The total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government increased to N510bn (US$1.63bn) in September (from August revenues). It therefore returns above the projected pro rata monthly average of N477bn per the 2016 budget, which projects the net distribution from the federation account and the VAT pool combined at N5.72trn. At first glance, one might be surprised by the increase in the payout when the economy has entered a technical recession.
However, the devaluation on 20 June has given a boost to federation account inflows. Both petroleum receipts based upon the US dollar price and customs revenues have benefited from the adjustment.
The federal finance minister, Kemi Adeosun, was quoted after the FAAC meeting as highlighting a rise in dutiable imports. Given the recession and the challenge in sourcing fx for imports, she would appear to have been referring to an improvement in compliance. Anecdotal evidence supports this view.
The broadly upward trend in payout since May is based upon improved non-oil revenue collection and devaluation. It is set to continue in our view.
Adeosun put the excess crude account (ECA) balance at US$2.91bn.
The statutory distribution of N315bn was supplemented by an exchange-rate gain of N84bn, excess petroleum tax payments of N35bn, the regular NNPC “refund” of N6bn and VAT.
We have taken the data for recent payouts from the local media, given the delays in posting the information on official websites, and caution that there may be some inconsistencies between different accounts.