FAAC Revenues: 21 States Seek ₦1.65 Trillion Loan [See Breakdown]

A total of twenty-one states within the federation are currently seeking loans totaling ₦1.65 trillion to address their budget deficits for 2024, despite having received increased allocations from the Federation Account Allocation Committee (FAAC) over the past year.

From June 2023 to June of this year, all 36 states and 774 local governments collectively received N7.6 trillion from FAAC. This rise in revenue is primarily attributed to the federal government’s removal of the petrol subsidy on May 29, 2023.

Findings revealed that the 36 states are anticipated to receive ₦5.54 trillion from FAAC this year, compared to the ₦3.3 trillion allocated to them the previous year.

Under the existing revenue-sharing arrangement, the federal government is allocated 52.68 percent, while states and local governments receive 26.72 percent and 20.60 percent, respectively.

These federation revenues, along with the internally generated revenues from each tier, are expected to promote development across all three levels of government and ensure that they meet their financial responsibilities.

The FAAC allocations designated for local governments in June were disbursed directly to the state governments.

On July 11, the Supreme Court upheld the financial autonomy of local governments, mandating that the financial allocations intended for all 774 local government areas be paid directly to them.

Don’t miss out on any real-time information. Join our WhatsApp group to stay updated.

CLICK HERE TO JOIN

The court ruled that it is unconstitutional for state governments to retain and manage these allocations on behalf of local governments.

HOW STATES’ OBTAINED LOANS

According to Daily Trust, findings show that 21 states have expressed intentions to borrow a total sum of ₦1.650 trillion from both internal and external sources to fund their 2024 budget deficits.

Meanwhile, other states are yet to upload their borrowing plans.

According to details of the borrowing plans made public, the Adamawa State Government is to borrow ₦68.46 billion; Anambra N245 billion; Bauchi, N59.08 billion; Bayelsa, ₦64 billion; Benue, ₦34.69 billion; Borno, ₦41.71 billion; Ebonyi, N20.5 billion; Edo, N42.71 billion and Ekiti State, N27.15 billion.

Others are Jigawa, ₦1.78 billion; Kaduna, ₦150.1 billion, Kebbi, ₦36.7 billion; Katsina, ₦163.87 billion; Kogi, ₦37.08 billion; Kwara, ₦30.76 billion; Osun, ₦12.36 billion; Oyo, ₦133.4 billion; Nasarawa, ₦32.93 billion; Gombe, ₦73.75 billion; Enugu, ₦103 billion and Imo, ₦271.34 billion.

BELOW IS THE BREAKDOWN OF STATE’S, LGAs ALLOCATINO IN 1 YEAR

The total monthly allocations from the Federation Account Allocation Committee (FAAC) to the 36 states and 774 local governments from June of the previous year to June of the current year amounted to ₦7.6 trillion, reflecting an increase of over 40 percent.

In June 2023, the allocations were ₦299.92 billion for states and ₦221.79 billion for local government councils (LGCs). In July, states received ₦310.67 billion, while LGCs were allocated ₦229.409 billion. August saw allocations of ₦319.52 billion for states and ₦236.23 billion for LGCs. In September, states received ₦361.19 billion, and LGCs received ₦266.54 billion. October’s allocations were ₦287.07 billion for states and ₦210.90 billion for LGCs.

In November, states received ₦379.41 billion, while LGCs were allocated ₦278.04 billion. December’s figures were ₦396.693 billion for states and ₦288.928 billion for LGCs.

In January of this year, state governments received ₦379.407 billion, and LGCs received ₦278.041 billion. February’s allocations were ₦366.95 billion for states and ₦267.15 billion for LGCs. In March, states received ₦398.689 billion, while LGCs were allocated ₦288.688 billion. April’s figures were ₦403 billion for states and ₦293 billion for LGCs. In May, states received ₦388.419 billion, and LGCs received ₦282.476 billion. By June, the allocations had increased to ₦461.979 billion for states and ₦337.019 billion for LGCs.

Additionally, allocations from Value Added Tax experienced a year-on-year increase of 228.8 percent, reaching ₦2.42 trillion in the first five months of 2024, compared to ₦736.06 billion during the same period in 2023.

The 13 percent derivation fund allocated to oil-producing states also saw a significant rise of 234 percent, totaling ₦519.83 billion in the first five months of 2024, up from ₦155.5 billion in the first five months of 2023.

In June of this year, the combined FAAC allocations to states and local governments

There’s need for accountability – Experts

In a recent discussion with reporters, Umar Yakubu, the Executive Director of the Centre for Fiscal Transparency and Public Integrity, emphasized the necessity for accountability in the expenditure of state allocations.

Yakubu pointed out that the elimination of the petrol subsidy has resulted in a substantial rise in revenues, particularly for state and local governments.

He said: “The major issues is that governments think the more they make revenue, the more they solve problems because the accountability mechanism is so weak and the audit processes are not good enough to check excesses.

“So, what you have is more Naira into the system and the few who have access to them will convert them to dollars, which is the major reason our foreign exchange market has not stabilised because of too much Naira chasing few dollars.

“Therefore, we call for accountability which has to be in place to check corruption because as you can see, more money has come, but no state is recruiting, no state is increasing pensions or allowances of workers or event increasing capital expenditures because they are just siphoning money without accountability.”

In a separate interview with Daily Trust, a development expert, Victor Agi, emphasized the necessity of addressing accountability at the sub-national level directly, warning that without such measures, grassroots challenges will persist.

He asserted that state governments must demonstrate accountability in managing increased revenues to foster growth within local communities.

“One of the issues is that people always blame bad governance on the federal government, forgetting that governors also get huge allocations to develop their various states.

“In the last one year, revenues have grown by almost 50 per cent, yet the governors can’t improve welfare of their workers and the people in general. For instance, the president signed the national minimum wage of N70,000 and some of the governors are kicking that they can’t pay despite increase in revenues. This indicates that something is wrong.

“What is more disturbing is that the same issue will now be encountered in the local governments now that their allocations will be paid directly. There is need for more awareness from civil society to ensure that development at the grassroots is implemented now that revenues have increased,” he said.