FAAC Allocation for June Dips Amidst Concern About the Coronavirus

Proshare

Sunday, September 6, 2020/ 11:00AM/ by TheAnalyst /Image Credit: Pinterest 


 Proshare Nigeria Pvt. Ltd.


Nigeria's federation account allocations dipped in June 2020 as the impact of COVID-19 took a toll on economic activities. The downturn in fiscal revenues peeped into prominence from April. FAAC revenue generated in April but allocated in May fell by -22.37%, FAAC revenue declined to N606.2bn in May from N780.93bn in April. Furthermore, there was also a significant drop in value-added tax (VAT) revenue as VAT income in April slipped to N94.5bn from N120.27bn in March or what came to a revenue dip of -21.43%. The decline in both FAAC and VAT revenues were attributed to a fall in consumption expenditure as businesses took a knock during the three-months of economic lockdown in H1 2020.


FAAC allocation for June 2020 slid to N547.31bn from N606.2bn in May. However,   VAT revenue saw a rebound as VAT rose from N94.5bn in May to N103.87bn  in June or what  amounted to a +9.92% rise in consumption tax month-on-month (M-o-M) (see Chart 1 below).


Chart 1: FAAC and VAT 2020 (N'bn)

Proshare Nigeria Pvt. Ltd.

Source: Proshare Research, NBS


Comparative annual data suggests that both FAAC and VAT revenues improved marginally between 2019 and 2020. FAAC for the period January to June 2020 rose to N3.88trn compared to N3.84trn in 2019. Also, VAT revenue generated between January and June 2020 rose to N637.76bn from N597.12bn in 2019, representing a rise of +1.04% year-on-year (Y-o-Y) (see Chart 2 below).


Chart 2: Total FAAC and VAT for the period January-June (N'trn)

Proshare Nigeria Pvt. Ltd.

Source: Proshare Research, NBS


Sub-nationals in Search of Fiscal Sustenance

Uncertainty clouding FAAC allocation has heightened the need for states in Nigeria to build robust income-generating frameworks for growing internally generated revenue (IGR). The poor internal revenue generating capacity of states has been a sore point for subnational fiscal stability.   


According to National Bureau of Statistics (NBS) data as of 2019, the majority of states in Nigeria were highly dependent on monthly FAAC revenues as their primary source of fiscal inflows and hence had weak fiscal cushions against federal revenue shocks.  The top five states with the highest dependency on FAAC  were Bayelsa 89.56%, Borno 88.3%, Katsina 88.16%, Kebbi 87.78%, and Taraba 87.68% with high FAAC percentage of total revenue (see Chart 3 below).


Chart 3: Top 5 States with Highest FAAC Percentage Ratio 2019

Proshare Nigeria Pvt. Ltd.

Source: Proshare Research, NBS


On the other hand, five states had IGR to total revenue ratios above 40% , the states were; Lagos 77.18%, Ogun 64.69%, FCT 50.91%, Rivers 46.98%, Osun 42.53%, Kwara 41.94%, and Kaduna 40.12% (see Chart 4 below).


Chart 4: States With IGR Percentage of Total Revenue Above 40% in 2019

Proshare Nigeria Pvt. Ltd.

Source: Proshare Research, NBS


FAAC and VAT figures for states in 2020 highlight the fiscal challenges that may worsen in an environment of persistent COVID-19 presence. The longer it takes to find a vaccine for the virus the greater the possibility that some states would become insolvent as federal revenues shrink.


The attempt by some states to increase IGR by raising taxes has been described as "self-defeating" by economists who point out that tax raises should occur when companies and individuals experience rising incomes and not falling cash inflows. Raising taxes when companies are going through operating difficulties could lead to shutdowns, operational cutbacks and job losses, which would combine to cause a fall in tax revenues. If states are to raise their IGR to FAAC ratios they must 'grow' taxable economic  activities rather than snuffing the oxygen from companies and individuals barely able to stay alive.


 Proshare Nigeria Pvt. Ltd.


Related News

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

2.     Nigeria's Merchandise Trade Falls Steeply in Q2 2020 Due to Sharp Drop in Exports

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

4.     Total Value of Capital Imported into Nigeria Stood At $1,294.94m in Q2 2020 - NBS

5.     612,547kg of Drugs Seized in 2019 - NBS

6.     Nigeria's GDP Contracts by -6.10% YoY in Real Terms in Q2 2020 - NBS

7.     Average Price of 1kg of Tomato Increased By 3.24% MoM in July 2020 - NBS

8.     Average Fare Paid By Commuters for Motorcycle Journey Increased By 9.06% MoM in July 2020

9.     Average Prices of PMS, AGO, HHK and Cooking Gas - July 2020

10. Headline Inflation Increases By 12.82% YoY In July 2020; 0.26% Higher Than June 2020 Rate

11. Nigeria's Unemployment Rate Moves Up to 27.1% in Q2 2020 from 23.1% in Q3 2018 - NBS

12. N651.77bn Generated as VAT in H1 2020 - NBS

13. Average Prices of 1kg of Tomato Increased By 30.25% YoY in June 2020 - NBS

14. Average Fare for Bus Journey Within City Increased By 3.36% MoM to N229.94 in June 2020 - NBS

15. Average Prices of PMS, AGO, HHK and Cooking Gas - June 2020

16. Headline Inflation Increases By 12.56% YoY In June 2020; 0.16% Higher Than May 2020 Rate

17. Nigeria's Total Public Debt Stood At N28.63trn in Q1 2020 - NBS

18. NBS Publishes National Living Standard Survey 2018-19 Report

19. Active Voice Subscription Grew By 2.48% in Q1 2020 - NBS

 

 Proshare Nigeria Pvt. Ltd.

