FAAC Allocation: FG, States, LGs Suffered N270bn Shortfall In 2021

The Federation Account Allocation Committee shared a total of N8.16tn among the three tiers of government in 2021.

However, data from the Medium-Term Expenditure Framework and Fiscal Strategy Paper for 2022-2024 shows that the amount budgeted to be disbursed to the three tiers of government during the 2021 fiscal year was N8.43tn.

This resulted in an allocation shortfall of N270bn during the period under review.

The Federation Account is currently being managed on a legal framework that allows funds to be shared under three major components.

They are the statutory allocation, Value Added Tax distribution; and allocations made under the 13 per cent derivation principle.

Under the statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that VAT revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.

Similarly, an additional allocation is given to the nine oil-producing states based on the 13 per cent derivation principle.

A breakdown of actual allocation showed that the sum of N640.3bn was shared in January out of which the Federal Government received N226.998bn; states received N177.17bn; the local government councils got N131.4bn, while the oil-producing states received N26.78bn as 13 per cent derivation.

Cost of collection/transfer and refunds accounted for N75.97bnn. With a monthly prorated budget of N702.5bn, the sum of N640.3bn shared in January resulted in an estimated shortfall of N62.2bn.

In February, N640bn was disbursed, indicating a shortfall of about N62.5bn. The amount allocated constitutes a gross statutory distribution of N483bn and a VAT pool of N157bn, according to a report by FBNQUEST.

According to a communiqué issued at the end of a virtual meeting of the FAAC, N681.3bn was shared in March.

This amount represents a monthly shortfall of N20.7bn. The communiqué indicated that from the total distributable revenue, the Federal Government received N212.15bn; state governments got N179.24bn, while the local government councils received N132.19bn.

For the oil-producing states, the sum of N40.24bn was shared as 13 per cent derivation revenue, while the cost of revenue collection, transfers, and refunds was N87.51bn.

“The N30bn augmentation was also shared as appropriate,” the communique stated.

For April, the sum of N244.01bn was disbursed to the Federal Government, states received N193.43bn, LGs got N143.29bn, while oil-producing states received the sum of N36.14bn, bringing the total allocation for the month to N616.87bn. This sum was N85.6bn lower than the budgeted monthly allocation.

In May, a total of N605.96bn revenue was shared among the federal, states, and local governments areas, as well as other relevant agencies.

Out of this amount, the Federal Government received N242.12bn; the states got N194.19bn while the LGs received N143.74bn. For May, oil-producing states received N26.9bn as derivation revenue.

The total amount shared in May was N96.82bn lower than the budgeted monthly allocation of N702.77bn.

In June and July, FAAC allocations rose to N733.69bn and N760.71bn, exceeding the monthly prorated budget by N31.9bn and N58.12bn, respectively.

Allocation, however, declined in August to N696.9bn. The committee in a communiqué said from the N696.96bn shared, the Federal Government received N289.25bn, states got N217.183bn, LGs received N161.54bn, while oil-producing states received N41.37bn as their 13 per cent derivation.

The sum shared in August was N5.6bn lower than the prorated budget.

In September, the allocation rose again to N739.96bn, exceeding the prorated budget by N37.46bn.

Of the disbursed amount, the Federal Government received N276.0bn, states got N139.99bn, LGs received N107.93bn, and derivation gulped N53.83bn.

For the month of October, the sum of N671.9bn was disbursed to the three tiers, representing a shortfall of N30.6bn.

However, in November, the revenue shared among the three tiers of government rose to N675.94bn and further to N699.82bn in December.

In November, the shortfall recorded was N30.6bn while N2.68bn was recorded in December.