The Federation Accounts Allocation Committee (FAAC) has announced the distribution of N1.203 trillion in revenue generated in August 2024 among the Federal Government, States, and Local Government Councils (LGAs). This represents a significant decrease of 11.4% compared to the N1.358 trillion shared from July 2024 revenue, distributed in August.
The revenue allocation was confirmed during the FAAC meeting held in Abuja on Tuesday, September 17, 2024, as announced by Bawa Mokwa, Director of Press and Public Relations for the Office of the Accountant General of the Federation (OAGF).
Breakdown of Revenue Allocation
Total Revenue and Deductions
In August 2024, a total revenue of N2.278 trillion was available, as indicated by the communiqué issued by FAAC. However, deductions were made to account for collection costs and other obligations. A total of N81.975 billion was deducted for the cost of collection, while N992.617 billion was set aside for transfers, interventions, and refunds.
This resulted in the distributable revenue of N1.203 trillion that was shared among the Federal Government, States, and Local Government Councils in September 2024.
Key Revenue Components
The total distributable revenue of N1.203 trillion for August comprised several key components:
Statutory revenue: Increased to N186.636 billion, up from N161.593 billion in July, reflecting a 15.5% rise.
Value Added Tax (VAT) revenue: Saw a decline, dropping 8.3% from N582.307 billion in July to N533.895 billion in August.
Electronic Money Transfer Levy (EMTL) revenue: Fell by 20.2%, with N15.017 billion shared in August compared to N18.818 billion in July.
Exchange Difference revenue: Experienced the largest drop, amounting to N468.245 billion in August, down 19.5% from N581.710 billion in July.
Distribution among the Three Tiers of Government
The distribution of the N1.203 trillion revenue among the Federal Government, States, and Local Government Councils was as follows:
Federal Government: Received N374.925 billion, marking a 13% decrease from the N431.079 billion it received from July’s revenue.
States: Received N422.861 billion, reflecting a 10.7% reduction from N473.477 billion in the previous month.
Local Government Councils: Saw an 11% decrease, receiving N306.533 billion, compared to N343.703 billion in July.
Derivation Revenue for Mineral-Producing States
Mineral-producing states shared N99.474 billion as 13% derivation revenue in August, a 9.4% decline from the N109.816 billion distributed in July.
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Breakdown of Distributable Statutory Revenue
Out of the N186.636 billion distributable statutory revenue, the following allocations were made:
Federal Government: Received N71.624 billion.
States: Received N36.329 billion.
Local Government Councils: Received N28.008 billion.
13% of mineral derivation revenue: N50.675 billion.
Breakdown of VAT Revenue
Out of the N533.895 billion VAT revenue, the following allocations were made:
Federal Government: Received N80.084 billion.
States: Received N266.948 billion.
Local Government Councils: Received N186.863 billion.
Breakdown of EMTL Revenue
Out of the N15.017 billion EMTL revenue, the following allocations were made:
Federal Government: Received N2.252 billion.
States: Received N7.509 billion.
Local Government Councils: Received N5.256 billion.
Breakdown of Exchange Difference Revenue
Out of the N468.245 billion Exchange Difference revenue, the following allocations were made:
Federal Government: Received N220.964 billion.
States: Received N112.076 billion.
Local Government Councils: Received N86.406 billion.
13% of mineral derivation revenue: N48.799 billion.
Declines in Key Revenue Streams
The report noted that August 2024 saw declines in Oil and Gas Royalty, Petroleum Profit Tax (PPT), VAT, Import and Excise Duties, EMTL, CET Levies, and Companies Income Tax (CIT).
Excess Crude Account Balance
The balance in the Excess Crude Account (ECA) stood at $473,754.57 as of the end of the month.
Analysis of Revenue Trends
The decline in overall revenue and the distribution share among the three tiers of government can be attributed to several factors, including:
Economic challenges: The Nigerian economy continues to grapple with various challenges, including inflation, foreign exchange volatility, and low oil prices, which have impacted revenue generation.
Reduced oil production: The country’s oil production has been affected by factors such as pipeline vandalism and operational challenges, leading to lower oil revenues.
Tax evasion and avoidance: Efforts to combat tax evasion and avoidance have yielded mixed results, impacting revenue collection.
Implications for Government Finances
The decrease in revenue allocation has significant implications for the financial health of the Federal Government, States, and Local Government Councils. It may constrain their ability to fund critical projects and services, such as infrastructure development, education, healthcare, and security.
To address these challenges, governments may need to explore alternative revenue sources, such as increased domestic taxation, improved tax administration, and diversification of the economy. Additionally, there is a need for more efficient and transparent management of public resources to ensure that available funds are utilized effectively.
If You Ask Me: Outlook
The outlook for future revenue allocations remains uncertain, as it depends on various factors, including economic conditions, oil prices, and government policies. However, it is essential for the government to take proactive measures to enhance revenue generation and ensure sustainable financing for development.
As the Nigerian economy continues to evolve, it is crucial for policymakers to carefully monitor revenue trends and adjust their strategies accordingly. By adopting effective policies and implementing reforms, the government can improve the country’s fiscal position and enhance the well-being of its citizens.
