NEITI: Only Three States Can Fund their Budgets

Chineme Okafor in Abuja

With the exception of three states – Lagos, Delta and Rivers – the remaining 33 states and the Federal Capital Territory (FCT) may not be able to fund their annual budgets, the latest quarterly review on national revenue disbursements to the federal, states and local governments prepared by the Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed.
This is because of the prolonged drop in revenue accruing to the federation mainly from the oil and gas sector.

Released yesterday in Abuja, the document explained that while revenue from the country’s national earnings had dropped, and states expected to augment their shares with internally generated revenues (IGR), only Rivers, Lagos and Delta States can boast of their clear abilities to earn enough IGRs to close the expected revenue gaps and fund their budgets.

It said the federal government, states and local government areas got a total of N1.534 trillion as allocations from the Federation Account Allocation Committee (FAAC) for the months of July, August and September 2016.

According to it, a breakdown of the allocations for the third quarter of 2016 showed that the federal government received N697.9 billion, the states got N512.66 billion, while the local government areas collected N324.31 billion.
It, however, said there was a major revenue spike in July when the three tiers of government shared N546.62 billion as against the N304.91 billion they shared in June, an increase of 79 per cent.

Considering that most states depend on FAAC to fund their annual budgets, the NEITI document observed that lower monthly disbursements would likely impact the budget implementation of most states of the federation in very negative ways.

It said: “Although the states also have revenue inflows from IGR, the report contends that, it is highly unlikely that IGR would be sufficient to offset the huge gap between expenditure and revenue in many states, with perhaps only the exception of three states – Lagos, Rivers, and Delta.

“The dwindling revenue from the petroleum sector, which has led to substantially lower disbursements from FAAC, will limit the ability of states to effectively execute their budgets,” the NEITI report explained.