By Adedapo Adesanya

The Nigerian Extractive Industry Transparency Initiative (NEITI) has disclosed that the Federation Accounts Allocation Committee (FAAC) disbursements to the federal, state, and local governments rose by 43 per cent in 2024, indicating a significant rise in government revenue.

In its newly released FAAC Quarterly Review in Abuja on Tuesday, the agency a total of N15.26 trillion was shared to the three tiers of government in the year under review.

According to a statement signed by the NEITI’s Acting Director Communication and Stakeholders Management, Mrs Obiageli Onuorah, the disbursements represent a historic high in revenue distribution and a 43 per cent increase compared to previous years.

The surge was attributed to sustained fiscal reform policies of the federal government, especially the removal of fuel subsidies and liberalisation of foreign exchange (FX) system which have continued to impact positively on oil revenue remittances.

NEITI said in the year, the federal government got N4.95 trillion, the state governments received N5.81 trillion and the local governments shared N3.77 trillion, putting the total FAAC disbursements (Including Derivation Revenue) stood at N15.26 trillion.

The NEITI FAAC Quarterly Review showed that distribution to state governments in 2024 recorded the largest percentage increase of 62 per cent from N3.58 trillion in 2023, followed by local government councils with a 47 per cent increase, while the Federal Government’s share rose by 24 per cent from N3.99 trillion in 2023 to N4.95 trillion in 2024.

The report said the total FAAC allocations increased by 66.2 per cent 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.

The review also called for adequate measures to manage and mitigate economic and other social risks associated with reforms in transitional economies like Nigeria.

According to the agency, such risks include: inflationary pressures, possible rise in debt servicing costs, and fiscal uncertainties for states dependent on oil revenues.

NEITI recommended that governments at all levels take innovative actions to mitigate the impact of these economic challenges.

The report also revealed 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).

Furthermore, six states—Lagos, Rivers, Bayelsa, Akwa Ibom, Delta, and Kano—each received over N200 billion, collectively accounting for 33 per cent of total allocations to all states, while the six lowest-receiving states—Yobe, Gombe, Kwara, Ekiti, Ebonyi, and Nasarawa—accounted for only 11.5 per cent.

The report revealed a major financial divide, with the top four states—Lagos, Delta, Rivers, and Akwa Ibom—collectively receiving N1.49 trillion, over three times more than the combined total of the bottom four states—Kwara, Ekiti, Ebonyi, and Nasarawa—which received N442.4 billion.

The review highlighted that total debt deductions for states’ foreign debts and other contractual obligations amounted to N800 billion, representing 12.3 per cent of total allocations to the 36 states, including derivation revenue.

Lagos State recorded the highest debt deduction of N164.7 billion, accounting for over 20 per cent of total deductions, while Kaduna State followed 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.

Speaking on the numbers, Mr Orji Ogbonnaya Orji, Executive Secretary of NEITI, noted 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 sub-national finances and the consequences of debt repayment deductions on state allocations.

He said 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 benefiting from the 13 per cent derivation revenue from oil, gas, and solid minerals.

“The analysis focused on crude oil revenue derivation states, as solid minerals continue to under-perform despite their significant potentials.”