FAAC disbursement been dropping since Q3 2019 – NEITI

The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that allocations paid to the three tiers of government by the Federation Accounts Allocation Committee (FAAC) have dropped three consecutive times since the third quarter (Q3) of 2019.

According to its quarterly review report released in Abuja on Tuesday, NEITI said the total quarterly disbursements have been falling since Q3 2019 when a total N2.273 trillion was disbursed between the three tiers of government.

“This fell to N2.031 trillion in Q4 2019. Total disbursements fell further to N1.945 trillion in Q1 2020, and to N1.934 trillion in Q2 2020. Thus, total quarterly disbursements have fallen by 14.9% between Q3 2019 and Q2 2020,” the report read.

The NEITI report attributed the 0.55 percent decrease in Q2 2020 to a couple of factors including a rebound in oil prices in the second quarter as a result of ease of lockdowns by countries across the world and the adjustment of the official exchange rate by the CBN from N307/$1 to N360/$1 in March resulting in higher naira disbursements.

The report noted that FAAC shared N3.87 trillion to the federal, state, and local governments in the first half (H1) of 2020 which is higher than the N3.842 trillion shared in the first half of 2019 but lower than the N3.946 trillion disbursed among the three tiers in the first half of 2018.

A breakdown of the recent H1 disbursements showed that N1.53 trillion went to the federal government, while the states got N1.29 trillion and the 774 local government areas received N771.34 billion.

It noted the N1.53 trillion received by the federal government in H1 2020 was 4.28 percent lower than the N1.599 trillion it got in the first half of 2019 and 7.36 percent lower than the N1.652 trillion it received in the first half of 2018.

For states, a total of N1.298 trillion was disbursed in the first half of 2020. This was 2.8% lower than the N1.35 trillion disbursed in the first half of 2019, and 5.6% lower than the N1.375 trillion disbursed in the first half of 2020.

For local government areas, it explained that the 2020 first half disbursements were 2.64 percent and 3.04 percent lower than the corresponding disbursements for 2019 and 2018 respectively.

NEITI also disclosed that from January to May 2020, actual government revenue was N1.62 trillion, representing 62% of the expected pro-rata revenue of N2.62 trillion from the revised budget which resulted in a shortfall of 38 percent in government revenue for the first five months of the year.