With practically all of the Federation’s states having little to nothing to show for the enormous revenues that have come in for them since President Bola Tinubu announced the removal of petroleum subsidies on May 29, it appears that the removal of the subsidy, which was expected to lift more Nigerians out of poverty through higher revenue accrual to both the federal and sub-national governments, is ineffective.
According to LEADERSHIP’s research, the states collectively received over N5.108 trillion in revenue from the Federal Account Allocation Committee (FAAC) in eight months, from July 2023 (when the proceeds of the subsidy removal started coming in) to February 2024, in addition to their internally generated revenue, which amounts to billions of Naira.
The states received N5,108,219,000,000 (N5.1 trillion) in total revenue, of which N2,690,391,000,000 (N2.69 trillion) came directly from the federation account and N1,975,899,000,000 (N1.975 trillion) was distributed to the local government account under the governors of each state. Additionally, some states received N441.929 billion as a share of the 13% solid minerals derivation revenue.
The average monthly payment from FAAC climbed to almost N1.09 trillion due to the withdrawal of subsidies, from an earlier average of N620 billion. However, the state governors have not been able to boost the living standards and per capita income of their constituents.
As of the last count, only around ten states have begun to implement the N30,000 minimum wage guideline for public workers that was agreed upon by labour and the government. Even though labour is already requesting an increase of more than 200%, most governments have failed to apply the previous rate despite the rise in income.
When the first post-subsidy income was received in July, the three tiers of government divided a total distributable revenue of N907.054 billion, with the states taking a total of N561.49 billion from the federation account. This is according to a breakdown of the FAAC allocation to the states during the period under review.
The states received N591.624 billion in August when the overall income, which included Value Added Tax, exchange rate gains, and electronic money transfer fees allowed for distribution, reached N966.110 billion.
The FAAC said in September that the 36 states received N361.188 billion and the local government areas received N266.538 billion of the N1.1 trillion total distributable revenue, with the Federal government receiving a total of N431.245 billion. This is an increase. The relevant states received a total of N26.473 billion (13% of mining revenue) and N14.657 billion (13% of NNPCL savings) as derivation money.
Additionally, state governments received N287.071 billion and municipal governments received N210.900 billion from the N903.480 billion total income given in October 2023. The relevant states received a total of N84.966 billion (or 13% of the revenue from minerals) as derivation revenue, making the total amount of money that the states received from the federation account N582.937 billion.
The FAAC authorized on November 22 the distribution of N225.209 billion to the LGAs and N307.717 billion to the states. The relevant states divided N50.674 billion (about 13% of the mining revenue) as derivative revenue.
Additionally, FAAC distributed N1.1 trillion in income from the previous month to every level of government. The federal government got a total of N402.867 billion, state governments received N351.697 billion, and local government areas received N258.810 billion, according to the communiqué released following the monthly meeting. The benefited states received a total of N75.410 billion (or 13% of the mining revenue) as derivation money, which increased their portion of federal revenue once again.
At the first FAAC meeting of the year in January 2024, N1.127 trillion from December income was distributed. According to the breakdown, the oil-producing states received N57.915 billion as Derivation (13% of mineral revenue), the federal government received N383.872 billion, the states received N396.693 billion, and local government areas received N288.928 billion.
N85.101 billion, or 13% of the mineral revenue, also went into the beneficiary states as derivation money. In the end, the state governments received N379.407 billion and the local governments received N278.041 billion.
This is in addition to the billions that each state got from the federal government to provide palliative care to the most disadvantaged members of society following the gasoline subsidy and ensuing crisis in the cost of living.
Nevertheless, the Governors’ increased access to funds hasn’t seemed to be helping the state’s citizens in any way; reports of hunger strikes and food truck raids have been made in several parts of Nigeria, and the Nigeria Labour Congress is preparing a nationwide protest in the coming days in response to the ongoing suffering that Nigerians, including workers, are facing.
Credit: Allschoolabs, Myschoolabs
