NEITI Report : FAAC allocations soar by 43% in 2024 ,as it disbursed N15.26trn to FG,States, LGs
CHIGOZIE AMADI
. The Federation Accounts Allocation Committee (FAAC) disbursed an unprecedented N15.26 trillion to the Federal, State, and Local Governments in 2024,
The disbursements represent a historic high in revenue distribution and a 43% increase compared to previous years.
The NEITI FAAC Quarterly Review, released today in Abuja by the Nigeria Extractive Industries Transparency Initiative (NEITI), attributed the surge in revenue disbursements to sustained fiscal reform policies of the Federal Government especially the removal of fuel subsidies and foreign adjustment exchange rate policies which has continued to impact positively on oil revenue remittances.
Announcing the report’s release at the NEITI House in Abuja, Dr. Orji Ogbonnaya Orji, Executive Secretary of NEITI, noted that the analyses were 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.
According to Dr. 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 benefitting from the 13% derivation revenue from oil, gas, and solid minerals. He added, “The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potentials.”
Breakdown of Disbursements:
Federal Government: N4.95 trillion.
State Governments: N5.81 trillion.
Local Governments: N3.77 trillion.
Total FAAC Disbursements (Including Derivation Revenue): N15.26 trillion.
The NEITI FAAC Quarterly Review showed that distribution to state governments in 2024 recorded the largest percentage increase of 62% from N3.58 trillion in 2023, followed by local government councils with a 47% increase, while the Federal Government’s share rose by 24% from N3.99 trillion in 2023 to N4.95 trillion in 2024.
The report highlights that total FAAC allocations increased by 66.2% from N9.18 trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant growth occurring between 2023 and 2024.
Revenue Growth Drivers and Economic Risks
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 400%.
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 Pressures
• 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.
State-by-State Allocation Analysis
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% of total allocations to all states, while the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5%.
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.
Debt Deductions
The review highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3% of total allocations to the 36 states, including derivation revenue.
• Lagos State recorded the highest debt deduction of N164.7 billion, accounting for over 20% of total deductions.
• Kaduna State 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.
Recommendations
NEITI urged the government to sustain policy reform measures to encourages sustainable revenue growth and economic stability with priority attention focussed on job creation, poverty reduction and control of inflation on goods and services.
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.
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.
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.