 

Q2 2020

1.     5.26bn Litres of PMS Imported Into Nigeria in Q1 2020 - NBS

2.     All Commodity Group Import Index Decreased By 0.84% in Q1 2020

3.     Average Price of 1kg of Rice Increased By 28.18% YoY in May 2020 - NBS

4.     Average Fare Paid By Commuters for Bus Journey Within City Decreased By -0.56% MoM in May 2020 - NBS

5.     Average Prices of PMS, AGO, HHK and Cooking Gas - May 2020

6.     Headline Inflation Increases By 12.40% YoY In May 2020; 0.06% Higher Than April 2020 Rate

7.     Nigeria's Merchandise Trade Slowed in Q1 2020 Due to Declines in Both Imports and Exports

8.     11,072 Road Traffic Crashes Occurred in 2019 - NBS

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

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

11. Average Price of 1kg of Rice Increased MoM By 7.56% in April 2020 - NBS

12. Average Air Passengers Fare Was Flat MoM in April 2020 - NBS

13. Total Value of Capital Importation into Nigeria Stood At $5,854.38m in Q1 2020 - NBS

14. Nigeria's GDP Grew By 1.87% YoY in Real Terms in Q1 2020

15. Average Prices of PMS, AGO, HHK and Cooking Gas - April 2020

16. N1.33trn Generated As IGR in 2019 - NBS

17. Headline Inflation Increases By 12.34% YoY In April 2020; 0.08% Higher Than March 2020 Rate

18. 20.89bn Litres of PMS Imported Into Nigeria in 2019 - NBS

19. N338.94bn Generated As VAT in Q1 2020 - NBS

20. Total Household Expenditure on Food and Non-food Was Put At N40.21bn in 2019 - NBS

21. Poverty and Inequality in Nigeria 2019: 40% of Total Population Classified as Poor

22. GDP By Income and Expenditure Approach Q4 2019 - Household Final Consumption Declined by -2.40%

23. Average Price of 1kg of Rice Increased By 21% YoY to N438.66 In March 2020

24. Average Transport Fare Paid By Commuters Within City Increased By 1.89% MoM in March 2020

25. Average Prices of PMS, AGO, HHK and Cooking Gas - March 2020

26. Headline Inflation Increases By 12.26% YoY In March 2020; 0.06% Higher Than February 2020 Rate

27. Nigeria's Total Public Debt Stood At N27.40trn in Q4 2019 - NBS

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

 

 Proshare Nigeria Pvt. Ltd.

 

Q1 2020

1.     Banking Sector Records 893.68m Volume of Transaction in Q4 2019 - NBS

2.     Active Voice Subscription Grew By 3.08% in Q4 2019 - NBS

3.     All Commodity Group Import Index Fell by 3.27% Due Mainly to Declines in the Prices of Goods

4.     Average Prices of 1kg of Tomato Decreased By -10.65% YoY to N237.22 in Jan 2020 - NBS

5.     Average Fare Paid By Commuters For Bus Journey Intercity Increased By 0.91% MoM in February 2020

6.     Average Prices Of PMS, AGO, HHK and Cooking Gas - February 2020

7.     Headline Inflation Increases By 12.20% YoY In February 2020; 0.07% Higher Than January 2020 Rate

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

9.     FAAC Disburses N2.93trn to FG in 2019 - NBS

10. Total Value of Capital Imported in Q4 2019 Stood At $3,802.38m - NBS

11. FAAC Disburses N650.83bn in December 2019 - NBS

12. Nigeria's Merchandise Trade Grew in Q4 2019; Imports Rose Faster Exceeding Falling Exports

13. Nigeria's GDP Grew By 2.55% in Real Terms in Q4 2019 and 2.27% in Full Year 2019

14. Average Prices of 1kg of Tomato Decreased By -10.65% YoY to N237.22 in Jan 2020 - NBS

15. Average Prices Of PMS, AGO, HHK and Cooking Gas - January 2020

16. Headline Inflation Increases By 12.13% YoY In January 2020; 0.15% Higher Than December 2019 Rate

17. N293.80bn Generated as IGR in Q3 2019 - NBS

18. Nigeria's Total Public Debt Stood At N26.14trn in Q3 2019 - NBS

19. Average Intercity Fare Increases By 1.43% MoM To N1, 666.57 In December 2019

20. Average Price of 1kg of Tomato Decrease YoY by -2.80% To N263.90 In December 2019

21. All Commodity Group Index Grew By 2.48% in Q3 2019

22. Average Prices Of PMS, AGO, HHK and Cooking Gas - December 2019

Headline Inflation Increases By 11.98% YoY In December 2019; 0.13% Higher Than November 2019 Rate


 

 Proshare Nigeria Pvt. Ltd.

 

 

 

 

READ MORE:
Related News
SCROLL TO TOP