There are many who are of the opinion that Nigeria’s commonwealth is a gigantic national cake to be shared by everyone. Such people dream of coming to the dining with a big shovel to get their share of the allocation.
This has been the attitude of most states and local government councils in Nigeria not generating much, only waiting for the end of the month to trip down to Abuja and cash out massively.
Unfortunately, this style of governance has become a problem, seeing how dip-necked Nigeria is into debt combined with a poor revenue generation system that is operational.
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Nigeria’s economy failed to rise up from the slow start it was plunged into by the Central Bank’s Naira redesign agenda that led to scarcity of the Naira notes, causing a major disruption on the business scene.
Revenue Loss
Amidst these trouble, crude oil production dropped by 38,102 barrels per day, translating to a cumulative loss of 1,181,162 barrels in the month of March.
Unfortunately, this has led to a revenue loss of about ₦356 billion.
All these simply means that Nigerians should brace up for tough times and so should state and local government councils, seeing as the revenue being shared continues to decline month after month.
The Federation Account Allocation Committee (FAAC), recently shared a sum of ₦655.932 billion to the federal, states and local government councils for the month of April.
Month-on-month comparison reveals that the ₦655.932 billion shared in April is about ₦58.697 billion lower than ₦714.629 billion that was shared in the previous month March, 2023.
Which means that states would now have to start thinking out of the box or get a bailout fund to meet up with their expenditure demands.
Only economic vibrant states like Lagos, Rivers Kano will not feel the impact of this FAAC revenue decline.
Distributable Revenue Generated
The ₦655.932 billion total distributable revenue comprised distributable statutory revenue of ₦364.654 billion, distributable Value Added Tax (VAT) revenue of ₦202.762 billion.
Electronic Money Transfer Levy (EMTL) of ₦14.516 billion, ₦50.000 billion augmentation from Forex Equalization revenue and ₦24.000 billion augmentation from the Non-mineral revenue.
Total deductions for cost of collection was ₦28.108 billion and total deductions for transfers and refunds was ₦120.287 billion.
The balance in the Excess Crude Account (ECA) was $473,754.57, in the month of April 2023.
From the total distributable revenue of ₦655.932 billion; FG received ₦248.809 billion, the State Governments received ₦218.307 billion and the Local Government Councils received ₦160.600 billion.
While a total sum of ₦28.216 billion was shared to the relevant States as 13% derivation revenue.
Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Oil and Gas Royalties, Import and Excise Duties, and Value Added Tax (VAT) all decreased considerably in the month April 2023.
With all these declines here and there, states should expect to continue to receive less from the FAAC allocation that will not be enough for their expenditure.
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Furthermore, serious economic difficulties would be experienced in the states which would, most likely, result to reduced pay, staff being owed salaries or laid-off.
It will also affect demand and consumption levels because income is not sufficient.
Business owners and workers are therefore advised to brace up for the looming hardship ahead, as there might not be enough capacity to acquire the usual in the coming months.
