FAAC Disbursements Increased by 25% to N6.41 Trillion in 2017
• VAT disbursements on the increase
• Revenues projected to increase in 2018
• Positive signals on non-oil sectors
Abuja. February 20, 2018. The Federation Account Allocation Committee (FAAC) disbursed a total sum of N6.418 trillion in 2017. This showed an increase of 25.8% and 6.8% when compared to total disbursements of N5.1 trillion and N6.011 trillion in 2016 and 2015 respectively.
A breakdown of the amount disbursed in 2017 showed that the Federal Government received N2.564 trillion; the 36 States got N1.859 trillion while the 774 local governments shared N1.502 trillion.
The information is contained in the latest edition of the Quarterly Review of the Nigeria Extractive Industries Transparency Initiative (NEITI), entitled: “Analysis of FAAC Disbursements in 2017 and Projections for 2018”.
However, the review noted that despite the fact that FAAC disbursements increased in 2017 over the preceding years, they were still 34.1% and 25.3% lower than total disbursements of N9.742 trillion and N8.595 trillion in 2013 and 2014 respectively.
The NEITI review attributed the revenue increase in 2017 to rising oil prices, improved oil production, and greater attention towards development of non-oil revenue sectors. It projected brighter prospects in 2018 as a result of the current oil price which recently hovered around $70 per barrel, in addition to upsurge in oil production.
State – by – state breakdown of the FAAC allocations in 2017 showed that Akwa Ibom State received the highest share of 143.6 billion, followed by Rivers State with a total allocation of N119.6 billion. Delta State came third with a total allocation of N111.2 billion in 2017 while Bayelsa State got N105.3 billion to take the fourth position. On the other hand, Osun State received N10.4 billion to take the lowest position of FAAC within the year under review.
Another striking feature of the latest NEITI review of FAAC allocations is the disclosure that the third quarter of 2017 recorded highest revenues of N1.929 trillion, while second quarter recorded the lowest revenues of N1.377 trillion.
The NEITI review also revealed that revenue disbursements from Value Added Tax (VAT) have been on the increase since 2015. The increase is an indication of a positive signal in recognition of the government’s policy towards the development of non-oil sectors through sustained revenue generation from services.
The publication remarked: “VAT disbursements in 2017 were N967.7 billion and N811 billion in 2016. This represented an increase of 19.3% in 2017 over the figures for 2016. Also, total VAT disbursements in 2015 were N778.7 billion. This represented an increase of N188.9 billion (24.3%) over the 2015 figures”
From the review, the 36 states received the highest share of VAT revenues of N464.5 billion in 2017, followed by N325.1 billion shared among the 774 local governments, while the Federal Government received the lowest share from VAT proceeds with N139.3 billion. This is on the account of the fact that states take 50% of VAT, while LGAs and the Federal government take 35% and 15% respectively.
The NEITI review explained the connection between FAAC disbursements and Nigeria’s exit from recession in 2017. The report also attributed this development to increased revenues from oil and gas sector as a result of rising oil prices and improved crude oil production due to stability in the Niger Delta.
On Paris Club loan refunds, the review disclosed that the 36 states received N760.18 billion. The refunds were released in two batches of N516.38 billion and N243.79 billion respectively. A breakdown showed that Rivers State got the highest amount of N44.925 billion while Gombe State received the lowest sum of N13.4 billion.
The NEITI quarterly review is designed to provide timely information and data on FAAC disbursements to the three tiers of government. The publication is a tool to support citizens’ advocacy, promote constructive debate, information and enlightenment in tracking the utilization of the funds for purposes of development. NEITI’s interest in FAAC disbursements and the statutory recipients is in view of the fact that over 80% of the funds are derived from the extractive industry.
Dr. Orji Ogbonnaya Orji
Director Communications and Advocacy
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Report By: PRNigeria.com