The federal, states and local government areas shared N3.95 trillion from the Federation Account within the first half of this year.

The disbursements made by the Federation Accounts Allocation Committee (FAAC) represented an increase of 41% when compared to the N2.79 trillion disbursed in the first half of 2017 and a 95% increase in the N2 trillion disbursed in the first half of 2016.

The analysis is contained in the latest edition of the NEITI Quarterly Review published by the Nigeria Extractive Industries Transparency Initiative (NEITI). The review provided highlights and in-depth analysis of disbursements by FAAC for the second quarter and the first half of this year.

A breakdown of the disbursements showed that the Federal Government received N1.65 trillion, states received N1.38 trillion while local governments got the least share of N795 billion. The disparity in the revenues received by each of the three tiers of government was based on the revenue sharing formula of the Federation as stipulated in the constitution.

The NEITI Quarterly Review shows that the lowest monthly figure of N635.6 billion disbursed in the first half of 2018 was N121.4 billion higher than the highest monthly figure (N514.2 billion) disbursed in the first half of 2017 and N218 billion higher than the highest monthly figure (N417 billion) for 2016. “These figures clearly indicate that revenue accruing to the Federation in the first half of 2018 completely outstripped revenues in the previous two years,” stated the report.

The Quarterly Review further disclosed that total FAAC disbursements in the second quarter of this year was 46% higher than the figure for the same period last year and 127% higher than the figure for the same period in 2016. The report noted that while N2 trillion was shared in the second quarter of this year, N1.38 trillion was disbursed during the same period last year and only N886.38 billion was shared in the second quarter of 2016. “In fact, Q2, 2018 was the first time an amount in excess of N2 trillion was disbursed since Q3 2014. This is a run of 14 consecutive quarters of disbursements below N2 trillion.”

The phenomenal increase of disbursements recorded in the second quarter of 2018, the report observed, was the highest to the Federation since the third quarter of 2014. The report attributed the positive development to the rise in crude oil prices and similar increase in oil production. “Average oil price in 2016 was $43.5 per barrel, while in 2017 oil price averaged $54.2 per barrel. However, in the first six months of 2018, average oil price was $70.6 per barrel. Thus, on the average, oil price increased by 62.2% between 2016 and the first half of 2018”, the NEITI Quarterly Review asserted. “Total oil production in 2016 was 661.1 million barrels while the figure was 690 million barrels in 2017. In 2016, average monthly oil production was 55.1 million barrels while it was 57.5 million barrels in 2017. For the first two months of 2018 for which data is available, average production was 59 million barrels.”

On net FAAC disbursement to states, the review disclosed that during the first half of this year, “the highest receiving state was Delta State with N101.19 billion, while the lowest receiving state was Osun State with N10.24 billion. This implies that Delta State received 988% more than Osun State received.”

NEITI postulates that since “disbursements to all states as at June 2018 exceeded 60% of total disbursements in 2017, it is also likely that FAAC disbursements to all states in 2018 will exceed their 2017 values.”

The NEITI Quarterly Review also looked at the deductions made from the allocations to the states. The report identified five states with the lowest deductions as a percentage of disbursements as Anambra (2.89%), Yobe (2.93%), Jigawa (3.96%), Enugu (6.72%), Nassarawa (6.74%). In the same direction, states with the highest deductions as percentage of disbursements were Plateau (33.48%), Ogun (38.43%), Zamfara (41.55%), Cross River (54.53%) and Osun (141.79%).

Another striking feature of the NEITI Report is the significant increase in VAT disbursements during the period under review. VAT disbursements increased by 35% between the first quarter of 2015 and the second quarter of 2018.

The report remarked: “It is interesting that VAT has been generally increasing over time. This bodes well for the government’s efforts at increasing revenue from non-oil sources.”

The NEITI Quarterly Review expressed hope about increased revenues to governments from both oil and non-oil sectors, but cautions that the volatile and unpredictable nature of government revenues will continue to make planning difficult for all tiers of government, increasing difficulties in implementing their budgets. It highlighted the need to place priority attention to internally generated revenues.

The latest issue of the publication is based on data from the National Bureau of Statistics (NBS) and NEITI’s regular attendance at FAAC meetings. The publication is NEITI’s contribution to the advancement of citizens education and enlightenment on revenues disbursed to the three tiers of government from the Federation Account.

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