020 were also made in the review after comparing crude oil prices between January 2015 and December 2019: The available data to NEITI for the first month of 2020 indicated an average oil price of $58.6 per barrel as against the $56.9 in 2019 and $64.9 per barrel price of 2018. This suggests that oil prices in 2020 have experienced slight increase over the 2019 figures.

The report noted that with increased efforts and collaboration between Organization of Petroleum Exporting Countries (OPEC) and other major oil producers to stem falling oil prices, it is hoped that oil prices will not fall further, and this will result in increased revenue for the Federation, and ultimately boost FAAC disbursements in 2020.

The NEITI Quarterly Review is one of NEITI’s policy and advocacy instruments intended to provide timely information and data that could be used to support citizens’ engagement, advocacy, information sharing and enlightenment in the tracking of the use of extractive revenue for development purposes. The publication is in line with the agency’s mandate of ensuring transparency and accountability in the utilization of extractive revenues by government to improve quality of lives and reduce poverty.