FG, States, LGs share N4.55 trillion in 9 months -NEITI

The total sum of N4.545 trillion was disbursed as Federation Account and Allocation Committee, (FAAC), allocations between January and September 2017, Nigeria’s Extractive Industries Transparency Initiative (NEITI)’s latest report said.
The FAAC allocations are shared monthly among the Federal, States and the Local governments in the country.
Out of this amount, N1.757 trillion was shared in the third quarter of 2017 as against the N1.377 trillion and N1.411 trillion disbursed in the second and first quarters of the year.
The information, NEITI informed in a statement issued by Ogbonna Orji, its director of Communications is contained in the latest Quarterly Review of NEITI.

The publication which contains information and data on FAAC disbursements for the third quarter of 2017 and on mid-year budget implementation also shows that between January and September 2017, the federal government received the highest allocation of N1.851.32 trillion, followed by state governments with N1.509 trillion and the 774 local governments with N913.8 billion.
The sum of N271.78 billion went to Department for Petroleum Resources, DPR, the Nigeria Customs Service and the Federal Inland Revenue Services, FIRS as cost of revenue collections.
Further analysis shows that the revenues shared to the federating units were higher in the third quarter of 2017 which has been the pattern for some years now.
For instance, while the federal government got N549.41 billion in the second quarter of 2017, third-quarter figures were N752.79 billion, an increase of 37.02 percent.

The trend is the same for the states and local governments which received N586.58 billion and N363.98 billion in the third quarter as against N467.13 billion and N280.42 billion in the second quarter respectively.
The percentage increases between the two quarters for the two tiers of government are 25.57 percent and 29.80 percent respectively.
The Review attributed the reason for the increases in FAAC disbursements to the three tiers of governments in the third quarter to “Positive developments in the oil sector – evident from resurgent oil prices and increased production levels.
The third quarter also represents the summer season when global oil demand and consequently oil prices are generally higher than other times of the year and this could possibly explain the higher revenue accruals to the Federation account in these third quarters.”

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The NEITI Quarterly Review which based its analysis on data obtained from FAAC, National Bureau of Statistics, Federal Ministry of Finance and the Budget Office of the Federation noted that the “Upward trend in the FAAC disbursements to the three tiers of governments are encouraging signs which if sustained will improve government expenditures, help to boost economic activities and move the country further away from recession.”
Another major highlight of the report is the high degree of volatility in FAAC disbursements between January and September 2017.
For example, the federal and local governments received the highest revenues in July recording as much difference as 75 per cent and 58 per cent respectively between the months with the highest and lowest disbursements.
State governments on the other hand got the highest allocations in September with a difference in revenues of about 53 per cent between the high and low revenue months.

“Disbursements to the federal, states and local governments have risen and fallen in alternate months throughout the year, making economic planning and execution of capital projects difficult,” the report stated underlining the need for “diversified sources of government revenue to limit volatility and ensure more stable and predictable revenue streams.”
Meanwhile, the Federal Government of Nigeria spent an average of 35 per cent of its budget for capital expenditure between 2012 and 2017, according to data compiled by BusinessDay.
In recent years, capital expenditure has been underperforming in its implementation.
The United Nations Development Plan (UNDP) recommends that 70 per cent of developing country’s budget should be allocated to capital expenditure to accelerate economic growth but in Nigeria, not more than 30 per cent of its budget is often allocated to capital spending.
BusinessDay analysis of data from the budget office of Nigeria showed that from 2012 till 2017, N2.732 trillion was spent on capital projects, compared to the budgeted amount of N7.8 trillion for the period (2012 – 2017).

In 2012, 55 per cent of the budgeted capital expenditure was achieved which was less when compared to 57 per cent in 2013 and in 2014, 28 per cent of budgeted capital expenditure was achieved which was low when compared to 65 per cent in 2015.
Then in 2016, 8.8 per cent of the capital budget was realised which was also less when compared to 20.4 per cent so far in 2017.
From the Budget office of Nigeria, only half a year implementation report (Jan-June) was gotten and for 2016, only 3 quarterly reports were available.
The president promised while delivering the 2018 budget proposal that 50 per cent of its capital budget will be implemented by the end of December.
Meaning that N1.07 trillion should have been implemented. From June till now only 20 per cent out of N 2.14 trillion has been achieved.

READ ALSO: FG, States, LGS shared N3.88trn in H1 2020

The Federal Government not meeting up the revenue projection through the years and the Capex budget underperforming is due to recurring increase in recurrent expenditure, according to Ayodele Akinwunmi, Head of Research FSDH Merchant Bank.
“For capital expenditure to be ungraded, the government must involve the private sector to improve the infrastructure because they don’t have enough funds to bridge the infrastructure gap in the country,” Akinwunmi said.
Luqman Agboola, Sector Head, Energy and Infrastructure at Diamond Bank said the promise made by the president to implement 50 per cent of its capital budget may be achievable based on the $5.5 billion loans recently approved by the Senate.
“Part of the loan might be released by the end of the year and in terms of the implementation we should look at it from the performance aspect of capital projects, not from the money released by the government,” Agboola said.
Other highlights from the NEITI report is that Nigeria’s revenues in the first half of 2017 were about 49 per cent lower than budgeted figures.

While the government projected N5.368 trillion revenue flows in its 2017 Fiscal framework for the first six months of the year, actual inflows were N2.712 trillion.
From the report, the Government’s half-year projections were 2.667 trillion for oil and 2.701 trillion for non-oil revenue. However, actual revenue for the first half of the year fell short of projections. “Actual oil revenue was N1.587 trillion, representing a shortfall of N1.079 trillion, implying a 40.4 per cent underperformance. Non-oil revenue fared slightly worse, as only 41.6 per cent of the projected revenue was realized. Actual non-oil revenue totalled N1.125 trillion, indicating a shortfall of N1.575 trillion.”
The report also pointed out that while government projected that the non – oil sector would outperform the oil sector, the oil sector performed better by as much as 41 per cent in revenues generation raking in N1.587 trillion as against N1.125 trillion for the non-oil sector.

HARRISON EDEH, ABUJA & BUNMI BAILEY, LAGOS