BREAKING: FAAC Disbursed Record N15.26 Trillion to Governments in 2024, Up By 43%, NEITI Reports

The Federation Accounts Allocation Committee (FAAC) disbursed an unprecedented N15.26 trillion to federal, states and local governments in 2024, representing a historic high in revenue distribution and a 43 percent increase compared to previous years.

The Nigeria Executive Industries Transparency Initiative (NEITI) disclosed this on Tuesday, in its NEITI FAAC Quarterly Review, released in Abuja.

The agency attributed the surge in revenue disbursements to the three tiers of government to sustained fiscal reform policies of the federal government especially the removal of fuel subsidies and adjustment of foreign exchange rate policies which have continued to impact positively on oil revenue remittances.

Announcing the report, the Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, 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.

Orji explained that the report’s objective was 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 benefiting from the 13 per cent derivation revenue from oil, gas, and solid minerals.

He added, “The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potential.”

The breakdown of the disbursements showed that the federal government received N4.95 trillion; state governments got N5.81 trillion while local governments received N3.77 trillion.

According to the report, the total FAAC disbursements including Derivation Revenue was N15.26 trillion.

The NEITI FAAC Quarterly Review showed that distribution to State governments in 2024 recorded the largest percentage increase of 62 percent from N3.58 trillion in 2023, followed by local government councils with a 47 percent increase, while the federal government’s share rose by 24 percent from N3.99 trillion in 2023 to N4.95 trillion in 2024.

The report highlighted that total FAAC allocations increased by 66.2 percent from N9.18 trillion in 2022, to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant growth occurring between 2023 and 2024.

“The Quarterly Review attributes the sustained rise in revenue disbursements to the government’s fiscal reforms, specifically the removal of fuel subsidy and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400 percent.

“While NEITI welcomes and would continue 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,” the report added.

NEITI, however, outlined such risks to include inflationary pressures, a possible rise in debt service costs as well as fiscal uncertainties 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 N531.1 billion in 2024, followed by Delta (N450.4 billion) and Rivers (N349.9 billion).

Conversely, Nasarawa State received the least allocation of N108.3 billion, followed by Ebonyi (N110 billion) and Ekiti (N111.9 billion).

Furthermore, it revealed that six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, 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 major financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49 trillion, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4 billion.

The review also highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3 per cent of total allocations to the 36 states, including derivation revenue.

It stated that Lagos State recorded the highest debt deduction of N164.7 billion, accounting for over 20 per cent of total deductions. It revealed that Kaduna State followed with N51.2 billion, while Rivers (N38.6 billion) and Bauchi (N37.2 billion) 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.

In its recommendations, NEITI urged the government to sustain policy reform measures to encourage sustainable revenue growth and economic stability with priority attention focussed on job creation, poverty reduction and control of inflation on goods and services.

It also harped on ensuring exchange rate stability to mitigate inflationary pressures and adoption of conservative estimates for crude oil production and pricing to prevent budget shortfalls.

The agency further called for the review and diversification of minerals revenue dependence while incentivising investment and strengthening regulatory oversight.

NEITI added, “Enhancing internal revenue generation by all three tiers of government.

Bolstering savings in the Excess Crude Account (ECA) to create a buffer against revenue volatility.

“Sustaining fiscal transparency policies in line with OGP and EITI commitments.

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.”