A total sum of N120 billion was spent by the Nigerian government to augment FAAC revenue shortfalls between January and July 2021.
This was the case in the months of April, May and June. A review of the monthly reports made available by the Budget and National Planning showed that the government augmented its revenue with N30 billion in the month of April to supplement the month’s disbursement. This amount is close to the amount of money that the governor of Edo state claimed that the federal government printed to augment FAAC disbursement for that month.
Subsequently, there was an N20 billion augmentation for the FAAC distribution in May while the highest FAAC augmentation of N70 billion was in June.
Why did the FG augment FAAC revenue for disbursement in these months?
The Federation Account Allocation Committee (FAAC) is responsible for the disbursement of funds amongst the three tiers of government. The disbursed funds are a collection of the government revenue generated from tax, oil sales and other statutory sources in the previous month.
However, in the event that there is a shortfall in the revenue, the government augments it by drawing from the Excess Crude Oil Revenue Account (ECA), and other sources, including loans and overdrafts. This is done supposedly to provide sufficient disbursements for the three tiers of government.
The ECA account where the excess revenue of crude oil sold above the budgeted benchmark price is saved is the one that usually funds this process.
This has been the practice in times past and in September 2013, the government arrived at a resolution not to draw from this account to augment FAAC disbursement. However, this resolution was not adhered to and the government went back on it in November 2013.
Between January and July 2021, a total of N4.477 trillion was disbursed among the three tiers of government and statutory bodies. In addition, in these first seven months of 2021, records show that the highest disbursement of N722.09 billion was in July. Conversely, the lowest disbursement was 581.57 billion in March.
Who got what in seven months?
Total disbursement showed that the Federal Government got N1.684 trillion in the seven months. This sum makes up 37.62% of the total N4.477 trillion disbursed. State Governments got 31.42% of the amount which is N1.407 trillion. The sum N962.83 was shared among the 774 Local Governments in the country. This shows that all the Local Governments together got 21.5% of the disbursements. An additional N258.363 was shared as the 13% derivation to the 9 oil-producing states.
Breakdown of FAAC revenue sources
Statutory revenue summed up to N3.226 trillion for the first seven months of the year. The highest sum of N585.75 billion from statutory revenue was recorded in July. The lowest monthly revenue was N357.89 in June.
Another major source of revenue aside from oil revenue is the Value Added Tax (VAT). The total revenue in the first seven months of the year summed up to N1.098 trillion.
Other revenue sources are Foreign Exchange Gains, FOREX Equalization, and Solid Mineral Revenue.