FAAC disbursed N2.494trn in 2018, says NEITI Report

…As S’South generates highest revenue, S’East zone records lowest revenue

Ukpono Ukpong, Abuja

State governments in the country received a total of N2.849 trillion allocations from the Federal Accounts Allocation Committee (FAAC) in 2018.

According to a report released by Nigeria Extractive Industries Transparency Initiative (NEITI), which compared each state’s budgets to their total revenue to analyse their viability, it revealed that total Internally Generated Revenue (IGR) for states in 2018 was N1.103 trillion.

Thus, total revenue for states in 2018 accounted for N3.953 trillion.

While noting that with total revenue of N501.2 billion, Lagos State received the highest revenue, accounting for 13.9% of total revenue of all states, it was also revealed that FAAC disbursements exceeded IGR in 34 out of 36 states, adding that states rely almost exclusively on FAAC disbursements.

“After deductions, states received a total N3.597 trillion as revenue in 2018. This comprised N2.494 trillion as net FAAC disbursements and N1.103 trillion as IGR,” the report stated.

A review by geopolitical zones showed that the South South zone had the highest aggregate revenue (N1.102 trillion) while the South East zone had the lowest aggregate revenue (N340.1 billion).

The South West zone had the highest amount of IGR (N533 billion) while the South South had the highest receipts of FAAC disbursements (N847.9 billion).

Further checks revealed that total revenue of Lagos State (N501.2 billion) exceeded total revenue of each of three zones: North Central (N378.7 billion), North East (N351.5 billion) and South East (N340.1 billion),

while the total revenue for South South (N1.102 trillion) exceeded the combined revenue for the North Central, North East and South East (N1.07 trillion).

The report noted that states recorded significantly lower total revenue than budgets, which it explained will lead to not being able to fully implement their budgets.

On the debt levels of states at the end of 2018, the report observed that domestic debt was larger than foreign debt in all states, while external debt was below N50 billion in most states.

Four states of Cross River, Kaduna, Edo and Lagos had external debt above N50 billion, with Taraba and Borno states recording the lowest external debt levels of N6.6 billion each.

“Only four states had external debt above N50 billion including Cross River (N57.8billion), Kaduna (N69.6 billion), Edo (N84.6 billion) and Lagos (N436.6 billion).

Taraba and Borno states had the lowest external debt levels of N6.6 billion each. Interestingly, the lowest domestic debt level was for Yobe State (27.8 billion). Lagos State had the highest domestic debt level (530.2 billion).

“Second, domestic debt in most states was more than 100% higher than external debt. Only six states had domestic debt levels which were less than 100% higher than external debt – Anambra, Edo, Enugu, Kaduna, Katsina, and Lagos.

For most states (14), domestic debt was between 100% and 200% higher than external debt – Abia, Adamawa, Bauchi, Cross River, Ebonyi, Ekiti, Jigawa, Kwara, Niger, Ogun, Ondo, Oyo, Sokoto, and Yobe.

Domestic debt was between 200% and 300% higher than external debt in six states – Gombe, Imo, Kebbi, Nasarawa, Osun, and Zamfara.

Domestic debt was more than 300% higher than external debt in 10 states – Akwa Ibom, Bayelsa, Benue, Borno, Delta, Kano, Kogi, Plateau, Rivers, Taraba.”

The report disclosed that budgets, budget deficits and debt levels followed similar patterns with total revenue.

“Thus, it is generally the case that states and zones with higher total revenue also had higher budgets, higher budget deficits and higher debt levels.

“In conclusion, considering the high levels of budget deficits and debt, it would be advisable for states to strategise and develop innovative ways of generating revenue.

This would go a long way in reducing their budget deficits and deter excessive borrowing.

“Then, expenditure on critical developmental and investment projects can be embarked upon,” said the NEITI report.