There was more cash to share from the federation account as the nation’s revenue sources received a boost in the fiscal year ended 2021. The Federal Government and Sub-Nationals (States) enjoyed an increase of 52 percent from the Federation Account Allocation Committee, raising total cash distribution to N7.3trillion in 2021. Meanwhile, the World Bank has said more than 40 percent of Nigerians still live below the poverty line as more people will be pushed into the labour market this year. BAMIDELE FAMOOFO reports.
Cash disbursed by the Federation Account Allocation Committee to the Federal Government and State Governments increased from about N4.8trillion in fiscal year 2020 to about N7.3trillion in 2021, representing an increase of 52.1 percent year-on-year (Y/Y).
The largesse from the commonwealth of Africa’s largest economy injected into the nation’s economy would increase to N9.08trillion if cash disbursement to the third Tier of government (Local Government) is put into consideration.
Breakdown of the figures made available by the National Bureau of Statistics during the period under review showed that the Federal Government, as it is the custom, got a lion share of the booty.
The Federal Government received N3.13trillion representing about 43.0 percent of the total allocation in the period while the States got N2.39trillion accounting for about 33.0 percent of the FAAC largesse in 2021.
The allocation to oil states which is exclusive of the total cash shared by all the States and the Federal Capital Territory stood at about N455.62billion while Local Governments (government at the grass root) received N1.78trillion.
According to the NBS, there are three major sources that boosted allocation to the three arms of governments in the review period. They are: Statutory Account, Value Added Tax and Exchange Tax.
“Notwithstanding the rising revenue in Africa’s most populous country, data from the World Bank showed that the increase in funding of government activities is not reflecting in the welfare of Nigerians as more than 40 percent of the people live below the poverty line till date”
Breakdown of contributions showed that 73.34 percent or N6.66 trillion of the total revenue shared in 2021 was from the Statutory Account while about N2.04trillion came from VAT collections and Exchange Gain, N47.95billion or 0.53 percent of gross allocation.
Notwithstanding the rising revenue in Africa’s most populous country, data from the World Bank showed that the increase in funding of government activities is not reflecting in the welfare of Nigerians as more than 40 percent of the people live below the poverty line till date.
By definition, the World Bank describes poverty as a state of being in which a person lacks the income (or other means of support) to reliably meet their basic personal needs, such as food, shelter, and clothing.
Statistics on poverty rate (poverty rate is the number of people in a given demographic group whose income falls below the poverty line) shared by the World Bank indicated that around 40 percent of Nigerians live in poverty with about 92.04 percent living below $5 or N2, 500 per day and about 99 percent not able to afford a lifestyle that will cost $10 or N5, 000 per day.
This poverty rate index by the World Bank puts some smaller countries like Ghana, Ivory Coast, Cameroon, Zimbabwe, Benin, Rwanda and Kenya ahead of Nigeria as the poverty index is lower than 40 percent.
There are indications also that the increasing revenue generation may not necessarily aid job creation as a recent data published by Statistica, credited to the NBS, claimed that the unemployment rate in Nigeria is estimated to reach 33 percent in 2022. This figure was projected to be at 32.5 percent in the preceding year.
“Chronological data show that the unemployment rate in Nigeria rose constantly in the past years. In the fourth quarter of 2020, over 33 percent of the labor force was unemployed, according to the Nigerian methodology.”
Review of 2021 disbursements
The Federation Account Allocation Committee disbursed the sum of N619.34bn to the three tiers of government in December 2020 from the revenue generated in January 2021.
The amount disbursed comprised N437.26bn from the Statutory Account, N3.83bn as Exchange Gain Difference, N6.90bn from Distribution of FOREX Equalisation and N171.36bn from Valued Added Tax. The Federal Government received a total of N218.30bn from the N619.34bn. States received a total of N178.30bn and Local Governments received N131.79bn. The sum of N31.83bn was shared among the oil producing states as a 13% derivation fund.
Revenue generating agencies such as Nigeria Customs Service, Federal Inland Revenue Service and Department of Petroleum Resources, received N6.99bn, N10.43bn and N6.36bn respectively as cost of revenue collections.
Further breakdown of revenue allocation distribution to the Federal Government of Nigeria revealed that the sum of N146.33bn was disbursed to the Federal Government of Nigeria consolidated revenue account; N3.69bn shared as share of derivation and ecology; N1.85bn as stabilization fund; N6.20bn for the development of natural resources; and N5.22bn to the Federal Capital Territory, Abuja.
The sum of N640.31bn went to the three tiers of government in February 2021 from the revenue generated in January 2021.
The Federal Government received a total of N227bn from the N640.31bn. States received a total of N177.17bn and Local Governments received N131.40bn. The sum of N28.78bn was shared among the oil producing states as a 13% derivation fund.
