The Federal, State and Local governments shared the total sum of N10.143 trillion from the Federation Account as statutory revenue allocations in 2023, the Nigeria Extractive Industries Transparency Initiative (NEITI) FAAC review report has shown.
According to the report released on Tuesday, the N10.143 trillion disbursements in 2023 is an increase of N1.934 trillion (23.56%) when compared to the disbursement of N8.209 trillion shared in 2022.
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A breakdown of the revenue receipts showed that the federal government received N3.99 trillion, representing 39.37 percent of the total allocation.
N3.585 trillion representing 35.34 percent was shared among the 36 states while the 774 local government councils of the Federation shared 2.56 trillion equivalent to 25.28 percent in the period.
According to the report, “the first quarter of 2023 increased by N579.71 billion (33.19 per cent) when compared to the first quarter of 2022. The second quarter increased by 10.32 percent, the third quarter by 27.49 percent and the fourth quarter had an increase of 23.42 percent respectively.
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“The Federal Government’s share increased by N574.21 billion (16.79 peecent) from the N3.42 trillion it received in 2022 to N3.99 trillion in 2023. The State governments shared N3.59 trillion in 2023 compared to the N2.76 trillion they got in 2022, showing an increase of 29.99 percent. Similarly, local government councils’ share of federation allocation was N2.57 trillion in 2023 compared to N2.032 trillion in 2023 which amounts to a 26.22 percent increase.
“While total distributed revenue from the Federation Account recorded an overall increase of 23.56 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue item contributing to the inflows into the Federation Account.
“In the same period (2023), states and local governments recorded increases in their allocations of 29.99 percent and 26.22 percent respectively. The increase in allocation to the Federal Government however was 16.79 percent.”
Commenting on the report, Orji Ogbonnaya Orji, the Executive Secretary of NEITI, attributed the increase to improved revenue remittances to the Federation Account due to the removal of petrol subsidy and the floating of the exchange rate by the new administration.
He explained that the agency embarked on the NEITI FAAC Quarterly Review to enhance public understanding of Federation Account allocations and disbursements as published by the government.
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He said, “The ultimate objective of this disclosure is to strengthen knowledge, and awareness and promote public accountability of all institutions in public finance management.
“Government (the National Assembly and the Executive) should adopt more conservative estimates for crude oil prices and output to enhance budgetary performance, reduce budget deficits and borrowing and strengthen fiscal stabilization.
NEITI renewed its earlier recommendations for the federal government to highly prioritize the ongoing efforts at economic diversification, and investment to improve power generation to encourage small, medium and large businesses to promote local production and reduce import and dependence on oil revenues.
“NEITI’s FAAC Quarterly Reviews also underlined the need for States to join hands with the federal government to deal with insecurity in rural communities where agro-based businesses thrive, pay attention to internally generated revenues through innovations and leadership that are citizen-centred.”
The report also noted that while total revenues distributed from the Federation Account recorded an overall increase of 23.56 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue streams contributing to the inflows into the Federation Account.
State-by-state share of the allocations showed that Delta State received the largest share of N402.26 billion (gross). The figure is inclusive of the state’s share of oil and gas derivation revenue. Delta was followed by Rivers State which received N398.53 billion.
Akwa-Ibom State received the third largest allocation of N293.58 billion. Nasarawa State received the least amount of N73.32 billion while Ebonyi and Ekiti states received N73.91 billion and N74.04 billion respectively.
The review observed that the first five states that topped the allocation during the period under review are amongst the major oil-producing states in the country.
On the share of 13 percent derivation revenue, nine states received the 13 percent allocated to mineral-producing states from the proceeds from mineral revenue. The derivation revenue remains a significant portion of revenue for states like Delta, Akwa Ibom, Anambra and Rivers states.
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Also, the derivation revenues of states such as Delta, Akwa Ibom, and Bayelsa, which were 161.47 percent, 141.25 per cent and 127.89 per cent respectively, eclipsed their statutory revenues.
Rivers State‘s derivation revenue was 74.15 percent during the period. Notably, the other five oil-producing states recorded lesser derivation revenue compared to the four above. For example, Ondo State had 27.71 percent, Edo had 30.04 percent, while Abia, Anambra and Imo recorded a derivation revenue of 20 per cent.
The report showed that solid minerals-producing states did not receive derivation revenues during the last quarter of last year because of the need to allow the revenues to accumulate over some time before sharing can occur.
On direct deductions from the state, Delta State recorded the largest debt deductions in 2023. With a total deduction of N12.97 billion, Delta’s debt deduction was more than the deductions for Bauchi State, the second largest n, 2023 by 282 million Lagos State recorded the least cumulative debt deductions amounting to N370 million.
The report maintained that the reduced debt burden is attributable more to the increase in the size of Federation Account allocations than a reduction in the size of the debt.
The main sources of revenue inflows, according to the report were the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS), through earnings from the different revenue streams. This included oil, gas royaand lies, petroleum profit tax, company income tax, value-added portport and excise duties.
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