Lagos, Rivers, Bayelsa, Three Others Get Over N5tn As FAAC Disbursed N15.26tn To FG, States In 2024

…Fuel Subsidy Removal, Exchange Rate Policy Boosted Federation Revenue By 43%

…NEITI Advocates More Savings To Serve As Buffer Against Revenue Volatility.

Six states of Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano each received over N200bn from the federation account, collectively accounting for 33% of total allocations to all states, a report by the Nigeria Extractive Industries Transparency Initiative has revealed.

This is just as the six lowest-receiving states of Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5 per cent which is just N1.75tn.

NEITI in its Quarterly Report said the Federation Accounts Allocation Committee (FAAC) disbursed an unprecedented N15.26tn to the Federal, State, and Local Governments in 2024.

The disbursements represent a historic high in revenue distribution and a 43 per cent increase compared to previous years.

The NEITI FAAC Quarterly Review, released on Tuesday in Abuja, attributed the surge in revenue disbursements to sustained fiscal reform policies of the federal government especially the removal of fuel subsidies and foreign adjustment exchange rate policies which has continued to impact positively on oil revenue remittances.

Announcing the report’s release at the NEITI House in Abuja, Dr. Orji Ogbonnaya Orji, Executive Secretary of NEITI, noted that the analyses were conducted against the backdrop of major fiscal reforms that reshaped the revenue landscape, particularly the impact of subsidy removal in mid-2023 on national and subnational finances and the consequences of debt repayment deductions on state allocations.

According to Orji, the report’s objective is to assess the sustainability of the federal and state governments’ borrowing to fund their projects and programmes, as well as the implications of natural resource dependence, particularly for states benefitting from the 13 per cent derivation revenue from oil, gas, and solid minerals.

He added, “The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potentials.”

A breakdown of the dsbursements showed that the federal government got N4.95tn; state governments: N5.81tn, while the local governments received N3.77tn.

The NEITI FAAC Quarterly Review showed that distribution to state governments in 2024 recorded the largest percentage increase of 62 per cent from N3.58tn in 2023, followed by local government councils with a 47 per cent increase, while the federal government’s share rose by 24 per cent from N3.99tn in 2023 to N4.95tn in 2024.

The report highlighted that total FAAC allocations increased by 66.2 per cent from N9.18tn in 2022 to N10.9tn in 2023 and N15.26tn in 2024, with the most significant growth occurring between 2023 and 2024.

The Quarterly Review attributed the sustained rise in revenue disbursements to the government’s fiscal reforms, specifically the removal of fuel subsidy and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400 per cent

While NEITI expressed support to the reforms with credible information and data, the Review called for adequate measures to manage and mitigate economic and other social risks associated reforms in transitional economies like Nigeria.

NEITI outlined such risks to include inflationary pressures, possible rise in debt servicing costs, fiscal uncertainties for states dependent on oil revenues.

NEITI recommended that governments at all levels take innovative actions to mitigate the impact of these economic challenges.

In terms of state-by-state allocation analysis, NEITI in the report also revealed that Lagos State received the highest allocation of N531.1bn in 2024, followed by Delta (N450.4bn) and Rivers (N349.9bn).

Conversely, Nasarawa State received the least allocation of N108.3bn, followed by Ebonyi (N110bn) and Ekiti (N111.9bn).

The report revealed a major financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49tn, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4bn.

The NEITI review also highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800bn, representing 12.3 per cent of total allocations to the 36 states, including derivation revenue.

​Lagos State recorded the highest debt deduction of N164.7bn, accounting for over 20 per cent of total deductions.

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Kaduna State followed with N51.2bn while Rivers (N38.6bn) and Bauchi (N37.2bn) also recorded significant debt deductions.

The report noted that many states with high debt ratios were in the lower half of the FAAC allocation rankings but ranked higher for debt deductions, raising concerns about their debt-to-revenue ratios and overall fiscal health.

NEITI urged the government to sustain policy reform measures to encourages sustainable revenue growth and economic stability with priority attention focussed on job creation, poverty reduction and control of inflation on goods and services.

Lagos, Rivers, Bayelsa, Three Others Get Over N5tn As FAAC Disbursed N15.26tn To FG, States In 2024 is first published on The Whistler Newspaper