FAAC Distributes N2.054 Trillion To 3 Tiers Of Government 

Moses Ofodeme

The Nigeria Extrative Industries Transparency Initiative (NEITI), has said the Federation Account Allocation Committee, FAAC, disbursed N2.054 trillion to the three tiers of government and other statutory recipients in the third quarter of 2020.

NEITI disclosed this in the latest edition of Nigeria Extractive Industries Transparency (NEITI)’s Quarterly Review released in Abuja on Tuesday.

It said the disbursements were made in spite of COVID-19 pandemic and its attendants socio-economic consequences.

A breakdown in the review showed that the Federal Government got N812.22 billion and State Governments received N676.5 billion, while Local Governments got N429.16 billion.

This was the first time that total disbursement had exceeded N2 trillion for a quarter in 2020, said the report.

It said that the review analysed FAAC disbursements in the third quarter of 2020, using data from the National Bureau of Statistics, NBS, and the Revenue Mobilization, Allocation and Fiscal Commission, RMAFC.

“Total disbursements of N2.054 trillion in 2020 Q3 were 6.2 per cent higher than total disbursements of N1.934 trillion in 2020 Q2, and 5.6per cent higher than total disbursements of N1.945 trillion in 2020 Q1

“The disbursements in 2020 Q3 were lower than those of the corresponding quarters in 2019 and 2018 as a whole,” it said.

NEITI added that 2020 Q3 disbursements were 9.6per cent lower than the N2.273 trillion disbursed in the Q3 of 2019 and 9.8per cent lower than the N2.278 trillion disbursed in the third quarter of 2018.

The review further noted that the Federal Government of Nigeria (FGN) received N812.22 billion in the third quarter of 2020.

According to the review,  this is 11.7per cent lower than the N920.2 billion and 10.2per cent lower than the N904.8 billion the Federal Government received in the third quarters of 2019 and 2018 respectively.

” The states on the other hand received a total of N676.5 billion in the third quarter of 2020, showing a decrease of 6.6 per cent when compared to the N724.16 billion they got in the third quarter of 2019, and 5.9 per cent lower than the N718.5 billion they received in the third quarter of 2018.

“The local governments got a total of N429.16 billion in 2020 Q3,” it said.

This, it said, was 9.6per cent lower than the N441.19 billion they got in 2019 Q3 and 9.8per cent lower than the N432.1 billion received in 2018 Q3.

“The dip in disbursements between 2020 Q3 and corresponding quarters in 2019 and 2018 was largely on account of the impact of COVID-19 and its associated effects on demand for oil, oil prices, economic activities and other sources of revenues,” it noted.

The report revealed that disbursements to the three tiers of government fell between the first and second quarters, and then increased between the second and third quarters of 2020.

The total disbursements to the FGN were N791.44 billion, N739.2 billion and N812.22 billion for the first, second and third quarters of 2020, respectively.

“This means that disbursements in the third quarter were 9.9per cent higher than disbursements in the second quarter, and 2.6per cent higher than disbursements in the first quarter.

“For states, total disbursements were N669.02 billion in the first quarter, N629.26 billion in the second quarter, and N676.5 billion in the third quarter.

“Thus, disbursements to states in 2020 Q3 were 7.5per cent higher than disbursements in 2020 Q2, and 1.1 per cent higher than disbursements in 2020 Q1, ” the review revealed.

It further noted that local governments received total of N395.95 billion in 2020 Q1, N375.39 billion in 2020 Q2, and N429.16 billion in 2020 Q3.

The disbursements to local governments in 2020 Q3, it said, were 14.3per cent higher than the amount disbursed in 2020 Q2, and 8.4per cent higher than the disbursements in 2020 Q1.

“Total FAAC disbursements in 2020 Q3 were higher than disbursements in either the first or second quarters of 2020, continuing a trend that stretches back to 2015,”it added.

The review noted that higher disbursements in the third quarters of the years were generally on account of increased demand for oil during the summer season, and the attendant surge in oil prices.

It also attributed rise in third quarter disbursements for 2020 to two primary factors of increased demand for oil following the easing of the global economic shut-downs as a result of the COVID-19 pandemic.

” Secondly, the official exchange rate (earlier adjusted in March 2020 from N305/$1 to N360/$1) was adjusted from N360/$1 to N380/$1, and this will necessarily lead to higher disbursements from FAAC as revenues are shared in Naira”, the review stated.

On disbursements to states in 2020 Q3, NEITI review noted that there was wide disparity in the total net disbursements.

It noted that it ranged between the lowest of N9.39 billion net disbursements to Osun State and the highest of N43.08 billion net disbursements to Delta State, indicating a variance of 358 per cent.

According to the review, apart from the sharing formula, the amount of deductions carried out also plays a role in determining how much net disbursements are received by states.

Yobe State had the lowest deduction of N81.98 million, while Lagos State had the highest deduction of N17.35 billion, which was 10per cent higher than the combined total deductions of 20 states (N15.72 billion).

The review further revealed that the combined disbursements of the four states with the highest disbursements (Delta, Rivers, Lagos and Akwa Ibom states) amounted to N144.48billion.

This, it said, was higher than the combined total of N135.36 billion received by the 12 states with the lowest disbursements.

It named the states to include Osun, Cross River, Plateau, Ogun , Ekiti, Gombe, Zamfara, Kwara, Nasarawa, Ebonyi, Taraba & Ondo.

On the revenue outlook for 2020 Q4, the NEITI review projected that actual oil revenue is likely to continue to outperform the projected oil revenue for the fourth quarter of 2020.

However, it cautioned that even with projected improvement in revenues in 2020 Q4 and based on the total revenues received in the first three quarters of 2020, all tiers of government may struggle to meet the revenue projection in their revised budgets for the year.

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