The Federation Account Allocation Committee (FAAC) disbursed the sum of N606.2 billion to the three tiers of government in May 2020, from the revenue generated in the previous month. This is contained in the latest FAAC report released by the National Bureau of Statistics (NBS).
A cursory look at the report shows that the disbursement of N606.2 billion in May 2020 marked a decline of 22.4% when compared to N780.9 billion disbursed in April 2020. It however grew slightly by 4.2% compared to N581.6 billion allocated in March 2020.
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Breakdown
- In May 2020, the federal government received the highest share of N255.1 billion (42.1%) from the total disbursement, States received a total of N166.63 billion while local governments received N125.4 billion.
- Oil-producing states received N37.4 billion as part of the 13% derivation fund.
- The sum of N194.19 billion was disbursed to the FGN consolidated revenue account; N4.59 billion was shared as a share of derivation and ecology; N2.3 billion as stabilization fund; N7.71 billion for the development of natural resources; and N5.43 billion to the Federal Capital Territory (FCT) Abuja.
The amount disbursed comprised of N370.41 billion from the Statutory Account, N94.5 billion from Valued Added Tax (VAT), N1.12 billion from Excess Bank Charges Recovered for the Month, N8.89 billion from the Distribution of Solid Mineral Revenue for the month, N103.96 billion distribution for the Month and N27.3 billion Exchange Gain Differences.
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States allocation
In the month of May 2020, Delta State received the biggest share of the total allocation as it scooped a sum of N15.79 billion gross allocation, followed by Lagos State with a total allocation of N13.05 billion. Other states that made the top 5 with biggest allocation include Akwa Ibom (N12.5 billion), Rivers State (N11.39 billion), and Bayelsa (N10.62 billion).
On the flip contrary, Kwara State received the lowest share (N3.73 billion) followed by Ekiti State with N3.74 billion allocation. Others include; Nassarawa (N3.82 billion), Ebonyi (N3.83 billion) and Osun State received N3.91 billion.
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External debt deductions
In May 2020, a sum of N35.9 billion was deducted from the allocation disbursed to the states for the following reasons;
- External debt deductions in the month stood at N4.46 billion, from which Lagos state accounted for 32.6% (N1.46 billion) of the total debt deductions.
- Contractual obligation (ISPO) in May was N6.14 billion while other deductions stood at N25.21 billion.
- Other deductions comprise of, National Water Rehabilitation Projects, National Agricultural Technology Support Programme, Payment for Fertilizer, State Water Supply Project, State Agricultural Project, and National Fadama Project.
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Upshot
The Nigerian economy, being faced with the ripple effect of the COVID-19 pandemic which was characterized by lockdown measures has caused a plunge in federal government revenue source. In addition, the sharp decline in global oil prices has added to the cause of worry. A recent world bank report stated that the Nigerian economy is highly vulnerable to oil shocks as even nonoil sectors of the economy depend on the activities of the oil sector.
Given that oil and gas accounts for over 80% of goods and services exported by Nigeria and forms a larger chunk of the government’s revenue, Nigeria’s fiscal structure faces a strong test and states may need to intensify effort to raise revenue generated internally to improve economic activities.
