Thirty Six (36) States in Nigeria received the total sum of N1.57 trillion Federal Allocation between January and July 2019. This is according to the Federation Account Allocation Committee (FAAC) reports covering the period.
According to the reports obtained from the National Bureau of Statistics (NBS), this value represents the total gross amount of money disbursed by the Federal Government to states for the periods.
The top 10 States: On the list, Delta State received the biggest share of revenue in the first seven months of 2019, with N133.7 billion. This means 8% of the total allocation went to the State.
- Akwa Ibom State received the second-largest gross federal allocation of N106.9 billion in the period. This represents about 7% of the allocation for the 36 states.
- Lagos ranks third with N97 billion gross revenue allocation.
- Rivers received 6% share of the total allocation to rank 4th, and this amounted to N93.7 billion.
- Bayelsa State Federal allocation in the first seven months estimated at N86.6 billion
- Other States that make the top 10 states include Kano (N51.1 billion), Kaduna (N41.5 billion), Edo (N41.4 billion), Katsina (N38.8 billion) and Oyo (N38.6 billion).
On the other hand, five states with the lowest allocation within the period include Gombe, Nassarawa, Ekiti, Ebonyi and Kwara.
The disbursements: Specifically, federal allocations given to states include gross statutory allocation, 13% share of derivation to oil-producing states, distribution of exchange gain and net VAT allocation.
On the other hand, the NBS disclosed that from the monthly gross allocation to states, several deductions are always made and these include external debt payment, Contractual Obligation (ISPO) and other deductions.
Hence, while states depend hugely on the Federal Government allocation on a month to month basis, a fall in the Federal Government revenue has the tendencies to affect the states’ revenue, and this may result in debt financing which most states have resolved into.
Some concerns: Despite the huge debt profile of most states, development is still at low ebb. One major concern that have hindered development across state is overdependence on federal allocation combined with low Internally Generated Revenue (IGR) and huge debt burden.
In 2018, all the 36 states in Nigeria generated an estimated N1.1 trillion IGR. Regrettably, measuring against the N3.9 trillion debt accrued by the states as at the end of 2018. It means revenue allocation received so far is only 28% of the debt owed.
To ease-off the debt challenge and low revenue, states have been emphasizing the need for the Federal Government to review the revenue sharing formula.
Recently, there was an indication that State governors in Nigeria might request for 42% share of the total federal allocation. The current revenue allocation formula, which was designed during the administration of former President Olusegun Obasanjo, recommended that the Federal Government gets 52.68%, while the states and local governments will receive 26.72% and 20.60% of the total amount respectively.