Revenue disbursements by the Federation Account Allocation Committee (FAAC) to the three tiers of government has witnessed a steady increase in three consecutive quarters of this year with N2.28 trillion shared in Q3 of 2018.
A breakdown shows that the Federal government received the highest sum of N904.8 billion, followed by states, which received N718.5 billion and Local governments (LGCs) receiving the lowest disbursements of N432.1 billion.This information is contained in the latest edition of the NEITI Quarterly Review just published.
From the NEITI Review, “Total FAAC disbursements in the third quarter of 2018 amounted to N2.28 trillion representing a 17.6% increase over the N1.938 trillion disbursed in the first quarter of 2018 and 13.5% higher than the N2.008 trillion disbursed in the second quarter.’’
The NEITI Quarterly Review notes that “It is interesting that with the exception of July, the lowest amount disbursed so far in 2018 is higher than disbursements in all other months in 2016 and 2017”.
A breakdown of the disbursed sums for 2016, 2017 & 2018 shows that the disbursements in the third quarter of 2018 (N2.28 trillion) were 31% & 18% higher than disbursements in the third quarters of the last two years.NEITI also reports that the last time total disbursements exceeded the N2.5trillion mark was in the second quarter of 2014 (N2.510 trillion).
Further analysis of the increases as reported by the NEITI Quarterly Review shows that the federal government’s receipt of N904.8 billion in the third quarter of 2018, was 11.3% and 7.8% higher than the amounts received in the first (N812.8 billion) and second (N839.5 billion) quarters of 2018 respectively.
“The amount disbursed to states represented an increase of 5.1% over the N683.5 billion disbursed in the first quarter, and an increase of 3.8% over the N692.1 billion disbursed in the second quarter. For LGCs, the amount received was 9.8% and 7.5% higher than the respective amounts of N393.4 billion and N402.1 billion received in the first and second quarters,” the NEITI Quarterly Review disclosed.
On a year-by-year analysis, NEITI reveals that the increase to third quarter disbursements to states in 2018 were the highest when compared to 2016 and 2017 figures disbursed to other federating units.
A breakdown of the figures showing the level of growth indicates that “Total disbursements to states in the third quarter of 2018 came to N718.5 billion, representing a growth of 40.1% and 22.5% over disbursements in the third quarters of 2016 (N512.7 billion) and 2017 (N586.6 billion) respectively” NEITI observes .
The NEITI Quarterly Review continues, “For the LGCs, disbursements in 2018 Q3 totaled N432.1 billion. This figure was 33.2% higher than the N324.3 billion disbursed in 2016 Q3, and 18.7% higher than the N324.3 billion disbursed in 2017 Q3. Total disbursements to the FGN in the third quarters of 2016, 2017 and 2018 were respectively, N697.9 billion, N752.7 billion, and N904.8 billion indicating that in 2018 Q3, the FGN received 29.7% higher disbursements than 2016 Q3, and 20.2% higher disbursements than 2017 Q3”. The review further disclosed that total net FAAC disbursements to states in the first nine months of 2018 ranged between N16.41 and N150.59 billion, with Osun and Delta states receiving the lowest and highest amounts respectively.
A comparison of the state-by-state net disbursement shows a stark disparity in the amounts received. For instance, the net disbursement received by Delta State in January alone sums up to the total net disbursements to Osun State from January to September 2018. This clearly indicates that disbursements to Delta State were higher than the one to Osun by over 800%.
The NEITI Quarterly Review also shows that average monthly net disbursements to states in the first nine months of 2018 ranged between N1.82 billion and N16.73 billion with Osun receiving the least monthly sum and Delta, the highest.As observed in previous reviews, states that received the highest allocations of N100billion and above are all in the Niger Delta region and this is on account of the 13% derivation.
Furthermore, a comparison of state-by-state debt deductions in the first nine months of 2018 revealed that Lagos State had the highest deduction of N26.84 billion while Yobe State had the lowest deduction of N1.12 billion (a percentage difference of 2,300%).
The state with the lowest ratio of deductions to net disbursements was Anambra with 2.85%, while Osun had the highest deduction to net disbursements ratio of 132.85%, signaling that deductions exceeded disbursements to Osun State.The review however explained that the wide disparities in disbursements to states were as a result of differences in disbursements arising from the revenue sharing formula, deductions from states due to external debts, contractual obligations, among others.
The NEITI review advised that the increase in disbursements is a ground for cautious optimism in the fiscal positions of all tiers of government, noting that the upswings and downswings pattern is reflective of the volatile nature of revenue resulting from reliance on primary commodity exports
The publication also observed that while increase in revenue will reflect positively on the fiscal situation of the federating units, states will still have to struggle to finance their budgets considering their poor Internally Generated Revenue (IGR).“There is virtually none of the states that can adequately finance their budgets from IGR and FAAC disbursements. States will have to resort to different levels of borrowing”, the NEITI review noted.
The NEITI Quarterly Review, designed to provide timely information and data, is a tool to support citizens’ engagement, advocacy, constructive debate, information sharing and enlightenment in tracking the utilization of public funds for purposes of development.
NEITI’s interest in FAAC disbursements and the statutory recipients is in view of the fact that more than 50% of the funds are derived from the extractive industry.
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