….Warns that all tiers of govt would face funding challenges in 2020
By Michael Eboh
Nigeria Extractive Industries Transparency Initiative (NEITI), yesterday, stated that the Federal, states and local governments received N1.95 trillion from the Federation Account Allocation Committee (FAAC) in the first quarter of 2020.
In a statement in Abuja, NEITI, in its Quarterly Review, disclosed that the Federal Government received N791.4 billion; the states shared N669 billion, while about N395 billion was shared by the 774 local government areas.
It added that the balance went to the North East Development Commission, the Excess Crude Account, Federal Inland Revenue Service (FIRS), Nigeria Custom Service (NCS) and the Department of Petroleum Resources (DPR).
NEITI, however, warned that the COVID-19 pandemic would seriously impact government’s revenue, adding that all tiers of government would face difficulties in funding their budgets.
It said, “on prospects of FAAC disbursements for the rest of the year as a result of the impact of COVID-19, the review remarked that in light of the ‘double whammy’ of declining oil demand and oil prices as a result of the COVID-19 pandemic, government revenue would likely continue to fall in subsequent months.
“As global crude oil prices plummet in the midst of the global oil supply glut arising from lockdown of economic activities in many countries of the world, all tiers of government will struggle to fund their 2020 budgets.”
NEITI further noted that the first quarter 2020 FAAC disbursements were the highest first quarter disbursements since 2014.
It said, “Total disbursements were N1.648 trillion in first quarter 2015, N1.132 trillion in first quarter 2016, N1.411 trillion in first quarter 2017, N1.938 trillion in first quarter 2018, and N1.929 trillion in first quarter 2019.
“The review examined FAAC disbursements in the first quarter of this year and made projections on the possible impacts of COVID-19 on government revenues. “While total disbursements in first quarter 2020 were slightly higher than first quarter 2019 and first quarter 2018, disbursements to the three tiers of government in first quarter 2020 were slightly lower than first quarter 2019 and first quarter 2018.
“This is due to transfers to other accounts in first quarter 2020 which were not done in either first quarter 2019 or first quarter 2018. These include allocations to the North East Development Commission and transfer to Excess Crude Account.
“The NEITI Quarterly Review explained that total FAAC allocations during the period under review comprised of gross disbursements to the Federal Government, States, Local Government Councils and the 13 per cent Derivation. It also covered cost of collections by the Nigerian Customs Service, the Federal Inland Revenue Service, the Department of Petroleum Resources and other allied handling charges.
“NEITI noted that from the previous years, with the exception of 2018, the general trend since 2015 had been that total disbursements fell in the second quarters, before rising in the third quarters. It also noted that with the COVID-19- pandemic, it is almost certain that total disbursements will fall in the second quarter of 2020.”
On FAAC disbursements to states between January and March this year, NEITI stated that there was a wide disparity between states as Osun State with the lowest allocation received N6.44 billion and Delta State with the highest disbursement received N52.03, a difference of 708 per cent.
NEITI also disclosed that Delta State’s net FAAC disbursements were higher than the combined total net disbursements of N50.67 billion of the six lowest receiving states, comprising Osun, Cross River, Plateau, Ogun, Ekiti and Gombe.
It said, “Further analysis revealed that combined disbursements to four states (Delta, Akwa Ibom, Rivers and Bayelsa) with the highest net FAAC disbursements were higher than the combined net disbursements for the 17 states with the lowest disbursements.
“The combined total net disbursement to these four states was N167.76 billion. This figure is higher than the combined total of N159.99 billion received by the 17 lowest receiving states (Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Bauchi, Abia, and Kogi).”
NEITI added that 31 states received less than N20 billion as total net FAAC disbursements in the first quarter of this year while only five states received more than N20 billion.
It listed the states as Lagos (N26.23 billion), Bayelsa (N35.14 billion), Rivers (N39.99 billion), Akwa Ibom (N40.61 billion), and Delta (N52.03 billion) respectively.
Furthermore, NEITI highlighted wide disparity in the amounts deducted from the states as their debt obligations, noting that for instance, Lagos State had the highest deductions of N14.92 billion, while Yobe State had the lowest deductions of N820.18 million.