*Stakeholders commend NEITI for transparency, demand accountability from States for huge FAAC receipts
The Federation Account Allocation Committee (FAAC) has reportedly disbursed a colossal amount of N2.054 trillion to the three tiers of government and other statutory recipients in the third quarter of 2020.
According to information from NEITI, this is despite COVID-19 pandemic and its attendants socio-economic consequences which brought about severe emergency crisis in the country.
In the latest edition of Nigeria Extractive Industries Transparency (NEITI)’s Quarterly Review just released by the agency, which evaluated FAAC disbursements in the third quarter of 2020, using data from the National Bureau of Statistics and the Revenue Mobilization, Allocation and Fiscal Commission(RMFC), a total of N2.054 trillion was disbursed to the three tiers of government and other statutory recipients in the third quarter of 2020.
An audited breakdown of the dynamics using well defined metrics indicate that the Federal Government received a total of about N812.22 billion; state governments got N676.5 billion while local government areas too home a total of N429.16 billion receipts.
Interestingly, this was the first time that total disbursement has exceeded N2 trillion for a quarter in 2020, says NEITI.
“Total disbursements of N2.054 trillion in 2020 Q3 were 6.2% higher than total disbursements of N1.934 trillion in 2020 Q2, and 5.6% higher than total disbursements of N1.945 trillion in 2020 Q1”, the review stated.
According to analysts, the FAAC releases in 2020 Q3 were lower than those of the previous quarters in 2019 and 2018, respectively. That is in terms of specific disbursements to the three tiers of government.
According to the review, 2020 Q3 disbursements were “9.6% lower than the N2.273 trillion disbursed in the third quarter of 2019 and 9.8% lower than the N2.278 trillion disbursed in the third quarter of 2018”.
While throwing further light on the subject matter, the NEITI noted that the Federal Government of Nigeria (FGN) received N812.22 billion in the third quarter of 2020, which was 11.7% lower than the N920.2 billion and 10.2% lower than the N904.8 billion the FGN received in the third quarters of 2019 and 2018 respectively.
However, sub-nationals, referring to states, on the other hand, received a total of N676.5 billion in the third quarter of 2020. According to the analysis, this reflects a decrease of 6.6% when compared to the N724.16 billion they got in the third quarter of 2019, and 5.9% lower than the N718.5 billion they received in the third quarter of 2018.
Correspondingly, the local governments received a total of N429.16 billion in 2020 Q3. This was however 9.6% than the N441.19 billion which they received in 2019 Q3 and 9.8% lower than the N432.1 billion which they correspondingly received in 2018 Q3.
The NEITI analysis further noted: “The dip in disbursements between 2020 Q3 and corresponding quarters in 2019 and 2018 was largely on account of the impact of COVID-19 and its associated effects on demand for oil, oil prices, economic activities and other sources of revenues”.
The NEITI review added: “Total disbursements to the FGN were N791.44 billion, N739.2 billion and N812.22 billion for the first, second and third quarters of 2020, respectively. This means that disbursements in the third quarter were 9.9% higher than disbursements in the second quarter, and 2.6% higher than disbursements in the first quarter.
“For states, total disbursements were N669.02 billion in the first quarter, N629.26 billion in the second quarter, and N676.5 billion in the third quarter. Thus, disbursements to states in 2020 Q3 were 7.5% higher than disbursements in 2020 Q2, and 1.1% higher than disbursements in 2020 Q1…
“Local governments received total of N395.95 billion in 2020 Q1, N375.39 billion in 2020 Q2, and N429.16 billion in 2020 Q3. Thus, the disbursements to local governments in 2020 Q3 were 14.3% higher than the amount disbursed in 2020 Q2, and 8.4% higher than the disbursements in 2020 Q1”.
The NEITI analysis also stated that “total FAAC disbursements in 2020 Q3 were higher than disbursements in either the first or second quarters of 2020, continuing a trend that stretches back to 2015”.
The review noted further: “First, there has been increased demand for oil following the easing of the global economic shut-downs as a result of the COVID-19 pandemic. Second, the official exchange rate (earlier adjusted in March 2020 from N305/$1 to N360/$1) was adjusted from N360/$1 to N380/$1, and this will necessarily lead to higher disbursements from FAAC as revenues are shared in Naira”.
On FAAC disbursements to states in 2020 Q3, NEITI review noted that there was wide disparity in the total net disbursements.
According to the agency, this ranged between the lowest of N9.39 billion net disbursements to Osun State and the highest of N43.08 billion net disbursements to Delta State, indicating a variance of 358%.
According to the review, apart from the sharing formula, the amount of deductions carried out also plays a key role in ascertaining how much net disbursements are received by states.
For example, the report notes that Yobe State had the lowest deduction of N81.98 million, while Lagos State had the highest deduction of N17.35 billion, which was 10% higher than the combined total deductions of 20 states (N15.72 billion).
The review further revealed that the combined disbursements of the four states with the highest disbursements (Delta, Rivers, Lagos and Akwa Ibom states) amounted to N144.48billion.
This was higher than the combined total of N135.36 billion received by the 12 states with the lowest disbursements (Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nasarawa, Ebonyi, Taraba & Ondo).
On the revenue outlook for 2020 Q4, the NEITI examination based on its data projects that actual oil revenue is likely to consistently outperform the projected oil revenue for the fourth quarter of 2020.
However, NEITI warned that even with projected rise in revenues in 2020 Q4 on account of the total revenues received in the first three quarters of 2020, all the three tiers of government may likely struggle to meet the revenue projection in their revised budgetary provisions for the year.
Given the huge receipts by some states including Lagos and Oil-producing states, many stakeholders have asked for accountability from the designated states.
Many analysts stated that the governors should begin to give open and transparent account of how their states receipts from FAAC are being deployed, stressing that ” the money belong to the states and stakeholders and not to the governors.”