Another Decline in the November 2020 FAAC Monthly Payout


Friday, November 27, 2020 / 09:03 AM / by FBNQuest Research / Header Image Credit: Council on Foreign Relations


The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three government tiers and eligible agencies amounted to NGN604bn (USD1.54bn) in November (from October revenue), This was NGN36bn lower than the previous month's payout. From the usual skeletal coverage in the local media, we learnt that the take from oil and gas royalties and companies' income tax was substantially higher than in September while the collection of import and excise duty, VAT and petroleum profit tax was much lower. State governments received a total of NGN107bn including derivation.


The headline figure is made up of gross statutory distribution of NGN378bn, the VAT Pool of NGN126bn, and a combination of fx equalization, FGN intervention and a drawing of NGN20bn from the stabilization fund for the balance of NGN100bn.


The total distribution was the lowest since May's NGN547bn. Indeed, the trends indicated in the chart are downward and the fact that a legitimate drawing was made from the stabilization funds shows the scale of the deterioration in the public finances.


The Covid-19 virus and the government's response to it have together created this deterioration. From 2016 through to 2019 there was a steady rise in the FGN's total revenue, equivalent to NGN1.94trn to reach NGN4.92trn. This was the reward for improved coverage, computerization, more efficient collection agencies and the expansion of digital financial services (to broaden Nigeria's tax net).  The improvement has come to a shuddering halt this year: revenue in January-August amounted to NGN2.25trn, representing a decline of 21.6% y/y. The total for the full year is set to fall some way short of NGN4.0trn and at least 25% below 2019's haul.


This latest payout to states falls far short of their spending, which averaged NGN351bn per month in 2018 and NGN396bn last year. It would not even have covered their salaries and pensions in aggregate. A small number of states, led by Lagos, can meet all their obligations at these reduced levels of FAAC distribution because they collect substantial sums of internally generated revenue. 


We must tread carefully in discussing state government finances because of the very different levels of reporting, which range from the opaque to the handful that are thoroughly audited and would be consistent with international best practice.

Revenue allocations (gross) by the FAAC (N bn)

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Source: Office of the accountant-general of the federation (OAGF); local media; FBNQuest Capital Research

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Related to FAAC

1.       FAAC Disburses N682.06bn in September 2020 - NBS

2.      FAAC Disburses N676.41bn in August 2020 - NBS

3.      FAAC Disburses N696.18bn in July 2020 - NBS

4.      FAAC Disburses N547.31bn in June 2020 - NBS

5.      FAAC Disburses N606.19bn in May 2020 - NBS

6.      FAAC Disburses N780.93bn in April 2020 - NBS

7.      FAAC Disburses N581.57bn in March 2020 - NBS

8.     FAAC Disburses N647.35bn in February 2020 - NBS

9.      FAAC Disburses N716.30bn in January 2020 - NBS

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