The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N733bn (USD1.78bn) in July according to a report by FBNQuest.
This represents a 21 percent (N127bn) increase compared to about N606 billion payout recorded in June 2021.
Responding to BusinessDay on this, Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited said oil price increased and that may be partly responsible for it.
He said this means more revenue for all the levels of government to discharge their responsibilities.
“From thin coverage in the local media, we learnt that the take from petroleum profit tax (PPT), companies’ income tax, import and excise duty, and oil and gas royalties recorded substantial increases over the previous month, while receipt from VAT was significantly lower.
Read also: Why rising oil price fails to boost Nigeria’s foreign reserves
State governments received a total of N143bn, including N51bn representing the 13 percent derivation for the few oil-producing states, analysts at FBNQuest said.
The report noted that the headline figure was made up of N586bn in gross statutory distribution, N143bn from the VAT Pool, and foreign exchange adjustments totalling N4bn.
The committee put the balance in the Excess Crude Account (ECA) at USD61m. Of the total distribution, N87bn was consumed by a combination of costs, transfers and unspecified refunds.
The average monthly allocation amounted to N647bn in H1 ’21, compared with N710bn in 2018, N685bn in 2019 and N636bn last year.
The allocation to the states again fell short of their aggregate needs. In 2018 they spent an average of N371bn per month (N271bn on recurrent and N100bn on capital items) and N396bn in 2019.
A few states, led by Lagos, generate substantial internal revenue and can still meet their spending commitments, including capital items, at these reduced levels of FAAC pay-out.
For most states that depend solely on the inadequate monthly FAAC distribution, the prospects are bleak: at a National Executive Council (NEC) meeting last week, the minister of finance, budget and national planning disclosed that deductions of the budget support the facility from state governments will now commence from July.
The federal government had extended the facility to states in 2017 to cushion the impact of dwindling resources and help meet their various obligations.
