Francis Ogwo
Report from the Nigerian Extractive Industries Transparency Initiative (NEITI) shows that there have been variations in the allocations of the Federal Accounts Allocation Committee (FAAC) since the outbreak of the novel COVID-19.
According to the latest edition of the review released in Abuja on Monday, FAAC disbursed N1.945 trillion to Federal Government, States, Local Government and others in 2020 first quarter, making this year’s disbursement the highest for the first quarter since 2014.
The negative impact of the pandemic, however, experts say, may see a drop in remittances for the remaining part of the year.
From the breakdown of the disbursements, it showed N791.4 billion going to the Federal Government, N669 billion shared by the states and about N395 billion shared by the 774 local government areas.
This also saw the balance allocated to the North East Development Commission, the Excess Crude Account, Federal Inland Revenue Service (FIRS), Nigeria Custom Service (NCS) and the Department of Petroleum Resources.
Comparatively since 2014, according to NEITI, shows the breakdown of the allocations of first quarter of 2020 as compared to previous allocations;
YR DISBURSED AMOUNT
Q1 2015 N1.648 trillion
Q1 2016 N1.132 trillion
Q1 2017 N1.411 trillion
Q1 2018 N1.938 trillion
Q1 2019 N1.929 trillion
The review further disclosed that there was a projection of the likely impacts of the pandemic from a review of the FAAC disbursements in the first quarter of this year, “While total disbursements in Q1 2020 were slightly higher than Q1 2019 and Q1 2018, disbursements to the three tiers of government in Q1 2020 were slightly lower than Q1 2019 and Q1 2018.
“This is due to transfers to other accounts in Q1 2020, which were not done in either Q1 2019 or Q1 2018. These include allocations to the North East Development Commission and transfer to Excess Crude Account,” the review added.
The NEITI Quarterly Review explained that total FAAC allocations during the period under review comprised of gross disbursements to the Federal Government, States, Local Government Councils and the 13% Derivation.
It also covered cost of collections by the Nigerian Customs Service, the Federal Inland Revenue Service, the Department of Petroleum Resources and other allied handling charges.
A look into FAAC disbursements to states between January and March this year shows a variation between states. Osun State had the lowest allocation of N6.44 billion and Delta State with the highest disbursement at N52.03, a difference of 708%.
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.
It was observed that 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. The States are 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 a wide disparity in the amounts deducted from the states as their debt obligations. For instance, Lagos State had the highest deductions of N14.92 billion, while Yobe State had the lowest deductions of N820.18 million.
On prospects of FAAC disbursements for the rest of the year as a result of the impact of COVID-19, the review remarked, “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.”
According to the review, the projected revenue for the Federal Government for the year stands at 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.
Oil revenue remained the dominant single source of revenue, with the figure of N2.64 trillion making up 31.35% of total projected revenue.
“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 stated.
The NEITI Quarterly Review is designed to provide timely information and data on FAAC disbursements to the three tiers of government. The publication is a tool to support citizens’ education, enlightenment, advocacy, and promote constructive debates in tracking the utilization of the funds for purposes of development.
