Revenue falls by 23% as Federal, states, LGAs share N4.37tr

Delta, Akwa-Ibom, Rivers, Lagos, Bayelsa receive N359.5b, higher than 15 states 

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 between January and June this year, a report by the Nigerian Extractive Industry Transparency Initiative (NEITI) said yesterday.

The revenue flowing into the Federal purse went down by 23 per cent in the second quarter of the year pushing down the fund received by the tiers by about 12 per cent.

The Executive Secretary of NEITI, Dr. Orji Ogbonnanya Orji, who disclosed this, said total distributable FAAC allocations to the three tiers of government in the first and second quarters of 2023 stood at over N2.32 trillion and N2.04 trillion respectively.

The quarterly review revealed that inflows into the Federation Account in the second quarter of 2023 declined by 23 per cent  and this affected the distributable revenue which fell by 12 per cent when compared with the total revenue disbursed in the first quarter.

The report however noted that each tier of government received more than N1 trillion over the six-month period.

A breakdown of the revenue receipts showed that the federal government received about N1.78 trillion, or 40.7 per cent while the State governments received N1.5 trillion, or 34.5 per cent  and the Local Government Councils, N1.08 trillion or 24.8 per cent of the total distributable revenue for the period.

NEITI further disclosed that a comparative analysis of the total allocations on a year-on-year basis in the corresponding quarters of 2022 and 2023 showed that the distributable revenue of N4.366 trillion shared by the three tiers of government between January and June 2023 was higher by about 16.7 per cent  from about N4.05 trillion shared in the corresponding period in 2022.
Consequently, the report revealed that the allocation received by the federal government over the period under review increased by 19.8% to N1.78 trillion in 2023, from the N1.48 trillion in the corresponding period in 2022.

Similarly, allocations to the State governments grew by about 11.2 per cent to N1.42 trillion in 2023 from N1.26 trillion in 2022, while allocations to the Local Government Councils rose by 16.8 per cent to N1.08 trillion in 2023, from N926 billion in 2022.

The report said the increase in half-yearly allocations in 2023 was consistent with an upward trend from the previous period where the distributable revenue for the first half of the year rose by 16.7 per cent from N3.47 trillion between January and June 2021 to N4.05 trillion in the corresponding period in 2022.
Also, allocations to the Federal, States and Local Government Councils increased across the board by 8.8 per cent , 26.5 per cent and 14.2 per cent respectively.

However, compared to the same period in 2022, the report showed that FAAC distribution in the second quarter of 2023 declined in absolute value, with total distributable revenue of N2.02 trillion being less by 13 per cent than about N2.16 trillion distributed in the second quarter of 2022.

Further analysis of the disbursements to the states showed that Delta state received the highest allocation of N102.79 billion in the second quarter of 2023, followed by Akwa Ibom N70.01 billion, Rivers N69.73 billion, Lagos N60.64 billion and Bayelsa N56.34 billion.

The total disbursements to these five states (N359.5 billion), or 35.9 per cent of the total FAAC allocations, was more than the total allocations to the next 15 states (N349.3 billion), while the cumulative allocation to the five states was also more than the share of allocation to 19 other states put together. The bottom 10 states received 17.3 per cent of the revenue shared in the second quarter of 2023.

Nasarawa, Ebonyi, Ekiti, Gombe and Taraba states received the lowest allocations of N16.71 billion, N16.84 billion, N16.95 billion, N17.22 billion and N17.45 billion respectively.

The report said four of the five states with the highest allocations, except Lagos, received a significant share of 13 per cent derivation revenue allocated to oil-producing states. The total disbursements to these five states (N359.5 billion), or 35.9 per cent of the total FAAC allocations, was more than the total allocations to the next 15 states (N349.3 billion), while the cumulative allocation to the five states was also more than the share of allocation to 19 other states put together. The bottom 10 states received 17.3 per cent of the revenue shared in the second quarter of 2023.

The NEITI reported  that the bulk of the revenues to the federation account came from remittances from the 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 came through earnings from the different revenue streams, including oil and gas royalties, petroleum profit tax, company income tax, value added tax and import & excise duties.

Also, revenue remittances of about N1.84 trillion in second quarter of 2023 came from mineral and non-mineral sources, comprising of N809 billion, or 44 per cent from mineral revenue (mostly oil and gas) and N1.03 trillion, or 56 per cent from non-mineral sources. The report noted a huge gap between revenue disbursements from the oil and gas and solid minerals sectors, pointing out that this was a reflection of the perennial underperformance of the latter over the years.

In terms of debt service obligations and the impacts on states’ net allocations, the report showed that Lagos topped the list of 36 states with a total 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).

Jigawa, Anambra, Nassarawa, Kebbi and Enugu States had the lowest deductions of N1.16 billion, N1.29 billion, N1.45 billion, N1.51 billion and N1.88 billion respectively.

The nine oil-producing states, according to the report, namely Abia, Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo and Rivers states received allocations relative to their share of the oil and gas as well as other minerals extracted from their domains.