A total of N4.545 trillion was disbursed as FAAC allocations between January and September 2017, according to the latest Quarterly Review of the Nigeria Extractive Industries Transparency Initiative (NEITI).
Out of this amount, N1.757 trillion was shared in the third quarter of 2017 as against the N1.377 trillion and N1.411 trillion disbursed in the second and first quarters of the year, said NIETI wednesday in a statement by its Director of Communications, Dr. Orji Ogbonnaya Orji.
The publication, which contained information and data on FAAC disbursements for the third quarter of 2017 and on mid-year budget implementation, also showed that between January and September 2017, the federal government received the highest allocation of N1.851.32 trillion, followed by state governments with N1.509 trillion and the 774 local governments with N913.8 billion.
The statement said the sum of N271.78 billion went to DPR, customs and the FIRS as cost of revenue collections.
The NEITI Quarterly Review further analysed FAAC disbursements to the states in the first three quarters of 2017. It observed that the allocations were 42 per cent lower than the states budgetary requirements.
The report noted that “states will have to aggressively raise their IGR in order to be able to actualise their budgets. The alternative is increased borrowing. About half of the states (15 states) have FAAC disbursements as a ratio of budgets lower than 20 per cent.”
Further analysis showed that the revenues shared to the states and local governments were higher in the third quarter of 2017, which it said has been the pattern for some years now.
Giving an instance, the report said: “While the federal government got N549.41billion in the second quarter of 2017, third quarter figures were N752.79billion, an increase of 37.02 per cent. The trend is the same for the states and local governments which received N586.58billion and N363.98 billion in the third quarter as against N467.13 and 280.42 billion in the second quarter respectively. The percentage increases between the two quarters for the two tiers of government are 25.57 per cent and 29.80 per cent respectively.”
The review attributed the increases in FAAC disbursements to the three tiers of government in the third quarter to what it called “Positive developments in the oil sector –evident from resurgent oil prices and increased production levels. The third quarter also represents the summer season when global oil demand and consequently oil prices are generally higher than other times of the year and this could possibly explain the higher revenue accruals to the Federation Account in these third quarters.”
The NEITI Quarterly Review, which based its analysis on data obtained from FAAC, National Bureau of Statistics, Federal Ministry of Finance and the Budget Office of the Federation, noted that the “upward trend in the FAAC disbursements to the three tiers of government are encouraging signs which if sustained will improve government expenditures, help to boost economic activities and move the country further away from recession.”
Another major highlight of the report “is the high degree of volatility in FAAC disbursements between January and September 2017.”
In its explanation, NIETI said:, “The federal and local governments received highest revenues in July recording as much difference as 75 per cent and 58 per cent respectively between the months with the highest and lowest disbursements. State governments on the other hand got the highest allocations in September with a difference in revenues of about 53 per cent between the high and low revenue months.
“Disbursements to the federal, states and local governments have risen and fallen in alternate months throughout the year, making economic planning and execution of capital projects difficult,” the report stated, underlining the need for “diversified sources of government revenue to limit volatility and ensure more stable and predictable revenue streams.”
Another highlight from the NEITI report is that Nigeria’s revenues in the first half of 2017 were about 49 per cent lower than budgeted figures. While government projected N5.368 trillion revenue flows in its 2017 Fiscal framework for the first six months of the year, actual inflows were N2.712 trillion.
The report said government’s half year projections were 2.667 trillion for oil and 2.701 trillion for non-oil revenue.
However, actual revenue for the first half of the year fell short of projections.
“Actual oil revenue was N1.587 trillion, representing a shortfall of N1.079 trillion, implying a 40.4 per cent underperformance. Non-oil revenue fared slightly worse, as only 41.6 per cent of the projected revenue was realised. Actual non-oil revenue totalled N1.125 trillion, indicating a shortfall of N1.575 trillion.”
The report also pointed out that while government projected that the non-oil sector would outperform the oil sector, the oil sector performed better by as much as 41 per cent in revenues generation raking in N1.587 trillion as against N1.125 trillion for the non-oil sector.
The statement said figures for the three tiers of government were no different, adding that the federal government had hoped for a N2.542 trillion revenue flows for the first half of 2017 but actual revenue was N1.497 trillion. A breakdown of the inflows shows that the oil sector accounted for a larger part of the shortfall with a 60 per cent drop while the non – oil sector underperformed by 49 per cent.
According to the NEITI publication, “Budgeted half-year inflows from the oil sector was N1.061 trillion but actual oil inflows to the federal government was N414 billion. The federal government’s budget estimated half-year non-oil revenue inflows at N705 billion but realised only N352 billion, indicating a 49 per cent shortfall.”
The report also compared government’s earnings in 2017 to 2016 and showed that total revenues were higher in the first half of 2017 than the corresponding period of 2016 by 22 per cent.
The report indicated that all sources of oil revenues with the exception of rents recorded positive improvements in 2017 than 2016 first halves. The same goes for the non-oil sector revenues where Value Added Tax (VAT) was the largest contributor to the revenues with a 16 per cent increase over 2016 figures.
The report attributes the development to “increase in economic activities, expansion in the tax base and the improvement in performance of revenue collecting agencies.”
However, the report notes that there was no revenue recorded from solid minerals and dividends from investments funded by FAAC despite the abundant solid minerals deposits in the country.
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