The total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government amounted to N429bn (US$1.4bn) in March (from February revenues), representing an 8% decline when compared with N465bn the previous month. According to the federal finance ministry, the decrease is due to production leakages arising from continued pipeline vandalism in the Niger Delta. Furthermore, the drop in the average crude oil price from US$49.6/b to US$44.7/b under the review period was also a contributing factor.
Although we only have one data point, the m/m decline in oil revenues according to the finance ministry is at odds with the consistent upward trend in official fx reserves. This increase in reserves was supported by the CBN’s restrictions on fx supply and the recent Eurobond issue.
Oil producing states benefiting from the 13% derivation principle such as Rivers, Bayelsa, Delta and Akwa Ibom collectively received N23bn.
For non-oil revenues, a significant decline was recorded in Companies Income Tax as well as import and export duties.
This decline in March’s payout will put some pressure on state governments’ finances, which are already under strain. The FGN has launched several initiatives to ease pressure on the finances of subnationals and the payment of their employees’ salaries.
Sources: Federal Ministry of Finance; local media; FBNQuest Research
There is still an urgent need for state governments to boost their internally generated revenue.
We have taken the details of the latest payout from the local media. Official data sources run to November, payable in December. We use the data for gross distributions whereas the local media cite a combination of gross and net payouts to the three tiers of government.
