Despite being a mostly tough year for Nigerians, the three tiers of government shared the total sum of N10.143 trillion from the Federation Account as statutory revenue allocations in 2023, a new report by the Extractive Industries Transparency Initiative (NEITI) showed on Tuesday.
A breakdown of the revenue receipts showed that the federal government received N3.99 trillion, representing 39.37 percent of the total allocation.
In the same vein, the 36 states got N3.585 trillion, representing 35.34 percent, while the 774 local government councils of the federation shared 2.56 trillion equivalent to 25.28 percent, the report said.
The review attributed the increase to improved revenue remittances to the federation account due to the removal of petrol subsidy and the floating of the exchange rate by the new administration.
President Bola Tinubu had after taking over the reins of power on May 29 last year, announced the withdrawal of subsidy on petrol, shooting the price per litre from about N195 to between N600 and N750, depending on the location.
Also, the dollar rate to the naira, which was about N460/$ at the Investors and Exporters (I&E) window in May 2023, has now overshot N1,600/$, causing a massive rise in the prices of imported goods.
But NEITI said that a further analysis of the N10.143 trillion disbursements in 2023, showed an increase of N1.934 trillion or 23.56 percent when compared to the disbursement of N8.209 trillion shared in the corresponding year 2022.
It highlighted that while total revenues distributed from the federation account recorded an overall increase of 23.56 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of the revenue streams contributing to the inflows into the federation account.
According to the report, the federal, states and local governments cumulatively received N1.934 trillion more than the amount shared in 2022, with the first quarter of 2023 increasing by N579.71 billion (33.19 percent) when compared to the first quarter of 2022.
The second quarter also increased 10.32 percent, third quarter by 27.49 percent, while the fourth quarter had an increase of 23.42 percent respectively.
It further indicated that the federal government’s share increased by N574.21 billion (16.79 percent) from the N3.42 trillion it received in 2022 to N3.99 trillion in 2023, while the state governments shared N3.59 trillion compared to the N2.76 trillion they got in 2022, showing an increase of 29.99 percent .
Similarly, local government councils’ share of federation allocation was N2.57 trillion in 2023 compared to N2.032 trillion in 2023 which amounts to a 26.22 percent increase.
Besides, while total distributed revenue from the federation account recorded an overall increase of 23.56 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue item contributing to the inflows into the Federation Account.
“In the same period (2023), states and local governments recorded increases in their allocations of 29.99 percent and 26.22 percent respectively. The increase in allocation to the federal government however was 16.79 percent.
“State by state share of the allocations showed that Delta state received the largest share of N402.26 billion (gross). The figure is inclusive of the state’s share of oil and gas derivation revenue.
“Delta was followed by Rivers State which received N398.53 billion. Akwa-Ibom State received the third largest allocation of N293.58 billion. Nasarawa State received the least amount of N73.32 billion while Ebonyi and Ekiti states received N73.91 billion and N74.04 billion respectively,” the report said.
The review observed that the first five states that topped the allocation during the period under review are amongst the major oil producing states in the country.
On the share of 13 percent derivation revenue, nine states received the 13 percent allocated to mineral producing states from the proceeds from mineral revenue.
“The derivation revenue remains a significant portion of revenue for states like Delta, Akwa Ibom, Anambra and Rivers states. Also, the derivation revenues of states such as Delta, Akwa Ibom, and Bayelsa, which were 161.47 percent, 141.25 percent and 127.89 percent respectively, eclipsed their statutory revenues.
“Rivers state‘s derivation revenue was 74.15 percent during the period. Notably, the other five oil producing states recorded lesser derivation revenue compared to the four above. For example, Ondo state had 27.71 percent, Edo had 30.04 percent, while Abia, Anambra and Imo recorded a derivation revenue of about 20 percent or less,” it added.
The NEITI report noted that solid minerals producing states did not receive derivation revenues during the last quarter of last year because of the need to allow the revenues to accumulate over a period of time before sharing can occur.
On direct deductions from state, it stated that Delta state recorded by far the largest debt deductions in 2023, totalling N12.97 billion.
NEITI said that other key findings of the report showed that revenue remittances to the federation account fluctuated significantly on a monthly basis due to corresponding fluctuations in oil and gas revenue.
The report also revealed that revenue from the solid minerals sector was very negligible, and reflected the under-performance of the sector.
On recommendations, the NEITI Quarterly Review urged the government to adopt more conservative estimates for crude oil prices and output to enhance budgetary performance, reduce budget deficits and borrowing and strengthen fiscal stabilisation.
NEITI renewed its earlier recommendations for the federal government to prioritise the ongoing efforts at economic diversification, investment to improve power generation and to encourage small, medium and large businesses.
It stated that this will further promote local production, reduce import and dependence on oil revenues.
It also underlined the need for states to join hands with the federal government to deal with insecurity in rural communities where agro-based businesses thrive, paying attention to internally generated revenues through innovations and leadership that are citizen-centred.
The Executive Secretary of NEITI, Dr. Ogbonnaya Orji, said that the agency embarked on the report to enhance public understanding of federation account allocations and disbursements as published by the government.
“The ultimate objective of this disclosure is to strengthen knowledge, awareness and promote public accountability of all institutions in public finance management,” he said.
Emmanuel Addeh
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