In the second quarter (Q2) of the year, the Federation Account Allocation Committee (FAAC) distributed to the 36 state governments a total of N767.05 billion in net value.
The sum was derived from a number of account components, including statutory allocations, a 13% share of derivation, and an electronic money transfer fee. The value-added tax and ecological funding are some others (VAT).
The payment represents the net amount owed to the states after taking into account any obligations the state governments have undertaken, such as the transfer of 50% of the ecological fund to the Niger Delta Development Commission/Hydroelectric Power Producing Areas Development Commission (HYPPADEC).
In accordance with the horizontal fiscal sharing formula, it is also exclusive of the portion of local government councils under their jurisdiction.
The Federal Ministry of Finance, the National Bureau of Statistics (NBS), and other pertinent organizations’ data indicate that the 36 states received the greatest share in June, taking N264.6 billion home with them.
The sum owed to the second tier of government in April was N262.46 billion, but in May it was only N239.99 billion. The majority of the receipt came from VAT, which brought in N281.72 billion, or 37% of the total amount owed to the states from the common resource pool.
The state governments shared in the VAT earnings in April and May, receiving N101.2 and N82.3 billion each, while in the final month of the quarter, they received N98.26 billion.
The sub-national entities’ portion of the ecological fund totaled about N7.26 billion. As a specific intervention fund to address the numerous environmental issues in local communities around the nation, the ecological fund was established in 1981 by the Federation Account Act.
However, some stakeholders have criticized the management’s effectiveness and demanded an extensive investigation into how prior expenditures were used.
The National Emergency Management Agency (NEMA), National Agency for the Great Green Wall, North-East Development Commission, and National Agricultural Land Development Authority were among the organizations to which the Ministry of Finance was asked to withhold funding while it conducted an investigation earlier in the year.
Local governments (LGs), in addition to the states, also get a sizeable piece of the ecological money, which is intended to be used to solve environmental issues across the nation.
For instance, the LGs received around N1.7 billion in June as their portion of the money. The sum corresponds to around N174.15 billion that they split with FAAC each month.
The overall revenue for LGs in Q2 was N487.5 billion. June (N174.15 billion), May (N147.35 billion), and April made up the appropriate spread (N165.98 billion). Therefore, the average monthly allocation for each local government was N209.5 billion.
Internally produced revenues (IGRs) are essentially nonexistent at that level of government, hence the majority of councils rely on FAAC allocations, which are funneled through state governments (who are frequently accused of shady deals in the utilisation of the monies).
Questions about the efficiency and funding mechanism of the tier of government have persisted in light of the growing underdevelopment of rural areas around the nation.
