The Nigeria Extractive Industries Transparency Initiative (NEITI) has reported that allocations to federal, states and local governments by the Federation Accounts Allocation Committee (FAAC) in 2024, including derivation revenue, totalled N15.26 trillion, representing a 43% increase over the disbursements to the tiers of government in 2023.
The NEITI’s ‘FAAC Quarterly Review’ report released on Tuesday in Abuja attributed the surge in revenue disbursements to sustained fiscal reform policies of the Federal Government, especially the removal of fuel subsidies and foreign adjustment exchange rate policies, which has continued to positively impact on oil revenue remittances.
Announcing the report’s release at the NEITI House in Abuja, Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, explained that the analyses were conducted against the backdrop of major fiscal reforms that reshaped the revenue landscape, particularly the impact of subsidy removal in mid-2023 on national and subnational finances and the consequences of debt repayment deductions on state allocations.
According to him, the report’s objective is to assess the sustainability of the federal and state governments’ borrowing to fund their projects and programmes, as well as the implications of natural resource dependence, particularly for states benefitting from the 13% derivation revenue from oil, gas, and solid minerals.
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He said: “The analysis focused on crude oil revenue derivation states, as solid minerals continue to underperform despite their significant potentials.”
A breakdown of the disbursements to the tiers of government last year indicated that the Federal Government received N4.95 trillion, State Governments colledct N5.81 trillion, and Local Governments got N3.77 trillion.
The NEITI’s FAAC Quarterly Review report showed that distribution to state governments in 2024 recorded the largest percentage increase of 62% from N3.58 trillion in 2023, followed by local government councils with a 47% increase, while the Federal Government’s share rose by 24% from N3.99 trillion in 2023 to N4.95 trillion in 2024.
The report highlighted that total FAAC allocations increased by 66.2% from N9.18 trillion in 2022 to N10.9 trillion in 2023 and N15.26 trillion in 2024, with the most significant growth occurring between 2023 and 2024.
According to the report, the surge in revenue disbursements is linked to the government’s fiscal reforms, specifically the removal of fuel subsidy and exchange rate adjustments, which boosted naira-denominated mineral revenue by over 400%.
While NEITI restated its commitment to continue to support the reforms with credible information and data, the Review called for adequate measures to manage and mitigate economic and other social risks associated reforms in transitional economies like Nigeria.
It listed the measures as including inflationary pressures, possible rise in debt servicing costs, fiscal uncertainties for states dependent on oil revenues.
NEITI recommended that governments at all levels should take innovative actions to mitigate the impact of these economic challenges.
An analysis of the state-by-state allocations also showed that Lagos State received the highest allocation of N531.1 billion in 2024, followed by Delta (N450.4 billion) and Rivers (N349.9 billion). Conversely, Nasarawa State received the least allocation of N108.3 billion, followed by Ebonyi (N110 billion) and Ekiti (N111.9 billion).
In addition, it reflected that six states, namely Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano, each received over N200 billion, collectively accounting for 33% of total allocations to all states, while the six lowest-receiving states Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa accounted for only 11.5%.
The report indicated that the top four states, comprising Lagos, Delta, Rivers, and Akwa Ibom—collectively received N1.49 trillion, representing over three times more than the combined total collections of the bottom four states – Kwara, Ekiti, Ebonyi, and Nasarawa – which received N442.4 billion.
On debt management, particularly on deductions, the NEITI report review highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3% of total allocations to the 36 states, including derivation revenue.
It disclosed that on debt deductions, Lagos State recorded the highest debt deduction of N164.7 billion, accounting for over 20% of total deductions, followed by Kaduna State with N51.2 billion, while Rivers (N38.6 billion) and Bauchi (N37.2 billion) also recorded significant debt deductions.
The report noted that many states with high debt ratios were in the lower half of the FAAC allocation rankings but ranked higher for debt deductions, raising concerns about their debt-to-revenue ratios and overall fiscal health.
NEITI urged the government to sustain policy reform measures to encourages sustainable revenue growth and economic stability with priority attention focused on job creation, poverty reduction and control of inflation on goods and services.
In addition, the organization urged the government to ensure exchange rate stability to mitigate inflationary pressures, adopt conservative estimates for crude oil production and pricing to prevent budget shortfalls, and review and diversify minerals revenue dependence while incentivizing investment and strengthening regulatory oversight.
Other governance imperatives advocated by the NEITI in the report include enhancing internal revenue generation by all three tiers of government, bolstering savings in the Excess Crude Account (ECA) to create a buffer against revenue volatility, and sustaining fiscal transparency policies in line with OGP and EITI commitments.
Also, it reiterated the need for stakeholders to leverage the findings and data provided to hold all levels of government accountable for the effective management of public resources especially revenues from the extractive industries.
