Fresh Headache For Tinubu As Revenue Falls By 23% (DETAILS)

Fresh Headache For Tinubu As Revenue Falls By 23% (DETAILS)

A report from the Nigerian Extractive Industry Transparency Initiative (NEITI) reveals that between January and June of this year, Nigeria’s three tiers of government—the Federal, States, and Local Government Councils—shared a total of N4.37 trillion from the Federation Account as statutory revenue allocations. However, the revenue flowing into the Federal purse declined by 23% in the second quarter of the year, resulting in an overall 12% decrease in the funds received by the three tiers.

NEITI’s Executive Secretary, Dr. Orji Ogbonnanya Orji, disclosed that the distributable FAAC (Federation Account Allocation Committee) allocations to the three tiers in the first and second quarters of 2023 amounted to over N2.32 trillion and N2.04 trillion, respectively. The report highlights that each tier received over N1 trillion over the six-month period.

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Here’s the breakdown of the revenue receipts:

1. Federal Government: Approximately N1.78 trillion, or 40.7%.
2. State Governments: N1.5 trillion, or 34.5%.
3. Local Government Councils: N1.08 trillion, or 24.8%.

Comparing the figures with the corresponding quarters in 2022, the report notes an increase in allocations for 2023. Allocations to the Federal, State, and Local Government Councils rose by 19.8%, 11.2%, and 16.8%, respectively.

However, the second quarter of 2023 showed a decline in FAAC distribution compared to the same period in 2022. Total distributable revenue in Q2 2023 was N2.02 trillion, down by 13% from the N2.16 trillion distributed in Q2 2022.

Further analysis of state disbursements reveals that Delta State received the highest allocation of N102.79 billion in Q2 2023, followed by Akwa Ibom (N70.01 billion), Rivers (N69.73 billion), Lagos (N60.64 billion), and Bayelsa (N56.34 billion).

Notably, the top five states received more allocations (N359.5 billion) than the combined allocations of the next 15 states (N349.3 billion). The bottom 10 states received only 17.3% of the revenue shared in Q2 2023.

The report emphasizes that most of the revenues to the federation account came from remittances by three main revenue-generating agencies: Nigeria Upstream Petroleum Regulatory Commission (NUPRC), the Federal Inland Revenue Service (FIRS), and the Nigeria Customs Service (NCS). These revenues were derived from various sources, including oil and gas royalties, petroleum profit tax, company income tax, value-added tax, import duties, and excise duties.

Mineral and non-mineral sources contributed to revenue remittances in the second quarter of 2023. Mineral revenue (mostly oil and gas) accounted for 44% (N809 billion), while non-mineral sources contributed 56% (N1.03 trillion).

Regarding debt service obligations and their impact on states’ net allocations, Lagos had the highest deduction of N9.03 billion in the second quarter of 2023, followed by Delta (N6.76 billion), Ogun (N6.10 billion), Kaduna (N5.63 billion), Osun (N5.60 billion), and Imo (N5.51 billion). On the other hand, Jigawa, Anambra, Nasarawa, Kebbi, and Enugu States had the lowest deductions.

The nine oil-producing states received allocations based on their share of oil and gas, as well as other minerals extracted from their territories.

Overall, the report provides insights into Nigeria’s revenue distribution, highlighting disparities among states and the impact of debt service obligations on their finances.