The Federation Account Allocation Committee (FAAC) disbursed the sum of N190.38 billion to the 36 States government in the month of August 2019. This is disclosed in the latest monthly allocation report released by the National Bureau of Statistics (NBS).
According to the monthly report, federal allocation to states in Nigeria dropped to N190.3 billion in August 2019, from the N201.2 billion disbursed in the previous month (July). This means allocation dropped by 5%.
The breakdown showed that in the month of August, a total of N769.5 billion was disbursed among the three tiers of government and some Federal agencies. The federal government got the biggest share of N299.7 billion, states received N190.4 billion and the local government Councils shared N143.5 billion.
- Also, as part of the 13% derivation fund, the sum of N51.6 billion was disbursed to the oil producing states, revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N5.70 billion, N11.14 billion and N5.02 billion respectively as cost of revenue collections.
- Also, N58.29 billion as transfer to excess crude account (ECA).
- The amount disbursed comprised of N607.37 billion from the Statutory Account, N94.16 billion from Valued Added Tax (VAT) and N999.99 million exchange gain differences.
States Allocation: In the month of August, as in previous months, Delta state received the biggest share of gross allocation estimated at N21.1 billion. Also, Akwa Ibom received a total sum of N15.9 billion. Other states within the top 5 biggest recipient of federal allocation in August include Rivers (N15.1 billion), Bayelsa (N14.5 billion) and Lagos (N13.6 billion).
On the other hand, five states with the lowest share of federal allocation in August 2019 include Gombe, Ekiti, Ogun, Cross River and Osun. The five states received an average of N4 billion each.
Meanwhile, despite the drop in allocation to the states, several deductions were made by the federal government. On a month to month basis, FG deducts external debt, contractual obligation and other deductions from allocations entitled to states.
- For the period under review, a total sum of N27.4 billion was deducted from the states’ allocation.
- External debt deduction was put at N3.14 billion while contractual Obligation (ISPO) was estimated at N6.43 billion. The biggest of the deduction is other deduction.
- According to the NBS, other deductions cover; National Water Rehabilitation Projects, National Agricultural Technology Support Programme and Salary Bailout.
- Essentially, other deduction was put at N17.8 billion in August.
Drop in revenue: It is important to stress that government revenue has dropped in recent times due to the development in the global oil market. Nigeria’s biggest export commodity and earner is oil, hence, drop in the prices of oil puts revenue under serious strain. While the oil market still appear uncertain, allocation to states may further be on the decline
Recall that the FG recently announced it would begin major deduction of bailout funds earlier given to states. The states governors have, however, been able to persuade the FG to honour initial agreements surrounding the refund, as the sudden deductions may put states in critical situations.