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More Money As FAAC’s Share For FG, States, LG Jumps By 43% To N15tn

by Reporter theconscienceng
March 19, 2025
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More Money As FAAC’s Share For FG, States, LG Jumps By 43% To N15tn

The Federation Accounts Allocation Committee (FAAC) disbursements to the Federal, State, and Local Governments rose by 43 per cent in 2024, indicating a significant rise in government revenue.

Acting Director Communication & Stakeholders Management, the Nigerian Extractive Industry Transparency Initiative (NEITI), Obiageli Onuorah, who quoted from the newly released FAAC Quarterly Review in Abuja on Tuesday, said the committee disbursed N15.26 trillion to the three tiers of government in the year under review.

She noted that the disbursements represent a historic high in revenue distribution and a 43% increase compared to previous years.

The quarterly Review attributed the surge in revenue disbursements to sustained fiscal reform policies of the Federal Government especially the removal of fuel subsidies and foreign adjustment exchange rate policies which have continued to impact positively on oil revenue remittances.

Announcing the report’s release in Abuja, Dr Orji Ogbonnaya Orji, Executive Secretary of NEITI, noted that the analyses were conducted against the backdrop of major fiscal reforms that reshaped the revenue landscape, particularly the impact of subsidy removal in mid-2023 on national and subnational finances and the consequences of debt repayment deductions on state allocations.

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According to Dr Orji, the report’s objective is to assess the sustainability of the federal and state governments’ borrowing to fund their projects and programmes, as well as the implications of natural resource dependence, particularly for states benefitting from the 13% derivation revenue from oil, gas, and solid minerals.

He added, “The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potentials.”

NEITI listed the breakdown of disbursements to include: Federal Government: N4.95 trillion;

State Governments: N5.81 trillion; Local Governments: N3.77 trillion, stressing that the total FAAC disbursements (Including Derivation Revenue) stood at N15.26 trillion.

The NEITI FAAC Quarterly Review showed that distribution to state governments in 2024 recorded the largest percentage increase of 62% from N3.58 trillion in 2023, followed by local government councils with a 47% increase, while the Federal Government’s share rose by 24% from N3.99 trillion in 2023 to N4.95 trillion in 2024.

The report highlights that total FAAC allocations increased by 66.2% from N9.18 trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant growth occurring between 2023 and 2024.

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Revenue Growth Drivers and Economic Risks:

The Quarterly Review attributes the sustained rise in revenue disbursements to the government’s fiscal reforms, specifically the removal of fuel subsidies and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400%.

While NEITI welcomes and would continue to support the reforms with credible information and data, the Review called for adequate measures to manage and mitigate economic and other social risks associated with reforms in transitional economies like Nigeria.

According to the agency, such risks include: Inflationary Pressures, possible rise in Debt Servicing Costs, and Fiscal Uncertainties for States Dependent on oil revenues.

NEITI recommended that governments at all levels take innovative actions to mitigate the impact of these economic challenges.

State-by-State Allocation Analysis:

The report also revealed that Lagos State received the highest allocation of N531.1 billion in 2024, followed by Delta (N450.4 billion) and Rivers (N349.9 billion). Conversely, Nasarawa State received the least allocation of N108.3 billion, followed by Ebonyi (N110 billion) and Ekiti (N111.9 billion).

Furthermore, six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, collectively accounting for 33% of total allocations to all states, while the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5%.

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The report revealed a major financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49 trillion, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4 billion.

The review highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3% of total allocations to the 36 states, including derivation revenue.

Lagos State recorded the highest debt deduction of N164.7 billion, accounting for over 20% of total deductions, while Kaduna State followed with N51.2 billion, while Rivers (N38.6 billion) and Bauchi (N37.2 billion) also recorded significant debt deductions.

The report noted that many states with high debt ratios were in the lower half of the FAAC allocation rankings but ranked higher for debt deductions, raising concerns about their debt-to-revenue ratios and overall fiscal health.

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