FAAC disburses N639.9 billion in October 2020, allocation drops by 6.2%

The FAAC disbursed a sum of N639.9 billion to the three tiers of government in October from the revenue generated in September 2020

The Federal Account Allocation Committee (FAAC) disbursed a sum of N639.9 billion to the three tiers of government in October 2020 from the revenue generated in September 2020.

This is contained in the latest monthly FAAC disbursement report, released by the National Bureau of Statistics (NBS).

According to the report, the monthly disbursement dropped by 6.2% compared to N682.1 billion shared in September and 5.4% decline compared to N676.4 billion shared in August 2020.

Checks by Nairalytics Research showed that a total of N6.57 trillion have been disbursed between January and October 2020.

Breakdown

Federal Government received a total of N255.75 billion (39.97%). States received a total of N185.65 billion (29.01%), and Local governments received N138.44 billion, representing 21.64% of the total disbursement. The sum of N36.19 billion was shared among the oil-producing states as 13% derivation fund.

Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), and Department of Petroleum Resources (DPR), received N6.50 billion, N8.54 billion, and N2.77 billion respectively as cost of revenue collections.

Further breakdown of allocation to the Federal Government of Nigeria (FGN) revealed that the sum of N180.75 billion was disbursed to the FGN consolidated revenue account, N4.48 billion as share of derivation and ecology.

Also, N2.24 billion was allocated to stabilization fund, N7.52 billion for the development of natural resources, and N5.74 billion to the Federal Capital Territory (FCT) Abuja.

The amount disbursed comprised of N341.50 billion from the Statutory Account, N72 billion from Distribution of FGN Intervention Fund, Distribution of N45 billion from Non-Oil Revenue, N39.54 billion from FOREX Equalisation Account, and N141.86 billion from Valued Added Tax (VAT).



States with the highest allocations

Delta State received the giant share of N15.42 billion, representing 7.95% of the total N194.03 billion net allocation disbursed to the 36 states, followed by Akwa Ibom with N12.32 billion (6.35%). Rivers State received a sum of N11.63 billion (5.99%), Lagos State N10.23 billion, while Bayelsa State received N8.21 billion.

On the flip side, Cross River State received the least share with N2.94 billion representing 1.52% of the total amount disbursed to states, closely followed by Osun State with N2.96 billion (1.53%) allocation. Plateau State also followed with N3.24 billion (1.67%), Ogun State and Ekiti State received a total net amount of N3.41 billion and N3.59 billion respectively.



External debt deductions

A total of N6.45 billion was deducted from the 36 states of the federation with Lagos State parting away with the highest sum of N2.44 billion, representing 37.8% of the total state deductions. Kaduna State followed with a total external debt deduction of N537.7 million.

Others on the list of top 5 states deduction include Oyo State with N378.7 million, Cross River and Rivers State with N311.3 million and N227.1 million respectively.

Upshot

The federal allocation to the three tiers of government continues to decline on the back of reductions in government revenue, as a result of the crash in oil prices triggered by the Covid-19 pandemic and global oil price war.

Meanwhile, the price of oil has grown considerably in recent weeks. As of the time of writing this article, WTI Crude oil sells for $45.77 per barrel, while Brent crude sells for $48.75 per barrel.

The increase in oil prices at the global market could see government revenue increase, thereby improving the monthly federal allocations. However, it is important for the state governments to strategize on ways to improve its internally generated revenue, so as to reduce reliance on the funds from the federation.