NEITI: FAAC quarterly disbursement declining since Q3 2019

Allocations paid to the three tiers of government by the federation accounts allocation committee (FAAC) have dropped three consecutive times since the third quarter (Q3) of 2019.

This is contained in the quarterly review report of the Nigeria Extractive Industries Transparency Initiative (NEITI) released in Abuja on Tuesday.

According to the report, the total quarterly disbursements have been falling since Q3 2019 when a total N2.273 trillion was disbursed between the three tiers of government.

“This fell to N2.031 trillion in Q4 2019. Total disbursements fell further to N1.945 trillion in Q1 2020, and to N1.934 trillion in Q2 2020,” the report read.

“Thus, total quarterly disbursements have fallen by 14.9% between Q3 2019 and Q2 2020.”

The NEITI report attributed the 0.55 percent decrease in Q2 2020 to a couple of factors including “rebound in oil prices in the second quarter as a result of ease of lockdowns by countries across the world and the adjustment of the official exchange rate by the CBN from N307/$1 to N360/$1 in March resulting in higher naira disbursements”.

The report noted that FAAC shared N3.87 trillion to the federal, state and local governments in the first half (H1) of 2020.

This figure is higher than the N3.842 trillion shared in the first half of 2019 but lower than the N3.946 trillion disbursed among the three tiers in the first half of 2018.

A breakdown of the recent H1 disbursements showed that N1.53 trillion went to the federal government, while the states got N1.29 trillion and the 774 local government areas received N771.34 billion.

It noted the N1.53 trillion received by the federal government in H1 2020 was 4.28 percent lower than the N1.599 trillion it got in the first half of 2019 and 7.36 percent lower than the N1.652 trillion it received in the first half of 2018.

“For states, a total of N1.298 trillion was disbursed in the first half of 2020. This was 2.8% lower than the N1.35 trillion disbursed in the first half of 2019, and 5.6% lower than the N1.375 trillion disbursed in the first half of 2020,” it read.

For local government areas, it explained that the 2020 first half disbursements were 2.64 percent and 3.04 percent lower than the corresponding disbursements for 2019 and 2018 respectively.

The report stated that the aggregate disbursements within the first six months in 2020 fluctuated by large amounts, compared to 2018 and 2019.

NEITI also disclosed that from January to May 2020, actual government revenue was N1.62 trillion, representing “62% of the expected pro-rata revenue of N2.62 trillion from the revised budget”.

It said the figure also resulted in a shortfall of 38 percent in government revenue for the first five months of the year.

The report noted that government revenue will perform better in the second half of 2020, with the possibility of shortfalls in revenue compared to budgeted figures as oil prices continue to rise and the pace of economic activities increase.

NEITI said it observed wide disparities in the total net FAAC disbursements and deductions for states for the first half of 2020.

It noted that Delta, with the highest net disbursement of N100.81 billion, received seven times the allocation given to Osun, which had the lowest net disbursement of N13.13 billion.

“Total net disbursements received by Delta State (N100.81 billion) was higher than the combined total net disbursements of N99.47 billion received by six states – Osun, Cross River, Plateau, Ogun, Gombe and Ekiti,” it read.

“Also, the combined total net disbursements of N321.29 billion received by the four highest receiving states of Delta, Akwa Ibom, Rivers, and Bayelsa were higher than the combined total net disbursements of N314.08 billion received by 16 states – Osun, Cross River, Plateau, Ogun, Gombe, Ekiti,  Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Ondo, Bauchi, and Abia.”

Featured image: Waziri Adio, NEITI executive secretary