26 November 2018, Sweetcrude, Lagos — The Nigeria Extractive Industries Transparency Initiative (NEITI) has advised the Federal, states and local governments to exercise caution over rising disbursements from the Federation Account.
NEITI, in its Quarterly Review for Third Quarter 2018, disclosed that revenue disbursements by the Federation Account Allocation Committee (FAAC) to the three tiers of government witnessed a steady increase in three consecutive quarters of this year with N2.28 trillion shared in third quarter 2018.
The breakdown shows that the Federal government received the highest sum of N904.8 billion, followed by states, which received N718.5 billion and local governments (LGCs) receiving the lowest disbursements of N432.1 billion.
According to NEITI, total FAAC disbursements in the third quarter of 2018 amounted to N2.28 trillion representing a 17.6 percent increase over the N1.938 trillion disbursed in the first quarter of 2018 and 13.5 percent higher than the N2.008 trillion disbursed in the second quarter.
It noted that with the exception of July, the lowest amount disbursed so far in 2018 was higher than disbursements in all other months in 2016 and 2017.
However, NEITI advised that the increase in disbursements was a ground for cautious optimism in the fiscal positions of all tiers of government.
According to NEITI, the upswings and downswings pattern was reflective of the volatile nature of revenue resulting from reliance on primary commodity exports.
It said, “While the increase in revenue will reflect positively on the fiscal situation of the federating units, states will still have to struggle to finance their budgets considering their poor Internally Generated Revenue (IGR).
“There is virtually none of the states that can adequately finance their budgets from IGR and FAAC disbursements. States will have to resort to different levels of borrowing.”
The report noted that a breakdown of the disbursed sums for 2016, 2017 & 2018 showed that the disbursements in the third quarter of 2018 (N2.28 trillion) were 31 percent 18 percent higher than disbursements in the third quarters of the last two years.
The NEITI report also added that the last time total disbursements exceeded the N2.5trillion mark was in the second quarter of 2014, which was N2.510 trillion.
“Further analysis of the increases shows that the federal government’s receipt of N904.8 billion in the third quarter of 2018, was 11.3 percent and 7.8 percent higher than the amounts received in the first (N812.8 billion) and second (N839.5 billion) quarters of 2018 respectively,” the NEITI report noted.
The report further stated that total net FAAC disbursements to states in the first nine months of 2018 ranged between N16.41 billion and N150.59 billion, with Osun and Delta states receiving the lowest and highest amounts respectively.