FAAC Shared N10.143trn to FG, States, LGAs as Allocation increased by 23.56% in 2023- NEITI


The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed in its latest report that a total of N10.143 trillion was shared among the federal government, states, and local government councils from the federation account as statutory revenue allocations in 2023. This shows an increase of 23.56 percent over that of the previous year.


NEITI in a statement released on Tuesday by its spokesperson, Obiageli Onuorah, said the disclosure was aimed at enhancing public accountability in the country’s public finance.


She said the Executive Secretary of NEITI, Orji Ogbonnanya, made this announcement at the NEITI House in Abuja during the release of the report.


According to the statement, the NEITI FAAC Quarterly Review was initiated to provide a comprehensive understanding of federation account allocations and disbursements as published by the government, ultimately promoting knowledge and awareness of public finance management institutions.


The breakdown of revenue receipts indicates that the Federal Government received N3.99 trillion, representing 39.37 percent of the total allocation, while the 36 States received N3.585 trillion (35.34percent), and the 774 Local Government Councils shared N2.56 trillion (25.28percent).


The analysis of the N10.143 trillion disbursements for 2023 revealed an increase of N1.934 trillion or 23.56 percent compared to the N8.209 trillion shared in the previous year, 2022.


This increase was attributed to improved revenue remittances to the federation account, driven by the removal of the petrol subsidy and the floating of the exchange rate by the new administration.


The NEITI Quarterly Review highlighted that while the total revenues distributed from the federation account increased by 23.56 percent in 2023, the growth varied among the three tiers of government due to the diverse revenue streams contributing to the inflows.


Notably, the federal government’s share saw an increase of N574.21 billion (16.79 percent) from N3.42 trillion in 2022 to N3.99 trillion in 2023. Similarly, state governments received N3.59 trillion in 2023, a 29.99 percent increase from N2.76 trillion in 2022, while local government councils’ share amounted to N2.57 trillion, a 26.22 percent increase from N2.032 trillion in 2022.


A state-by-state analysis of the allocations revealed that Delta State received the largest share of N402.26 billion, followed closely by Rivers State with N398.53 billion and Akwa-Ibom State with N293.58 billion. These top allocations largely stemmed from oil and gas derivation revenue.


In addition, the NEITI report emphasised the importance of 13 percent derivation revenue, which remains a significant portion of revenue for mineral-producing states such as Delta, Akwa Ibom, Anambra, and Rivers.


The report also highlighted the stark disparity in revenue from solid minerals, reflecting the underperformance of the sector.


The NEITI report highlighted that solid minerals-producing states did not receive derivation revenues in the last quarter of the year to allow the revenues to accumulate. Additionally, Delta State had the highest debt deductions in 2023, totaling N12.97 billion, while Lagos State recorded the least at N370 million.

The report attributed the reduced debt burden more to the increase in federation account allocations than a reduction in debt size, indicating that states’ borrowing decisions are influenced by their allocations and expected earnings, potentially leading to increased borrowing as revenues rise.


The NEITI report highlighted that revenue to the federation account fluctuated due to monthly changes in oil and gas revenue, influenced by crude oil prices and Nigeria’s output, affected by theft and sabotage.


Main revenue sources included the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), and Nigeria Customs Service (NCS), contributing through various streams like oil and gas royalties, petroleum profit tax, company income tax, value-added tax, import, and excise duties.

The report also noted the solid minerals sector’s very low revenue contribution, indicating its underperformance.


The NEITI Quarterly Review concluded with key recommendations for the enhancement of the federation account’s performance. These include adopting conservative estimates for crude oil prices and output, prioritizing economic diversification efforts, improving power generation, and tackling insecurity in rural communities, among others.


“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, investment to improve power generation to encourage small, medium and large businesses to promote local production, 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-centered,” the statement said.



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