The Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed that the three tiers of government – federal, state, and local – shared a total of N10.143 trillion from the Federation Account as statutory revenue allocations in 2023. This marks a significant increase of N1.934 trillion or 23.56% compared to the disbursement of N8.209 trillion in 2022.
The NEITI Executive Secretary, Dr. Orji Ogbonnaya Orji, presented these findings in a report released in Abuja on Tuesday, highlighting the importance of enhancing public understanding of Federation Account allocations and disbursements.
According to Orji, the breakdown of revenue receipts indicated that the federal government received N3.99 trillion (39.37% of the total allocation), while the 36 states obtained N3.585 trillion (35.34%) and the 774 local government councils shared N2.56 trillion (25.28%).
Further analysis revealed that the increase in disbursements in 2023 was attributed to improved revenue remittances to the Federation Account, primarily due to the removal of petrol subsidy and the floating of the exchange rate by the new administration.
The NEITI Quarterly Review of 2023 FAAC allocations disclosed that the federal, state, and local governments collectively received N1.934 trillion more than the amount shared in 2022.
Allocation for the first quarter of 2023 surged by N579.71 billion (33.19%) compared to the same period in 2022, with subsequent quarters also witnessing notable increases of 10.32%, 27.49%, and 23.42% respectively.
While states and local governments recorded substantial increases in their allocations, the rise in allocation to the Federal Government was comparatively lower at 16.79%.
State-by-state allocation data revealed that Delta State received the largest share of N402.26 billion (gross), followed closely by Rivers State with N398.53 billion, inclusive of oil and gas derivation revenue.
Notably, nine mineral-producing states received a 13% share of mineral revenue, with states like Delta, Akwa Ibom, and Rivers recording derivation revenues that exceeded their statutory revenues.
However, analysts caution that despite the increase in FAAC allocations, the gains have been eroded by the high rate of inflation in the country. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), emphasized that inflation has significantly reduced the purchasing power of the allocated funds, impacting project implementation and budget execution. Mr. David Adnori, Vice President of Highcap Securities Limited, echoed similar concerns, highlighting how inflation reduces the earning power of money, ultimately necessitating increased spending by the government to execute projects.
