The three tiers of government – the federal, State and local government councils shared the total sum of ₦10.1tn from the Federation Account as statutory revenue allocations in 2023.
Contained in the latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) on the Federation Account revenue allocations for the year 2023, its Executive Secretary, Dr. Orji Ogbonnaya, who announced the release of the report at the NEITI House in Abuja, said a breakdown of the revenue receipts showed that the Federal Government received about ₦4trn, representing about 39 per cent of the total allocation.
The 36 States got about ₦3.6trn, representing 35 percent, while the 774 local government councils of the federation shared ₦2.6trn, equivalent to 25 percent.
Further analysis of the ₦10.143tn disbursements in 2023 showed an increase of about ₦2trn, or 23 percent when compared to the disbursement of ₦8.2trn shared in the corresponding year 2022.
The Review attributed the increase to improved revenue remittances to the Federation Account due to the removal of the petrol subsidy, and the floating of the exchange rate by the new administration.
The report highlighted that, while total revenues distributed from the Federation Account recorded an overall increase of 23% in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue streams contributing to the inflows into the Federation Account.
The NEITI Quarterly Review disclosed that the federal, state and local governments cumulatively received ₦1.9trn more than the amount shared in 2022. The first quarter of 2023 increased by about ₦580bn (33%) when compared to the first quarter of 2022. The second quarter increased by about 10%, third quarter by 27%, and the fourth quarter had an increase of 23% respectively.
The Federal Government’s share increased by about ₦574bn (17%), from the ₦3.4trn it received in 2022 to about ₦4trn in 2023.
State governments shared ₦3.6trn in 2023 compared to the ₦2.8trn they got in 2022, showing an increase of about 30%. Similarly, local government councils’ share of federation allocation was about ₦3trn in 2023, compared to ₦2trn in 2023 which amounts to a 26% increase.
State-by-State share of the allocations showed that Delta State received the largest share of ₦402bn (gross). The figure is inclusive of the State’s share of oil and gas derivation revenue.
Delta was followed by Rivers State, which received ₦398bn. Akwa-Ibom State received the third largest allocation of ₦293bn. Nasarawa State received the least amount of ₦73bn, while Ebonyi and Ekiti States received ₦74.3bn and ₦74bn respectively.
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.
According to Orji, the agency embarked on the NEITI FAAC quarterly review to enhance public understanding of Federation Account allocations, and disbursements as published by the Government.
Other key findings of the report showed that revenue remittances to the Account fluctuated significantly every month, due to corresponding fluctuations in oil and gas revenue. Oil and gas revenues reflected crude oil prices and Nigeria’s output, which in turn is significantly affected by crude oil theft and acts of sabotage.
The Report pointed out that the main sources of revenue inflows to the account in 2023 were the Nigeria Upstream Petroleum Regulatory Commission, (NUPRC), Federal Inland Revenue Service, (FIRS) and Nigeria Customs Service (NCS), through earnings from the different revenue stream. This included oil, gas royalties, petroleum profit tax, company income tax, value-added tax, (VAT), and import and excise duties.
The NEITI Review proffered key recommendations for enhanced performance of the federation account, including that; government (the National Assembly and the Executive), should 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 highly prioritise the on-going efforts at economic diversification, and investment to improve power-generation to encourage small, medium and large businesses to promote local production and reduce import and dependence on oil revenues.
The reviews 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, and pay attention to internally generated revenues through innovations and leadership that are citizen-centred.
