There is scanty evidence on the lives of the people of the cash windfall unlocked to state governments by the removal of petrol subsidy and the devaluation of the naira.
Last year, governors got the most cash in Federation Account Allocation Committee (FAAC) allocations in at least seven years after the petrol subsidy removal took away its burden on public coffers and a currency reform delivered a 40 percent boost to naira income.
FAAC shared a total of N16.04 trillion to the three tiers of government in 2023, a 37.3 percent increase from N11.7 trillion in 2022, according to data from the National Bureau of Statistics (NBS).
The NBS data showed that states and their local governments received a total FAAC allocation of N6.57 trillion, double the N3.16 trillion they received in 2022.
The amount shared by the federation surged in June following President Bola Tinubu’s removal of the costly petrol subsidy and liberalisation of foreign exchange market.
But as the states got more cash, most of the people grew poorer.
Many citizens continue to grapple with poverty, as highlighted by the World Bank’s report indicating that 14.2 million Nigerians fell below the poverty line in 2023. The report attributed this increase to sluggish economic growth and rising inflation, emphasising the challenges faced by Africa’s largest economy.
Sluggish growth and rising inflation have increased poverty from 40 percent in 2018 to 46 percent in 2023, pushing an additional 24 million people below the national poverty line, according to the World Bank’s Nigeria Development Update report, released in December.
This data underscores the persistent economic challenges faced by a significant portion of the Nigerian population despite the notable surge in FAAC allocations.
Delta State received the highest FAAC allocation of N214.74 billion between June and December 2023. Rivers followed with N179.81 billion, Akwa Ibom got N145.57 billion, Bayelsa received N128.5, and Lagos, N119.45 billion.
According to the pcl State Performance Index (PSPI) released in December, Delta has a poverty rate of 13.10 percent, unemployment rate of 31.10 percent, and inflation rate of 24 percent, despite receiving the highest FAAC allocation in 2023. According to the PSPI, Delta faces significant challenges in the effective management of public institutions, provision of public transportation, and access to potable water.
Rivers’ poverty rate is 7.3 percent, unemployment rate 41.60 percent, and inflation rate 31 percent. Akwa Ibom has a poverty rate of 22.9 percent, unemployment rate of 51 percent, and inflation rate of 26 percent. Bayelsa’s poverty rate is 24.3 percent, unemployment rate of 36.7 percent, and inflation rate of 28 percent. Lagos has a poverty rate of 2.4 percent, unemployment rate of 37.1 percent, and inflation rate of 30 percent.
Data show that the substantial FAAC allocation received by these states has not significantly improved the condition of their residents.
FAAC distributes monthly revenues primarily from oil export and taxes among the central, state, and local governments in Nigeria.
This distribution aims to facilitate development and support the execution of governmental responsibilities at various levels.
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High unemployment, food insecurity threaten fragile states’ economies – Report
Wasiu Alli
Nigerian states are in for tough times as high unemployment, lack of food security and spread of illicit economic activities threaten to curb economic growth, according to the Pcl. State Performance Index report.
The report titled “My State: Economic Potentials and Performance of States in Nigeria”, provides informational resources for understanding the socioeconomic performance and risk profiles of Nigerian states.
The PSPI utilised four classes of indicators to assess state performance: socioeconomic performance indicators from secondary sources, socioeconomic performance from surveys, socioeconomic endowments/potentials of the state, and risk exposure.
The survey which was conducted in 2023, engaged 6,096 respondents nationwide, representing a cross-section of Nigerian society, classified state risk factors into three: high-risk, medium-risk and low-risk.
According to the report, unemployment takes the highest risk factor states must address in order to achieve noticeable growth.
Out of Nigeria’s over 200 million population, 63 percent are unemployed; food insecurity which leads to low availability of staples and other consumables amount to 41 percent while erosion of social and cultural values stood at 40 percent.
Gombe, Jigawa, Ekiti, Lagos and FCT ranked top as states with the best positive outlook.
Gombe ranked first due to its “continuity in government, ongoing investments in infrastructure, alignment with federal initiatives, economic diversification, and strategic agricultural programs.”
Plateau, Nasarawa, Zamfara, Abia, and Imo states were least performing states accordingly.
Highlighting the socio-economic performance of states, employment, public institutions, and access to
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