Further breakdown of revenue allocation distribution to the Federal Government of Nigeria revealed that the sum of N120.83bn was disbursed to the Federal Government of Nigeria consolidated revenue account; N3.89bn shared as share of derivation and ecology; N1.95bn as stabilization fund; N6.54bn for the development of natural resources; and N5.31bn to the Federal Capital Territory Abuja.
The Federation Account Allocation Committee disbursed the sum of N605.59bn to the three tiers of government in March 2021 from the revenue generated in February 2021.
The amount disbursed comprised N439.10bn from the Statutory Account, N157.33bn from Valued Added Tax, N8.65bn from FOREX Equalization and N0.52bn from Distribution of Excess Bank Charges.
The Federal Government received a total of N205.16bn from the N605.59bn while States received a total of N166.08bn and Local Governments received N122.85bn. The sum of N37.14bn was shared among the oil producing states from the 13% derivation fund.
In April, the sum of N835.33bn was shared to the three tiers of government from the revenue generated in March 2021. The amount disbursed comprised N620.69bn from the Statutory Account, N181.71bn from Valued Added Tax, N30.00bn from Non-Oil Excess Account, and N2.93bn from Distribution of Exchange Gain.
The Federal Government received a total of N227.95bn from the N835.33bn while States received a total of N187.26bn and Local Governments received N138.37bn.
“This poverty rate index by the World Bank puts some smaller countries like Ghana, Ivory Coast, Cameroon, Zimbabwe, Benin, Rwanda and Kenya ahead of Nigeria as the poverty index is lower than 40 percent”
The sum of N40.24bn was shared among the oil producing states from the 13% derivation fund while in May, disbursement dropped to N696.36bn.
The amount disbursed comprised of N496.83bn from the Statutory Account, N176.71bn from Valued Added Tax, N30.00bn from Non-Oil Excess Account, and N0.56bn from Excess Bank Charges and N20.00bn from Distribution of Exchange Gain. FAAC allocation suffered another setback in June as N681.00bn was available for sharing. The amount disbursed comprised N420.26bn from the Statutory Account, N181.08bn from Valued Added Tax, N77.94bn from Non-Oil Excess Account, and N1.73bn from distribution of Exchange Gain.
There was however a boom in July as revenue increased significantly to N970.57bn as the amount disbursed comprised N812.41bn from the Statutory Account, N154.47bn from Valued Added Tax and N3.69bn from Distribution of Exchange Gain difference.
The Federal Government as usual received a total of N304.95bn from the N970.57bn while States received a total of N215.57bn and Local Governments received N161.10bn. The sum of N51.47bn was shared among the oil producing states from the 13% derivation fund.
The Revenue generating agencies such as Nigeria Customs Service, Federal Inland Revenue Service and Department of Petroleum Resources received N8.37bn, N17.50bn and N11.05bn respectively as cost of revenue collections.
Allocation in the third quarter of the review fiscal year was robust with N769.23bn shared in September to the three tiers of government.
The amount disbursed comprised of N537.52bn from the Statutory Account, N178.48bn from Valued Added Tax, N50.00bn from Non-Oil Excess Account, N0.40bn from Excess Bank Charges and N2.83bn from Exchange Gain difference.
The Federal Government received a total of N289.56bn from the N769.23bn while States received a total of N217.18bn and Local Governments received N161.54bn.
The sum of N28.98bn was shared among the oil producing states from the 13% derivation fund. The Revenue generating agencies such as Nigeria Customs Service, Federal Inland Revenue Service and Department of Petroleum Resources received N11.50bn, N12.69bn and N5.05bn respectively as cost of revenue collections.
In October, the sum of N866.24bn was shared to the three tiers of government as the amount disbursed comprised N692.28bn from the Statutory Account, N3.10bn from Exchange Gain difference and N170.85n from Valued Added Tax.
The Federal Government received a total of N301.31bn from the N866.24.22bn while States received a total of N220.27bn and Local governments received N164.18bn.
The sum of N54.21bn was shared among the oil-producing states from the 13% derivation fund. The Revenue generating agencies such as Nigeria Customs Service, Federal Inland Revenue Service and Department of Petroleum Resources received N9.25bn, N11.99bn, and N6.49bn respectively as cost of revenue collections.
Further breakdown of revenue allocation distribution to the Federal Government of Nigeria revealed that the sum of N216.43bn was disbursed to the FGN consolidated revenue account; N5.27bn disbursed as a share of derivation and ecology; N2.63bn as stabilization fund; N8.84bn for the development of natural resources; and N6.75bn to the Federal Capital Territory, Abuja.
