April 17, 2020 / 08:49 PM / by FBNQuest Research / Header Image
We learn from the local media that the gross monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government amounted to N582bn (US$1.51bn) in March (from February revenue). This was a decline of N65bn on the previous month. The committee's brief statement following the decision noted that receipts from petroleum profit tax, companies' income tax, import and excise duty, oil and gas royalties, and VAT were all significantly lower on the month. It added that the balance in the excess crude account (ECA) remained a paltry US$72m.
The distribution followed an earlier unsuccessful meeting (Good Morning Nigeria, 24 March 2020), at which finance commissioners rejected the amount on offer. It would appear that the distribution made was very similar, if not identical to the payout earlier turned down. Mineral (oil) revenue has slumped, as we all know, and non-oil GDP growth has disappointed.
The gross payout consisted of the statutory allocation of N466bn, the VAT Pool of N100bn and exchange-rate adjustments of N16bn. The fees and charges of the three tax collection agencies absorbed N22bn of the total declared.
The states received N204bn including the derivation bonus for the oil-producers from FAAC in March. This is their largest source of revenue in aggregate, representing almost two-thirds of their total inflows, and covered just 58% of their average monthly spending in 2018. In the ideal world, all states, not just a few, would have since been able to honour the new national minimum wage and make a sizeable fiscal response to the onset of the coronavirus pandemic.
Revenue allocations (gross) by the FAAC (N bn)
Sources: Office of the accountant-general of the federation (OAGF); local media; CBN; FBNQuest Capital Research
Full details of FAAC distributions are available on the OAGF website. The most recent, however, date from July 2019 (on June revenue).