The Federation Accounts Allocation Committee (FAAC) disbursed a record N15.26 trillion to federal, state, and local governments in 2024, marking a 43% increase from the previous year, according to the latest FAAC Quarterly Review by the Nigeria Extractive Industries Transparency Initiative (NEITI).
NEITI attributes the surge in disbursements to the federal government’s fiscal reforms, particularly the removal of fuel subsidies and exchange rate adjustments, which significantly boosted oil revenue remittances.
Dr. Orji Ogbonnaya Orji, NEITI’s Executive Secretary, noted that these reforms reshaped the revenue landscape, with the impact of subsidy removal in mid-2023 playing a crucial role in increasing allocations to all tiers of government.
Federal Government: N4.95 trillion
State Governments: N5.81 trillion
Local Governments: N3.77 trillion
The report highlights that state governments saw the highest percentage increase in allocations, rising by 62% from N3.58 trillion in 2023.
Local government councils followed with a 47% increase, while the federal government’s share grew by 24% from N3.99 trillion in 2023.
Total FAAC allocations jumped from N9.18 trillion in 2022 to N10.9 trillion in 2023, before surging to N15.26 trillion in 2024, marking the highest year-on-year increase.
Lagos State received the highest allocation at N531.1 billion, followed by Delta (N450.4 billion) and Rivers (N349.9 billion). Conversely, Nasarawa, Ebonyi, and Ekiti States received the least, with allocations of N108.3 billion, N110 billion, and N111.9 billion, respectively.
Six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, accounting for 33% of total state allocations.
In contrast, the six lowest-receiving states collectively accounted for only 11.5% of total allocations.
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State governments faced significant deductions for debt servicing, with total deductions amounting to N800 billion, representing 12.3% of total allocations.
Lagos State recorded the highest deduction at N164.7 billion, followed by Kaduna (N51.2 billion) and Rivers (N38.6 billion).
The report raises concerns about the financial health of some states, noting that those with high debt burdens often rank lower in total allocations but higher in deductions, signaling potential fiscal distress.
While NEITI supports ongoing fiscal reforms, the agency warns of potential economic risks, including:
Rising inflation
Increased debt servicing costs
Fiscal uncertainties for oil-dependent states
To mitigate these risks, NEITI recommends that governments at all levels adopt innovative revenue strategies and prudent financial management.
The surge in FAAC disbursements reflects the federal government’s push for economic stability, but experts caution that without strategic planning, states heavily reliant on oil revenue could face long-term fiscal challenges.