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N5.108trn In 8 Months: Hardship Unabated In States Despite Huge Allocations



Hardship in Nigeria

The removal of subsidy on petroleum that was expected to take more Nigerians out of poverty through higher revenue accrual to both the federal and sub-national governments seems to be ineffective with almost all the states of the federation having very little or nothing to show for the huge revenues that have come in for them since May 29 when President Bola Tinubu announced the subsidy removal.

LEADERSHIP’s findings showed that aside from their internally generated revenue that runs into billions of naira, the states put together got over N5.108 trillion in revenues from the Federal Account Allocation Committee (FAAC) in eight months – from July 2023 (when the proceeds of the subsidy removal started coming in) and February 2024.

The overall revenue of N5,108,219,000,000 (N5.1 trillion) received by the states includes the N2,690,391,000,000 (N2.69 trillion) that came in directly from the federation account and N1,975,899,000,000 (N1.975 trillion) disbursed to the local government’s account that is controlled by the state governors, and another N441.929 billion as 13 percent solid minerals derivation revenue shared to some of the states.

While the subsidy removal increased the average monthly disbursement from FAAC to about N1.09 trillion against the previous average figure of N620 billion, the governors of the states have failed to raise the standard of living and the per capita income of their residents.

At the last count, only about 10 states had started the implementation of the N30,000 labour/government-agreed minimum wage benchmark for public workers. Despite the increase in revenue, most states are yet to implement the old rate even when labour is already demanding an increase of over 200 percent.

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A breakdown of the FAAC allocation to the states in the period under review showed that in July when the first post-subsidy income was received, a total distributable revenue of N907.054bn was shared among the three tiers of government, with the states taking a total of N561.49 billion from the federation account.

In August when the total revenue comprising Value Added Tax, exchange rate gains and electronic money transfer fee approved for sharing rose to N966.110 billion, the states got N591.624 billion.

An increase was recorded in September when a FAAC communique stated that from the N1.1 trillion total distributable revenue where the federal government received a total of N431.245 billion, the 36 states received N361.188 billion, while the local government areas got N266.538 billion. A total sum of N26.473 billion (13 percent of mineral revenue) and N14.657 billion (13 percent of savings from NNPCL) were shared with the relevant states as derivation revenue.

Also, from the N903.480 billion total revenue distributed in October 2023, the state governments received N287.071 billion and the local governments received N210.900 billion. A total sum of N84.966 billion (13 percent of mineral revenue) was shared to the relevant states as derivation revenue, bringing the total revenue from the federation account to the states to N582.937 billion.

On November 22, FAAC approved the disbursement of N307.717 billion to the states, while the LGAs received N225.209 billion. N50.674 billion (13 percent of mineral revenue) was shared among relevant states as derivate+ ion revenue.

FAAC also shared N1.1 trillion revenue for December to all the tiers of government as revenue from the previous month. The communique issued at the end of the monthly meeting revealed that while the federal government received a total of N402.867 billion, the state governments received N351.697 billion and the local government areas received N258.810 billion. A total of N75.410 billion (13 percent of mineral revenue) was shared with the benefiting states as derivation revenue, again, increasing their share of the federal revenue.

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In January 2024 when the first FAAC meeting of the year was held, N1.127 trillion which came in from December revenue was shared. In the breakdown, the federal government received N383.872 billion, the states received N396.693 billion, local government areas received N288.928 billion, and the oil-producing states received N57.915 billion as Derivation (13 percent of mineral revenue).

In the final analysis, the state governments received N379.407 billion, and N278.041 billion on behalf of the local governments, with the sum of N85.101 billion (13 percent of mineral revenue) also coming into the benefiting states as derivation revenue.

All this is apart from the billions each state received from the federal government to distribute palliatives to the vulnerable segment of society in the wake of the fuel subsidy and the cost of living crisis that followed.

However, these increased funds available to the governors has hardly translated to any kind of reprieve to the residents of the states, with hunger protests and raiding of truckloads of foodstuff recorded in parts of Nigeria, as well as the Nigeria Labour Congress planning a national protest in the coming days due the unabating hardship confronting workers and other Nigerians.

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