By Anthony Otaru, Abuja
The Federation Accounts Allocation Committee (FAAC) disbursed an unprecedented N15.26trn 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 yesterday in Abuja by the Nigeria Extractive Industries Transparency Initiative (NEITI), attributed the surge in revenue disbursements to the federal government’s sustained fiscal reform policies.
It said this follows the removal of fuel subsidies and the adjustment of the foreign exchange rate policies, which has continued to impact oil revenue remittances positively.
Announcing the NEITI report 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 percent derivation from oil, gas, and solid minerals
“The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potentials,” he said.
According to him, the breakdown of disbursements shows that the Federal Government received N4.95trn, state governments N5.81trn, and Local Governments N3.77trn, respectively.
*Over N15.26trn shared by FG, states, LGs in 2024
The NEITI FAAC Quarterly Review also showed that distribution to state governments in 2024 recorded the largest percentage increase of 62 percent from N3.58trn in 2023, followed by local government councils with a 47 percent increase, while the Federal Government’s share rose by 24 percent from N3.99trn in 2023 to N4.95trn in 2024.
The report highlights that total FAAC allocations increased by 66.2 percent from N9.18trn in 2022 to N10.9trn in 2023 and N15.26trn in 2024, with the most significant growth occurring between 2023 and 2024.
Also, on Revenue Growth Drivers and Economic Risks, the Quarterly Review attributes the sustained rise in revenue disbursements to the government’s fiscal reforms, specifically the removal of fuel subsidies and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400 percent.
While NEITI continues to support the reforms with credible information and data, the review called for adequate measures to manage and mitigate economic and other social risks associated with reforms in transitional economies like Nigeria.
NEITI outlined risks that include inflationary pressures, a possible rise in Debt Servicing Costs, and Fiscal Uncertainty for States Dependent on oil revenues.
NEITI recommended that governments at all levels take innovative actions to mitigate the impact of these economic challenges.
On State-by-State Allocation Analysis, 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).
Furthermore, six states- Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200bn, collectively accounting for 33 per cent of total allocations to all states, while the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5 percent
The report revealed a significant financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49trn, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4bn.
The review highlighted that debt deductions for states’ foreign debts and other contractual obligations amounted to N800bn, representing 12.3 percent of total allocations to the 36 states, including derivation revenue.
”Lagos State recorded the highest debt deduction of N164.7bn, accounting for over 20 percent of total deductions. 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.
On key recommendations, NEITI urged the government to sustain policy reform measures to encourage sustainable revenue growth and economic stability, with priority attention focused on job creation, poverty reduction, and control of inflation on goods and services.
Others include ensuring exchange rate stability to mitigate inflationary pressures, adopting conservative estimates for crude oil production and pricing to prevent budget shortfalls, reviewing and diversifying mineral revenue dependence while incentivizing investment, strengthening regulatory oversight, and enhancing internal revenue generation by all three tiers of government.
It also recommended bolstering savings in the Excess Crude Account (ECA) to create a buffer against revenue volatility.
The NEITI FAAC Review reiterated the need for stakeholders to leverage the findings and data provided to hold all levels of government accountable for the effective management of public resources, especially revenues from the extractive industries.
