FG Deducts N26.68bn From States Allocation

…Lagos, Akwa Ibom, Bayelsa Suffer Highest Deductions

The sum of N26.68bn has been deducted by the Federal Government from allocation made to the 36 States of the Federation and the Federal Capital Territory for external debt servicing, contractual obligations and others.

The deductions, which are for the month of September were made from the allocations given to State Governments from the Federation Account.

The federation account is currently being managed on a  legal framework that allows funds to be shared under three major components.

They are statutory allocation, Value Added Tax distribution; and allocation made under the 13 per cent derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; States Governments, 26.72 per cent; while the 774 Local Governments are allocated 20.60 per cent of the revenue.

The framework also provides that for Value Added Tax revenue, the Federal Government should get, 15 per cent; States, 50 per cent; and Local Government, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation  principle.

An analysis of the Federation Account Allocation Committee by THE WHISTLER which obtained from the Office of the Accountant-General of the Federation showed that the N26.67bn is made of external debt servicing of N6.45bn, and contractual obligations of N6.13bn.

In the same vein, the sum of N14.09bn was deducted from the States as counterpart funding for various developmental projects.

They are the National Water Rehabilitation Project, National Agricultural Technology Support Programme, Payment for Fertilizer, State Water Supply Project, State Agricultural Project and National FADAMA project.

Further analysis of the deduction showed that Lagos recorded the highest amount with a deduction of N5.43bn.

This is followed by Akwa Ibom with N1.01bn while Bayelsa suffered a total deduction of N1.94bn during the month of September.

In the same vein, the sum of N473.24m was deducted from Abia’s allocation, Adamawa N240m , Anambra N180.81m, Bauchi N985.95m, and Benue N804.48m.

Also, the sum of N79.29m was deducted from the allocation of Borno, Cross River N1.57bn, Delta N953.98m, Ebonyi N293.51m, and Edo N416.83m among others.

A Non-Governmental Organisation, BudgiT had in a report stated that only three state governments could finance their recurrent expenditure independently of federal allocation

The three states are Lagos, Rivers and Akwa Ibom.

The report wondered why a state such as Delta was running huge recurrent expenditure rising up to N200bn.

It also wondered why despite the size of its population, Bayelsa state, still had recurrent bill as high as N137bn, compared with Ebonyi with a recurrent bill of N30bn, Sokoto N38bn, Jigawa N43bn, and Yobe N35bn.

The report said it was a recurring development to see States in the South-South region running high recurrent bills, mainly driven by the high revenues earned as a result of the 13 per cent derivation principle.

The Revenue Mobilisation Allocation and Fiscal Commission had said that the Federation Account is currently overstretched due to the persistent draw down in the account.

The RMAFC said the rate at which demands are made from the account by the three tiers of government was alarming, adding that the trend needed to be checked

To reduce the stress on the Federation Account, the Chairman of the RMAFC Engr. Elias Mbam had called on state governments to develop strategies to boost their internal revenues.

According to the RMAFC boss, the Federation Account is overstretched by the over-dependence of the tiers of government and hence the need for state governments to develop strategies to boost their internal revenues.

The over-dependence in the monthly Federation Account allocation, Mbam said, has made it imperative “for state governments to boost their Internally Generated Revenues.”