By G9ija

Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday put the total disbursement by the Federation Account Allocation Committee (FAAC) to the three tiers of government and other statutory recipients in the third quarter of 2020 at N2.054 trillion.

Data from the latest edition of NEITI’s Quarterly Review, which analysed FAAC disbursements in the third quarter of 2020, using data from the National Bureau of Statistics (NBS) and the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), show that the federal government received N812.22 billion; state governments, N676.5 billion, while local government areas got N429.16 billion. The report said this was the first time total disbursement had exceeded N2 trillion for a quarter in 2020.

“Total disbursements of N2.054 trillion in 2020 Q3 were 6.2 per cent higher than total disbursements of N1.934 trillion in 2020 Q2, and 5.6 per cent higher than total disbursements of N1.945 trillion in 2020 Q1,” it stated.

A statement by the Director of Communications and Advocacy, NEITI, Dr. Ogbonnaya Orji, however, said the disbursements in Q3 2020 were lower than those of the corresponding quarters in 2019 and 2018 as a whole and to the three tiers of government.

It said: “2020 Q3 disbursements were 9.6 per cent lower than the N2.273 trillion disbursed in the third quarter of 2019 and 9.8 per cent lower than the N2.278 trillion disbursed in the third quarter of 2018.”

It explained that the dip in disbursements between 2020 Q3 and corresponding quarters in 2019 and 2018 was largely on account of the impact of COVID-19 and its associated effects on demand for oil, oil prices, economic activities and other sources of revenues.

According to the report, further analysis revealed that disbursements to the three tiers of government fell between the first and second quarters, and then increased between the second and third quarters of 2020.

It stated: “Total disbursements to the federal government were N791.44 billion, N739.2 billion and N812.22 billion for the first, second and third quarters of 2020, respectively. This means that disbursements in the third quarter were 9.9 per cent higher than disbursements in the second quarter, and 2.6 per cent higher than disbursements in the first quarter.

“For states, total disbursements were N669.02 billion in the first quarter, N629.26 billion in the second quarter and N676.5 billion in the third quarter. Thus, disbursements to states in 2020 Q3 were 7.5 per cent higher than disbursements in 2020 Q2, and 1.1 per cent higher than disbursements in 2020 Q1.”

According to the review, local governments received a total of N395.95 billion in 2020 Q1, N375.39 billion in 2020 Q2, and N429.16 billion in 2020 Q3.

“ Thus, the disbursements to local governments in 2020 Q3 were 14.3 per cent higher than the amount disbursed in 2020 Q2, and 8.4 per cent higher than the disbursements in 2020 Q1,” NEITI added.

The NEITI report explained that total FAAC disbursements in Q3 2020 were higher than disbursements in either the first or second quarters of 2020, continuing a trend that stretches back to 2015.

It noted that higher disbursements in the third quarter of the years were generally on an account of increased demand for oil during the summer and the attendant surge in oil prices. It also attributed the rise in third-quarter disbursements for the year to two primary factors.

“First, there has been increased demand for oil following the easing of the global economic shut-downs as a result of the COVID-19 pandemic.

“Second, the official exchange rate (earlier adjusted in March 2020 from N305/$1 to N360/$1) was adjusted from N360/$1 to N380/$1, and this will necessarily lead to higher disbursements from FAAC as revenues are shared in naira,” the report stated.

On FAAC disbursements to states within the period, NEITI noted that there was a wide disparity in the total net disbursements, ranging between the lowest of N9.39 billion net disbursements to Osun State and the highest of N43.08 billion net disbursements to Delta State, indicating a variance of 358 per cent.

According to the report, apart from the sharing formula, the amount of deductions carried out also plays a role in determining how much net disbursements are received by states.

“Yobe State had the lowest deduction of N81.98 million, while Lagos State had the highest deduction of N17.35 billion, which was 10 per cent higher than the combined total deductions of 20 states (N15.72 billion),” it said.
The report also showed that the combined disbursements of the four states with the highest disbursements class (Delta, Rivers, Lagos and Akwa Ibom States) amounted to N144.48billion.

“This was higher than the combined total of N135.36 billion received by the 12 states with the lowest disbursements, namely Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nasarawa, Ebonyi, Taraba and Ondo,” it said.
On the revenue outlook for Q4 2020, the NEITI projected that actual oil revenue is likely to continue to outperform the projected oil revenue for the period.

However, it cautioned that even with the projected improvement in revenues in Q4 2020 and based on the total revenues received in the first three quarters of 2020, all tiers of government may struggle to meet the revenue projection in their revised budgets for the year.