A Small Uptick In The FAAC Payout To N702bn In November 2019

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Friday, November 22, 2019   /10:03 AM  / By FBNQuest Research / Header Image Credit: FBNQuest

                                                                                   

The gross monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government amounts to N702bn (US$2.26bn) in November (from October revenue). This was an increase of N8bn on the previous month. The communique of the FAAC meeting, released by the accountant-general of the federation, noted that receipts from companies' income tax, VAT and import duty increased significantly, while royalties, petroleum profit tax (PPT) and excise duty recorded decreases. The balance in the excess crude account stood at US$324m as at 20 November.

                                                                                                                  

The gross payout consisted of the gross statutory allocation of N596bn, the VAT Pool of N105bn and an exchange-rate gain of N1bn. The fees and charges of the collection agencies consumed N19bn of the total declared, lower than the N21bn received in the previous month.

 

The payout to state governments including the 13% derivation bonus of N49bn for oil-producing states amounted to N242bn, compared with N238bn from October's distribution. This is not sufficient to cover recurrent expenses, let alone capital expenditure across states. Additionally, we note that N145bn was distributed to local governments (there are 774 LGAs).

 

Yesterday, the National Assembly passed the finance bill which covers an increment in VAT from 5.0% to 7.5%. This will be welcome news for the state governments, given that they receive the largest share of the distribution from the VAT Pool. However, we still believe that states need to be more deliberate with boosting their internal revenue as opposed to the current overdependence on FAAC allocations.

 

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

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

 

We have taken the data for the latest payout from local media reports. The accountant-general's office supplies the revenue numbers up to June 2019, shared out in July.


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