FG, States, LGs Record N1.1tn ShortfallIn Allocation

7 years ago

FG, States, LGs Record N1.1tn ShortfallIn Allocation

The three tiers of government received a total of N4.95tn instead of N6.1tn projected to be distributed to them in the 2016 fiscal year from the Federation Account Allocation Committee, investigation has shown.

This created a shortfall of about N1.1tn within the 12-month period based on the analysis by our correspondent.

The committee, headed by the Minister of Finance, Mrs. Kemi Adeosun, is made up of commissioners of finance from the 36 states of the federation.

Other members are representatives from the Federal Inland Revenue Service; the Nigeria Customs Service; Revenue Mobilisation, Allocation and Fiscal Commission as well as the Central Bank of Nigeria.

The federation account is currently being managed on a legal framework that allows funds to be shared under three major components – statutory allocation, Value Added Tax distribution; and allocation made under the derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments, 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: the Federal Government, 15 per cent; states, 50 per cent; and local governments, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.

Findings also revealed that the inability of the revenue generating agencies to meet up with their revenue targets owing to the challenges facing the economy was largely responsible for the dip in revenue, which impacted negatively on the allocations to the three tiers of government.

Figures of statutory allocations obtained from FAAC revealed that while the government had projected to distribute N509.1bn monthly among the three tiers of government, the shutdown of oil installation facilities, which led to a drop in crude oil production, made it difficult to generate enough revenue to achieve that target.

For instance, within the 12-month period of last year, the government could only surpass the monthly budgeted allocation to the three tiers of government thrice.

The months are August, where the highest amount of N691bn was shared; July, which had a total allocation of N559.03bn; and September, which had N510.27bn.

A further analysis showed that the sum of N387.77bn was allocated in January; February had N370.38bn; while March, April and May had N345.09bn, N299.74bn and N281. 5bn, respectively.

For the months of June, October, November and December, the committee distributed N305.12bn, N420bn, N386.87bn and N400bn in that order.

The Chairman, Forum of Finance Commissioners of FAAC, Mahmoud Yunusa, while speaking during an interview in Abuja on the sidelines of this month’s FAAC meeting, said the scarcity of resources to implement the programmes of government owing to the economic recession had made it imperative for states to be prudent and transparent in financial management.

He said, “The resources are no longer there and so whatever resources that we have must be effectively, transparently and judiciously used for the benefit of the people.

“The expectations of the people are very high and the resources are very lean day by day and so we have to add value to the people. People are clamouring for change and we have to look for a way to ensure that the lives of people are changed.”

He said the states would work with the Federal Government to address the current recession in the country.

Yunusa, who is also Commissioner for Finance in Adamawa State, said that the target of the states was to generate enough revenue internally to pay salaries.

He stressed that once this was done, whatever allocation received from the federation account would be used by the states for capital projects.

He said, “The recession is a problem but we should see it as a blessing in disguise because before now, all the states relied solely on the Federal Government but now because the money is no longer there, we are forced to look inwards for the opportunities and potential in our respective states and how to exploit them.

“We have to reduce the cost of governance and plug all the loopholes in our expenditure.”

He added that the challenge had helped the states to look at their revenues and restructure their expenditures to fit into the realities on the ground.