Nasarawa, Enugu, Anambra, Ogun, and Ebonyi are among the 10 states with the biggest average growth in revenue shared by the Federation Account Allocation Committee (FAAC) since the petrol subsidy was removed, according to data compiled by President Bola Ahmed Tinubu (PBAT) Media Centre.
The data from the media centre showed the average FAAC allocation to states from January to May 2023 (pre-subsidy) and June-December (post-subsidy).
The others on the top 10 list in terms of increase in FAAC allocation are Kogi, Bauchi, Plateau, Niger and Sokoto.
The bulk of the revenue shared at FAAC meetings every month by the federal, state, and local governments are earnings from oil exports, taxes, and other statutory allocations.
“Since President Tinubu assumed office, the revenue available to the three tiers of government has more than doubled,” the media centre said on social media platform X on Tuesday.
It said all 36 states, including the 774 local government areas, have been receiving significantly larger allocations on the back of the reforms being pursued by Tinubu to reposition the national economy.
“Nigerians should ask the Peoples Democratic Party (PDP) Governors how far and how well they have utilised the increased revenue to better the lives of Nigerians in their respective states. It is on record that most states controlled by PDP owe workers and pensioners months of unpaid salary and pension arrears,” it said.
A breakdown of the data show that Nasarawa’s monthly average FAAC allocation rose by 185.3 percent to N12.39 billion post-subsidy removal from N4.34 billion pre-subsidy removal, while that of Enugu increased by 94.3 percent to N6.72 billion from N3.47 billion.
Anambra, Ogun, Ebonyi, Kogi, Bauchi, Plateau, Niger and Sokoto saw increases of 74.1 percent, 66.3 percent, 53.6 percent, 51.9 percent, 51.5 percent, 51.4 percent, 50.9 percent and 50.5 respectively.
“The naira devaluation has increased government revenue in terms of the FAAC allocation. It has also been able to reduce the gap in government revenue in the budget,” Ayodeji Ebo, managing director/chief business officer at Optimus by Afrinvest Limited, said.
He added that if the funds are rightly used, it will impact the economy, especially for the states.
During the public presentation of the country’s 2024 budget proposals in November, Abubakar Bagudu, minister of budget and economic planning, said the federal government achieved N8.65 trillion in revenue in the first nine months of 2023 as against its pro-rata target of N8.28 trillion.
He said N1.42 trillion was generated from oil revenues, while non-oil revenues totalled N2.50 trillion.
Total FAAC allocation, according to the National Bureau of Statistics (NBS), rose to N16.04 trillion last year, the highest in at least seven years, from N11.7 trillion in 2022.
A breakdown of the total FAAC data shows that the federal government received N4.06 trillion, up from N3.92 trillion, while the state governments got N3.53 trillion, up from N2.76 trillion. Disbursements to local governments also increased to N2.61 trillion from N2.04 trillion.
Since Tinubu announced petrol subsidy removal during his inauguration on May 29, pump prices have tripled to more than N600, while the value of the naira has plunged following the floating of the currency.
Last June, the Central Bank of Nigeria merged all segments of the FX market into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.
The naira has continued to depreciate against the dollar and other major foreign currencies since then.
The official exchange rate fell from N463.38/$ to N1,499.07/$ as of February 13, 2024. At the parallel market, the naira is now pushing above N1,500/$ from 762/$.
Although the reforms have increased revenue for the government, it has also increased the hardship for people as the inflation rate has accelerated to the highest in at least 20 years.
According to the NBS, the headline inflation rose to 28.92 percent in December from 28.20 percent in the previous month. Food inflation, which constitutes 50 percent of the inflation rate, rose to 33.93 percent from 32.84 percent.
The World Bank’s latest Nigeria Development Update report revealed that rising inflation and sluggish growth in Africa’s biggest economy increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year.
“The impact of this inflation is especially hard on the poor and vulnerable. The Government has initiated targeted cash transfers to mitigate some of the impact on the most vulnerable households. In addition, a holistic approach to reducing inflation, including through tighter fiscal and monetary policies, is also needed,” the report said.
Last year, BudgIT, a civic organisation driven to make the Nigerian budget and public data more understandable and accessible, said: “State governments’ recurrent costs have increased significantly over the years with only a small portion of collected revenue and loans dedicated to meet capital.”
“This spending pattern is not sustainable as this has opened gaps in providing quality healthcare services and educational systems, thus slowing down social development as well as growth in other key areas of the economy,” BudgIT said in its report titled ‘Patterns in States’ Expenditure’.
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