The Federation Account Allocation Committee (FAAC) disbursed a sum of N3.16 trillion to the thirty-six (36) states of the federation in 2022. This is according to data compiled by the National Bureau of Statistics (NBS).
Analysis by Nairametrics showed that the amount disbursed increased by 30.5% from N2.42 trillion and by 42.1% from N2.23 trillion disbursed in 2020.
Further checks by Nairametrics Research showed that the amount shared by the thirty-six states in the year 2022 was the highest on record. Note that states received N2.4 trillion in 2019, N2.49 trillion (in 2018), and N1.74 trillion in 2017.
It is worth noting that the N3.16 trillion shared by the states, excluding the federal capital, Abuja is the net figure, which includes statutory allocations, 13% oil derivative, external debt deductions, distribution of exchange gain, the share of electronic money transfer levy, transfer of 50% share of Ecology to NDDC/HYPPADEC, and VAT allocations.
The increase in state FAAC collection followed the introduction of the Electronic Money Transfer Levy Regulations in 2022 by the ministry of finance, in consonance with the 2020 Finance Act and as amended by Finance Act, 2021.
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Breakdown by states: Further breakdown of the data showed that the oil-producing states led the pack of states with the highest net FAAC collection in the review year. Specifically, Delta State received a sum of N348.6 billion from the federal account, representing 11.02% of the total amount disbursed to the 36 states.
- The amount received by Delta State increased by 82.8% compared to N190.7 billion recorded in the previous year. In the last six years, Delta State has received a whopping sum of N1.27 trillion from the federal government.
- Akwa Ibom followed with a collection of N277.04 billion as net FAAC disbursement in 2022, accounting for 8.76% and representing a 97.5% increase when compared to N140.3 billion received in the prior year.
- Rivers State joined the list in third position having received a sum of N270.54 billion as federal allocation, representing 8.55% of the total states’ disbursement. Rivers State’s FAAC collection in 2022 increased by 67.3% year over year compared to N161.73 billion received in the previous year.
- Others that made the top five list include Bayelsa State with N229.81 billion collection and Lagos State, which received a sum of N160.9 billion.
On the flip side, Osun State received the lowest allocation from the federal account at N41.53 billion, accounting for just 1.3% of the total amount disbursed to the states, which is however 15.3% higher than the N36.03 billion received in the previous year.
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Kwara State followed in the same direction with N42.87 billion collection, a 3.6% decline compared to the prior year (N44.49 billion). Kwara State accounted for 1.36% of the total disbursement.
Ogun State also received N43.32 billion in 2022, a marginal decline of 1% from N43.77 billion collected in 2021.
Why FAAC disburses funds: The federation distributes a proportion of revenue generated every month from its different revenue generation units to the federal, state, and local governments. This is done to help fill the funding gap between the various levels of government.
- Some of the sources of this revenue include electronic transfer levies, value-added taxes, and remittances from other revenue-generating agencies.
- According to tracking by Nairalytics – the research arm of Nairametrics, the federation has disbursed over N14. Trillion to the thirty-six states of the federation between 2017 and 2022.
- Meanwhile, it has been argued that the funding allocated to the states has discouraged them from being self-sufficient as most of the states still rely mostly on FAAC allocations to fund their administrative spending.