The Federation Accounts Allocation Committee (FAAC) disbursed an unprecedented N15.26 trillion to the three tiers of governments in 2024, the Nigeria Extractive Industries Transparency Initiative (NEITI), has said.
According to NEITI, in its quarterly review, released yesterday, the disbursements represent a historic high in revenue distribution and a 43 per cent increase compared to previous years.
NEITI attributed the surge in revenue disbursements to sustained fiscal reform policies of the Federal Government, especially the removal of fuel subsidies and foreign exchange rate policies which have continued to impact positively on oil revenue remittances.
NEITI’s Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji said while presenting the report, that the analysis was conducted against the backdrop of major fiscal reforms that reshaped the revenue landscape, particularly the impact of subsidy removal in mid-2023 on national and subnational finances and the consequences of debt repayment deductions on state allocations.
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According to Orji, the report’s objective is to assess the sustainability of the federal and state governments’ borrowing to fund their projects and programmes, as well as the implications of natural resource dependence, particularly for states benefiting from the 13 per cent derivation revenue from oil, gas and solid minerals.
He said: “The analysis focused on crude oil revenue derivation in states, as solid minerals continue to underperform despite their significant potentials.”
According to the breakdown of disbursements, the Federal Government got N4.95 trillion; state governments got N5.81 trillion; local governments got N3.77 trillion, bringing the total FAAC disbursements (Including derivation revenue) to N15.26 trillion.
The Quarterly Review showed that distribution to state governments in 2024 recorded the largest percentage increase of 62 per cent from N3.58 trillion in 2023, followed by local government councils with a 47 per cent increase, while the Federal Government’s share rose by 24per cent from N3.99 trillion in 2023 to N4.95 trillion in 2024.
The report said total FAAC allocations increased by 66.2per cent from N9.18trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant growth occurring between 2023 and 2024.
The Quarterly Review attributes the sustained rise in revenue disbursements to the government’s fiscal reforms, specifically the removal of fuel subsidy and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400per cent.
While NEITI welcomes and would continue to support the reforms with credible information and data, the Review called for adequate measures to manage and mitigate economic and other social risks associated reforms in transitional economies like Nigeria.
NEITI outlined such risks to include inflationary pressure, possible rise in debt servicing costs, fiscal uncertainties for states dependent on oil revenues.
NEITI recommended that governments at all levels take innovative actions to mitigate the impact of these economic challenges.
The report also revealed that Lagos State received the highest allocation of N531.1 billion in 2024, followed by Delta (N450.4 billion) and Rivers (N349.9 billion).
Conversely, Nasarawa State received the least allocation of N108.3 billion, followed by Ebonyi (N110 billion) and Ekiti (N111.9 billion). Furthermore, six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, collectively accounting for 33 per cent of total allocations to all states, while the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5per cent.
The report revealed a major financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49 trillion, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4 billion.
The review highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3per cent of total allocations to the 36 states, including derivation revenue.
Lagos recorded the highest debt deduction of N164.7 billion, accounting for over 20per cent of total deductions.
Kaduna followed with N51.2 billion, while Rivers (N38.6 billion) and Bauchi (N37.2 billion) also recorded significant debt deductions.
The report noted that many states with high debt ratios were in the lower half of the FAAC allocation rankings but ranked higher for debt deductions, raising concerns about their debt-to-revenue ratios and overall fiscal health.
NEITI urged the government to sustain policy reform measures to encourage sustainable revenue growth and economic stability with priority attention focused on job creation, poverty reduction and control of inflation on goods and services.
It encourages ensuring exchange rate stability to mitigate inflationary pressures; adopting conservative estimates for crude oil production and pricing to prevent budget shortfalls; reviewing and diversifying minerals revenue dependence while incentivizing investment and strengthening regulatory oversight. Others are enhancing internal revenue generation by all three tiers of government; bolstering savings in the Excess Crude Account (ECA) to create a buffer against revenue volatility; and sustaining fiscal transparency policies in line with OGP and EITI commitments.
The NEITI FAAC Review reiterated the need for stakeholders to leverage the findings and data provided to hold all levels of government accountable for the effective management of public resources especially revenues from the extractive industries.