FAAC shared ₦5.74 trillion to Federal, States, LGs in 11 months

Between January and November this year, the Federation Account Allocation Committee shared a total of ₦5.74 trillion to the three tiers of government.

An analysis of the FAAC distribution shows that the amount represents an increase of ₦765 billion over the ₦4.98 trillion, which the committee allocated in the corresponding period of 2016.

The committee, headed by the Minister of Finance, Mrs. Kemi Adeosun, is made up of commissioners of finance from the 36 states of the federation; the Accountant General of the Federation and representatives of the Nigerian National Petroleum Corporation.

Others are representatives of the Federal Inland Revenue Service; the Nigeria Custom Service; Revenue Mobilisation, Allocation and Fiscal Commission as well as the Central Bank of Nigeria.

The federation account is currently being managed on a legal framework that allows funds to be shared under three major components – statutory allocation, Value Added Tax distribution; and allocation made under the derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments, 20.60 per cent.

The framework also provides that Value Added Tax revenue should be shared thus: the FG, 15 per cent; states, 50 per cent; and the local governments, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.

A breakdown of the ₦5.74 trillion allocation showed that after deducting cost of collections to revenue generating agencies such as the Nigeria Customs Service and the Federal Inland Revenue Service, the Federal Government got the sum of ₦2.26 trillion.

A further analysis showed that the 36 states received ₦1.36 trillion while the 774 local government areas were allocated a total of ₦1.03 trillion.

From the ₦5.74 trillion revenue, findings showed that in January, the three tiers of government shared ₦430.16 billion, out of which the Federal Government took ₦168 billion, states, ₦114.28 billion; and local government, ₦85.4 billion.

In February, the federation generated ₦514 billion, out of which the Federal Government’s share was ₦200.6 billion, states, ₦128.4 billion; and local governments, ₦96.52 billion.

However, in March, the revenue generation dipped with ₦466.9 billion; and from that, the Federal Government got ₦180.5 billion; state governments, ₦116.5 billion; and local governments, ₦87.5 billion.

The allocation declined further by ₦52.07 billion from ₦467.8 billion shared in March 2017 to ₦415.73 billion in April, with the Federal Government receiving ₦163.89 billion; states, ₦117.59 billion; while local governments received ₦87.77 billion.

In the month of May, the committee shared the sum of ₦462.4 billion among the three tiers of government as statutory allocation with the Federal Government receiving ₦147.7 billion; states, ₦74.9 billion; and local governments, ₦57.8 billion.

For June, the sum of ₦652.2 billion was shared with the Federal Government receiving ₦286.6 billion; states, ₦178.6 billion; and local governments, ₦134.9 billion.

The month of July witnessed a plunge in revenue as the sum of ₦467.85 billion was shared, with the Federal Government receiving ₦193 billion; states, ₦130.69 billion; and local governments, ₦98 billion.

For August, the committee distributed the sum of ₦637.7 billion, with the Federal Government, states and local governments receiving ₦260.6 billion, ₦132.18 billion and ₦101.9 billion, respectively.

In September, the sum of ₦558 billion was shared with the Federal Government receiving ₦210 billion, states, ₦140.45 billion; and local governments, ₦107.4 billion.

For the month of October, the sum of ₦532.7 billion was shared, while November had a total amount of ₦609 billion allocated to the three tiers of government.

The Chairman, Forum of Finance Commissioners of the Federation Accounts Allocation Committee, Mr. Mahmoud Yunusa, said state governments had resolved to begin an aggressive drive to shore up their internally generated revenue from next year.

The move, according to him, is part of measures aimed at reducing the over-dependence of state governments on revenue from the federation account.

He said the states would be setting up machineries to assist in boosting the IGR.

He said, “There are a lot of states that are doing very well in terms of revenue generation and most of the states in the North-East have started doing g very well because there is improvement in commercial activities and taxes are being collected in these areas.

“A lot of states are really making progress but we are far from where we should be and we will get there very soon. If there is one restructuring that is very difficult, it is to restructure the revenue base.

“Our intention is to really reduce significantly the overdependence of states on revenue that comes from the centre.”

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