Home Local FAAC Allocation Declines By 30%, States’ To Face Uncertainty Over Finances

FAAC Allocation Declines By 30%, States’ To Face Uncertainty Over Finances


Friday July 1, 2022

Revenue allocation to federal, state and local governments has declined from a peak of N970.57bn in July 2021 to N680.783bn in May 2022, representing a 30 per cent reduction over the period.

The decrease in allocation to these levels of government reveals the fiscal challenges facing various levels of government in Africa’s biggest economy.

Nigeria earns its biggest revenue from crude oil, but it has paid N2.1tn in the first six months of the year and could pay another N4tn by the end of the year, according to the International Monetary Fund estimates.

The opaque and fraudulent subsidy regime has made it nearly impossible for the Nigerian National Petroleum Corporation to make remittances to the government consistently.

The Federal Government has raised its budgetary allocation of N443 billion for gasoline subsidy to N4 trillion and has received approval from the National Assembly.

The situation is worsened by declining oil production and theft.

Oil production fell to 1.2 million barrels per day in April 2022 from 1.238 million barrels in March, according to OPEC Monthly Oil Market Report. This is far from the oil benchmark of 1.88 million barrels per day in the 2022 budget.

Company Income Tax in Nigeria fell from N472.52bn obtained in the third quarter of 2021 to N347.81 billion in the last quarter of 2021, indicating a 26 per cent decrease over the period, according to the National Bureau of Statistics,

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