Nigeria’s three tiers of government – the Federal, States and Local Government Councils (LGs) – received a total of N4.37 trillion from the Federation Account as statutory revenue allocations in the first half of 2023.
This was revealed by the latest report from the Nigeria Extractive Industries Transparency Initiative (NEITI) on the Federation Account revenue allocations for the period.
According to the report, which was announced by Dr Orji Ogbonnanya Orji, Executive Secretary of NEITI, on Thursday in Abuja, the total distributable revenue to the three tiers of government increased by 16.7% from N4.05 trillion in the first half of 2022 to N4.37 trillion in the first half of 2023.
The report also showed that the Federal government received N1.78 trillion, or 40.7% of the total revenue, while the State governments received N1.5 trillion, or 34.5%. The LGs received N1.08 trillion, or 24.8%. Each tier of government received more than N1 trillion over the six-month period.
The increase in revenue was attributed to improved oil prices and production levels, as well as higher non-oil revenues from taxes and customs duties.
However, the report also noted that there was a decline in revenue inflows into the Federation Account in the second quarter (Q2) of 2023 by 23%, which affected the distributable revenue which fell by 12% compared to the first quarter.
The report further analysed the disbursements to the States and revealed that Delta State received the highest allocation of N102.79 billion in Q2 of 2023, followed by Akwa Ibom with N70.01 billion, Rivers with N69.73 billion, Lagos with N60.64 billion and Bayelsa with N56.34 billion.
These five States received a combined total of N359.5 billion, or 35.9% of the total FAAC allocations, which was more than the total allocations to the next 15 States or 19 other States put together. The bottom 10 States received only 17.3% of the revenue shared in Q2 of 2023.
The report also stated that four of the five States with the highest allocations, except Lagos, received a significant amount of their revenue from oil derivation funds, which accounted for more than 50% of their total allocations.
The report concluded by recommending that States should diversify their revenue sources and improve their fiscal management to reduce their dependence on oil revenues and FAAC allocations.
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