The three tiers of government may soon have their monthly allocation from the federal account increased as the Federation Account Allocation Committee is targeting ₦1 trillion for the monthly disbursement.
A total of ₦701.022 billion was shared by the Federal Government, states and local governments as allocation for the month of April.
The Chairman, FAAC Commissioners of Finance Forum, Mahmoud Yunusa, confirmed the ₦1 trillion allocation target during an interview after the committee’s meeting in Abuja.
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, Alhaji Ahmed Idris, and representatives of the Nigerian National Petroleum Corporation.
Others are representatives of the Federal Inland Revenue Service, the Nigeria Customs Service, Revenue Mobilisation, Allocation and Fiscal Commission as well as the Central Bank of Nigeria.
The federation account is currently being managed with 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 the statutory allocation, the Federal Government gets 52.68 per cent of the revenue; states, 26.72 per cent; and local governments, 20.60 per cent.
The framework also provides that VAT revenue be shared thus: the Federal Government, 15 per cent; states, 50 per cent; and local governments, 35 per cent.
Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.
Yunusa said following the recent increase in oil prices to over $70 per barrel, coupled with the reforms being implemented by the government to drive non-oil revenue, the level of revenue accretion into the federation account is expected to hit the ₦1 trillion mark in the near future.
An analysis of the revenue distribution to the three tiers of government showed that the sum of ₦635.5 billion was distributed in January; February, ₦647 billion; March, ₦626.82 billion and April had ₦701. 22 billion.
He said, “I think there is an improvement in revenue figures because we are about crossing the ₦600 billion mark but we are far from where we should be because we want to get to ₦1 trillion mark as quickly as possible.
“As states, we are working very closely with all the revenue generating agencies of the Federal Government and within ourselves to ensure that we remit withholding taxes and VAT in our respective states to increase the revenue that will be generated from non-oil sector.
“That way, we will be able to start hitting the ₦1 trillion revenue that will be generated for FAAC for sharing to the Federal Government, states and local governments. We are on course on that, and we should be there very soon.”