Given the average oil price of $73.43 in May 2018, Nigeria’s recent recovery from recession as well as favourable exchange rate adjustments, the Federal Government of Nigeria has been able to build up its inflow into the federation account.
The Federation Account Allocation Committee (FAAC) allocation is estimated at N701bn in May 2018, representing a 9.86 percent increase from the N638.09 billion shared for the month of April 2018. The N701bn mark is the highest allocation shared since 2014 when the allocations were as high as N1.104 trn after oil prices reached monthly peaks of $112 /bbl and $105/bbl in June.
The official NBS report is to be released on 20th June, 2018 but the discussions of Bismark Rewane, CEO Financial Derivatives Company Ltd and the FDC Think Tank at the Lagos Business School monthly review on June 6th, 2018 estimated a further expansion to N710bn in June 2018 as oil proceeds increase barring any changes to the current monetary policy and the I&E FX window. In the last 2 quarters allocation has averaged N606.45bn with its lowest allocation at N532.67bn in November 2017.
According to the Allocation of Revenue Act, the Federal Account Allocation Committee (FAAC) is saddled with the responsibility of distributing the revenue accrued into the Federation Account between the Federal, State and Local Government Councils in the proportion of 52.68 percent, 26.72 percent and 20.60 percent respectively.
This revenue allocation sharing formula is under scrutiny by state governments who have relayed complaints to the committee and talks on changes to the allocation have begun but further details have not been released. The FAAC meets monthly for the sharing of revenue by the three tiers of government.
ENIOLA GIWA
