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FAAC Disburses N5.89trn In 2017

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 By KAYODE TOKEDE, Lagos

Federation Account Allocation Committee (FAAC) disbursed N5.89 trillion to the three tiers of government, Federal, States and Local government in 2017 investigation by LEADERSHIP has revealed.

In 2017, the federal government followed by 36 states including Abuja collected the highest sharing while the local governments shared the lowest.

Revenue generating agencies such as Nigeria Customs Service (NCS), and Federal Inland Revenue Service (FIRS) step-up their revenue collections to match up with government disbursement following the drop in global oil prices and government move to divest from the Oil & Gas sector.

According to LEADERSHIP investigation, July sharing was the highest followed by September while lowest month was in May.

The report by FBNQuest Research said, “Inflow into federation account widened in the more recent period because the recovery in oil output pushed up oil revenues considerably in July, August and September. Diplomacy in the Niger Delta has paid off for the federal government.

“A similar conclusion should be drawn from the monthly payouts by the Federation Account Allocation Committee (FAAC), of which the latest covers the distribution of revenues collected in November.

“The increase since mid-year is largely attributable to the improvement in average crude output, to 1.87 million barrel per day  in second quarter of 2017 and 2.03 million barrel per day  in third quarter of 2017.”

According to FAAC committee, figures for August rose because of “a significant increase in export volume by 0.85 million barrels, which resulted in increased revenue from export sales revenue by about $41 million.”

In November as shared in December, FAAC committee stated that” average price of crude oil from $48.66 to $52.07 per barrel and a decrease in export sales of $69.49 million due to decrease in oil production by 1.75 million barrels”

There was a discrepancy issue in October allocation which was finally distributed in early December.

Interestedly, transferred to the Excess Petroleum Product Tax ended since May after accumulating a total sum of about N123.23 billion in five months of 2017.

The breakdown of shared amount revealed that federal government in 2017 collected N2.56 trillion out of the N5.89 trillion. States received a total of N1.68 trillion and Local governments received N1.26 trillion.

Further findings revealed that a total of eight oil producing states, Abia, Akwa Ibom, Bayelsa, Delta, Edo, Imo, Ondo, Rivers shared a total sum of N358.12 billion as 13per cent derivation fund in 2017.

Information from National Bureau of Statistics (NBS) revealed that FAAC disbursed a total sum of N6.2 trillion to three tiers of government in 2017, funded mostly from the Statutory Account and revenue generated from Valued Added Tax (VAT) while refund to the federal government from Nigerian National Petroleum Corporation (NNPC) contributed 0.9 per cent (N55.32 billion).

Findings by LEADERSHIP revealed that the statutory account accrued N4.65 trillion in 2017 while VAT also accrued N967.65 billion in 2017.

Also, exchanged gained contributed N362.66 billion and excess Petroleum Product Tax (PPT) Account added N207.74 billion to the amount disbursed in 2017.

The quarter on quarter (QoQ) breakdown revealed that, in first quarter, a total of N1.4 trillion was disbursed (N430.16 billion in January;    N514.15 billion in February and N466.93 billion in March.)

In second quarter, a total sum of N1.377 trillion was disbursed to the three tiers of government. It consists of N496.39 billion in April,      N418.82billion in May and N462.36 billion in June.

In third quarter, it rose by 27.9 per cent to N1.76 trillion (N652.23 billion in July; N467.85 billion in August and N637.7 billion      in September) and in the fourth quarter, it moved to N1.7 trillion (N558.08 billion in October, N532.76 billion and N609.96 billion in December)

Experts in a separate chat with this newspaper bemoaned some states government monthly dependency on FAAC allocation, stating that allocations to local government are not utilized but pocketed for political reasons.

The Financial Economist in the University of Uyo, Awka Ibom State, Professor Leo Ukpong, said the   monthly allocation was structured that federal, state and local governments share from government revenue and it is not a bad idea.

He said the monthly allocation implementation to states and local governments has been creating problems

According to him, “Initially, when they started the allocation, they used to transmit the local government allocation to Chairman in that area. The local government chairmen used those funds effectively to develop grass root projects.

Now, the allocation goes to the state government state. The governor in states used local government allocation to control activities politically and economically at the local government level which is creating problem. Some state governors are actually managing the local government allocation themselves.

“Dependent on Monthly allocation is killing the nation’s economy. It is an economy policy but not necessary distribution of allocation. If those funds are channel into helping the private sector, maintaining infrastructure, boost agriculture sector that will create more jobs and improve our GDP.

“To me the allocation to local should be sent directly to their chairmen and not to state governors. The monthly contribution has not improve the nation’s economy and we will continue to utilize it to destroy politics and economy,” he said.

Economist and member of faculty, Lagos Business School, Dr. Adi Bongo, said the states monthly salary survival is dependent on the monthly allocation.

He said, “I really don’t know the current expenditure of these states compared to their monthly allocation from federal government. If the monthly allocation is not enough to cover the monthly salary, sure they will not be able to pay salary and develop infrastructure.

“However, to some states, the law of leadership does not apply. We have seen from one state to another, with exemption of few that collect allocation from federal government and take it as their own entitlement. They cannot grow their Internally Revenue Generation (IGR). Unfortunately, most states in Nigeria have been cursed with very bad governance. There is no transparency and accountability.  The curse on the leadership is a burden on the people.

In addition, Economist and Managing director consultant BIC consultancy Service Limited, Mr. Boniface Chizea was optimistic about the improved oil prices and improved monthly allocation to states that is expected to improve welfare of staff and develop economy wise.

In his words “Before the crash in global oil prices, the money accrued to the federal account was adequate. Some states in the federation operated from the huge amount coming from the federation account. As the oil market crash, that impacted on the accrued to federation account. There were issues with the government allocations to states, leading to backlog of salaries.

“We had relief from the federal government and some accessed funds from the World Bank. It will take some time to make states independent and sustained on their IGR.

“It is only Lagos, Rivers and Kano that have generated significant IGR to fund their expenditure. Oil price has improved and if the price is sustained, states allocation will improve this year,” he added.


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