FAAC: States, Local Govts Get N2.59trn As Economic Hardship Worsens

States and local governments got N2.59tn from the federation account in the first six months of 2023 amid worsening economic hardship in their respective states.

This is a 27.62 per cent increase from the N2.03tn that was shared in the corresponding period of 2022.

Also, the total revenue shared among the three tiers of government increased by 13.12 per cent to N4.54tn from the N4.01tn that was available in the corresponding period of 2022.

In the period under review, the 36 states of the federation got N1.49tn while the 774 local government areas got N1.09tn according to data from the Federation Account Allocation Committee.

In January 2023, states got N244.98bn, N236.46bn in February, N232.13bn in March, N218.31bn in April, N265.88bn in May, and N295.95bn in June. Local governments got N180.14bn in January, N173.94bn in February, N171.26bn in March, N160.60bn in April, N195.54bn in May, and N218.06bn in June.

While the 36 states got N1.49tn, Rivers, Akwa Ibom, Delta, Edo, Abia, Ondo, Imo, Bayelsa, and Lagos got N209.59bn more from the 13 per cent derivation fund.

Despite the increase in federal allocation to states, the World Bank recently stated that the real value of this increase had been negatively impacted by high inflation.

In its recent Nigeria Development Update, it said, “An average state saw an increase in nominal revenues between 2021 and 2022 of 16.1 per cent. However, given the high inflation rate, this is estimated to be a fall in real terms for most states.”

While federal allocation to the states had nominally increased, most states were grappling with reducing revenue, and struggling to curtail the impact of record-high inflation and depreciation in their states.

In the first quarter of 2023, about 25 states recorded a revenue shortage, with internally generated revenue dropping by 3.07 per cent quarter-on-quarter.

According to Economic Confidential report, the 25 states earned N182.26bn in Q1, 2023, a N5.77bn decline from the N188.03bn they made in Q4, 2022.

Within this period, the 36 states of the federation got N713.57bn as federal allocation in Q1 2023, showing a continued reliance of states on the Federal Government.