How FG, States, LGs, Shared N3.29trn From Federation Account

Facts have emerged as to how the three tiers of goverment shared the sum of N3.29trn from the federation account between January and May this year.

The figure was arrived at based on analysis by THE WHISTLER of the Federation Account Allocation Committee Report prepared by the Office of the Accountant-General of the Federation.

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, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 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 FAAC document showed that the sum of N716.3bn was allocated to the three tiers of government in January.

Out of this amount, the Federal Government received N287.92bn, representing 52.68 per cent, the States received N192.3bn representing 26.72 per cent and Local Government Councils got N143.69bn, representing 20.60 per cent, while the oil producing states received N50.279bn as 13 per cent derivation revenue.

In the Month of February, the three tiers of government shared the sum of N647.4bn.

Out of this amount, the Federal Government received N267.389bn, State Governments N176.92bn, while the Local Government Councils got N132.94bn

In addition, the oil producing states received N46.19bn as 13 per cent derivation revenue while the revenue generating agencies got N23.9bn as cost of revenue collection.

From the Value Added Tax component of the amount allocated in January, the Federal Government received N14.61bn, the State Governments got N48.71bn, the Local Government Councils received N34.09bn and the revenue generating agencies received N7.33bn as cost of revenue collection.

Further analysis of the revenue distribution showed that the FAAC Committee allocated the sum of N780.93bn to the three tiers of goverment in March out of which the Federal Government received N217.77bn; state governments, N110.45bn while the local government areas got N85.15bn.

In addition, the sum of N32.29bn was given to the oil producing states based on the 13 per cent derivation principle while N151.98bn was allocated to the revenue generating agencies as cost of revenue collection.

Also, from VAT revenue the Federal Government received N16.77bn; state governments received N55.92bn, the LGAs got N39.14bn, while sum of N8.41bn was given to revenue agencies as cost of collection.

For the Month of April, the sum of N606.9bn was made to the three tiers of government from which the Federal Government received N169.83bn, the States received N86.14bn, Local Government councils got N66.411 billion, while the oil producing states received N32.89bn as derivation.

Similarly, in the month of May, the sum of N547.3bn was distributed to the three tiers of government.

Out of this amount, the Federal Government received N219.79bn, State Governments got N152.43bn and local government councils received N114.095 billion.

The oil producing states also got N37.021 billion as 13 per cent derivation fund.

The Federal Government had last week painted a grim picture of the impact of COVID -19 on the country, saying that in the months ahead, the three tiers of government may face serious challenges providing services to the people if revenue sources continue to dip.

It warned that distributable revenue from their common pool -the Federation Account, may drop to below N400bn if there is no remarkable rise in crude oil prices.

The Secretary to the Government of the Federation, Mr Boss Mustapha, in an interview with THE WHISTLER, said that, to remain afloat and provide services with ease, the monthly revenue available to the three tiers must average N650bn.

However, Mustapha said since the first quarter of this year, there had been a steady decline of funds raked into the pool as a result of the impact on oil prices by COVID -19.

For instance, the SGF stated that while the 2020 budget projected N888.5bn as the monthly share to the tiers from the pool, in January, it could only accrue N716.3bn.

He added that by February, the figure dipped further to N647.4bn, an amount that was already below the N650bn required to remain on the borderline of financing governance.

The SGF told THE WHISTLER that in normal times, the Federal Government would ordinarily augment the FAAC allocations, but noted that with the current revenue challenges, the situation was tough even for the FG.

Mustapha explained, “Due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3bn in January and N647.4bn in February 2020.”