By Chinelo Obogo
Akwa Ibom, Bayelsa, Delta, Taraba are among the 14 states that would struggle to fund their 2023 budgets, pay salaries, pensions and gratuities without receiving funds from the Federal Account Allocation Committee (FAAC), a report has shown.
According to BudgIT, 14 out of Nigeria’s 36 states rely on FAAC for at least 70 percent of their total revenue. For instance, the report shows Bayelsa’s gross FAAC revenue for 2023 was N347,893,968,276.01 (Three hundred and forty-seven billion, eight hundred and ninety-three million, nine hundred and and sixty-eight thousand, two hundred seventy-six naira), while its total revenue for the same year was N406, 761, 540, 060.31 (Four hundred and six billion, seven hundred and sixty-one million, five hundred and forty thousand and sixty). The implication of this is that the state’s proportion of dependence on FAAC is 92.17 percent.
For Akwa Ibom, the proportion of its dependence on FAAC is 86.29 percent, Delta – 83.88 percent, Taraba – 81.89 percent, Niger – 80.19 percent, Benue – 79.85 percent, Anambra – 76.94 percent, Bauchi – 75.33 percent, Cross River – 74.87 percent, Nasarawa – 74.55 percent, Gombe – 72.29 percent, Enugu – 70.68 percent, Edo – 70.24 percent and Kano – 70.24 percent.
To secure funding for their budgets, states usually rely on their Internally Generation Revenue (IGR) and allocations from the federal government, primarily through the FAAC. They could also seek external loans and grants. The FAAC, which distributes funds monthly, allocates these funds based on various factors, including the 13 percent derivation, statutory allocations, Value Added Tax (VAT) revenue, and the division of funds among the three tiers of government.
According to Dataphyte, 34 states relied on federal government allocations to manage their 2023 budgets if the benchmark for revenue reliance is pegged at 50 percent, which means that the states can run half of their fiscal operations from IGR while depending on the government’s allocation for the other half.
Dataphyte further inspects the 2023 budget of the 36 states to check how much of the total revenue generated could sufficiently fund the states’ approved budget. Nigeria’s 36 states (except the FCT) approved N11 trillion in the 2023 fiscal year. The analysis shows that when the total revenue is placed side by side with the budget of the states, at a benchmark of 56 percent revenue to allocation, only 17 states can conveniently fund their budget with revenue generated within the year. Rivers, Delta, Ekiti, and Ebonyi could fund more than 70 percent of their budget from their IGR. Other states that could manage to fund their budgets at a benchmark of 56 percent revenue are Osun, Enugu, Kwara, Bayelsa, Jigawa, Nasarwa, Abia, Plateau, Kano, Benue, Kogi, Lagos and Kebbi.