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States’ Financial Woes Worsen

Monthly revenue shared by the Federal, State and Local Governments fell by 22.35 per cent between January and April 2015.

Joy Onyemaechi

The financial woes of Nigeria’s 36 states and the Federal Capital Territory (FCT) has taken a worsening dimension as the monthly Federal Allocation dropped by 22.35 per cent in four months, signaling more uncertainties ahead. The dwindling allocation figure began about June last following the falling prices of oil in the international market.

According to figures released by the Federal Allocation Committee Friday, a total of of N388.339 billion was shared among the three tiers of government as revenue allocation for the month of April 2015. This amount is 22.35 per cent less than the N500.1 billion shared by the three tiers of government in January this year. The allocation has dropped by a total of N111.76 billion in four months.

In January 2015, a total of N500.1 billion was shared by the three tiers of government. The amount rose to N522.05 billion in February; dropped to N435.06 billion and further dipped to N388.339 billion in March and April respectively. Compared to the amounts shared in April 2014 and April 2015, there was a 38.82 per cent drop from N634.72 billion in April 2014 to N388.339 billion in April this year.

A communiqué issued by the Federal Accounts Allocation Committee (FAAC) indicated that the Gross Revenue received for April 2015 was N282.06 billion. This amount when compared to the N315.044 billion received in March 2015, showed a decline of N32.982 billion. An increase in the average price of crude oil from $55.34 in February 2015 to $56.03 in March 2015 brought about a $21.67 gain in revenue.

Nigeria recorded an improvement in non-oil revenue from N86.462 billion in March to N101.59 billion in April. This accounted for a gain of N15.13 billion. The shared amount comprised the month’s statutory revenue of N282.062 billion and N6.330 billion refunded to the Federal Government by the Nigerian National Petroleum Corporation (NNPC). There is also exchange gain of N24.786 billion which is proposed for distribution. While gross revenue from Value Added Tax (VAT) was N75.16 billion.

From the N388.339 billion shared in April, the Federal Government received N132.118 billion which is 52.68 per cent as against N194.3 and N249.08 billion received in January 2015 and April 2014 respectively. N67.012 billion was shared among the state governments as against N98.5 and 126.33 billion in January 2015 and April 2014 respectively. The local governments received N51.66 billion as against N75.9 and 97.39 billion received in January 2015 and April 2014 respectively.

The Minister of State for Finance and Chairman of FAAC, Ambassador Bashir Yuguda, attributed the continuous reduction in the revenue shared over the past months to “frequent shut down which continued to impact negatively on crude oil revenue. The constant drop in the price of oil revenue from mid last year to date has had a very bad effect on the Nigerian revenue since crude oil is the main source of revenue in the country. This had in turn reduced the amount available to the government to run the country. Already the fall in revenue of the country has taken a turn on the government at all level as they are not able to meet their basic responsibilities.

Similarly, there has been an increase in the debt of the Federal Government as well as the state governments who have resorted to foreign and domestic borrowing to service their operations. With the continuous fall in revenue, Nigeria’s debt stock grew to N12.062 trillion, 7 per cent higher than N11.24 trillion as at December 31, 2104. Of great concern is that bulk of the loans was not spent on capital projects, but on recurrent expenditure.

Many states have not paid their workers for upwards of five months, attributing the development to dwindling revenue allocation from the Federation Account.. However, Chairman of Commissioners of Finance Forum, Barrister Timothy Odaah, accuses the state governments of failing to meet their obligations to their workers. According to him, the states that could not pay their workers’ salaries are to be blamed as it is their natural obligation to do so.

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