ANALYSIS: N25 trillion FAAC distribution and lingering financial challenges of state governments
Wait for a second, imagine how much your state
received from the monthly Federal Account Allocation
Committee (FAAC) disbursement in December 2018.
Stretch your thoughts to your local government as well.
What numbers do you come up with?
Hold your guess now. As the chart below clearly
shows, the fact is, if you are not from Osun State, then
your state received over N2.4 billion, and if you are
not from Delta State, your state treasury received an
amount definitely below N21 billion in December
If the monies were actually shared to states equally,
your state would have received N6.4 billion. Your local
government would have also had a minimum of N118
million or a maximum of N741.8 million.
FAAC Allocation To State, Criteria
A recent analysis of the FAAC distribution to states and
local governments of the federation in the last 12 years
provides interesting insights into the revenue
distribution matrix of the country.
Dataphyte Analytics report revealed that the 36 states
shared N25.03 trillion cumulatively, and each earned
an average of N109.37 billion between 2007 and 2018.
The total share of each state within this period is
shown in the map below and you can see the dataset
FAAC distributes revenue from the federation account
thus: the federal government 52.68 per cent, the 36
state governments share 26.72 per cent, while 20.60
per cent is given to the 774 local governments in the
country. It also distributes the revenue from Value
Added Tax (VAT) thus: the federal government, 15 per
cent; state governments all share 50 per cent; and the
local governments share get 35 per cent.
However, the general criterium that differentiates the
amount one state government receives from the other
is the population size of the state. FAAC disbursement
to a state is meant to be directly proportional to its
population, and, consequently, the number of local
governments in the state.
This is the reason why these five highly populated
states – Lagos, Kano, Kaduna, Katsina, and Borno rank
among the top 10 beneficiaries from the FAAC
allocation till between 2007 and 2018, as seen in the
Within this period, Lagos, Kano, Kaduna, Katsina
received N1.10 trillion, N808.10 billion, N627.93 billion
and N608.57 billion respectively. Borno, the least on
the top 10 got N601.66 billion.
Then, there is the special criteria, which allocates an
additional 13 per cent derivation from the net oil
revenue exclusively to oil-producing states.
This is the only reason why these other five states,
namely, Akwa Ibom, Rivers, Delta, Bayelsa, and Ondo,
rank among the top 10 earners too. As shown in the
chart above, Akwa Ibom, Rivers, and Delta got N2.36
trillion, N2.26 trillion, and N1.86 trillion in that order
while Bayelsa and Ondo had N1.48 trillion and N731
FAAC revenue cum development of individual states
While the K states – Kano, Kaduna and Katsina seem
to walk away from FAAC each month with big bags,
thanks to their population, it all amounts to little,
considering the per capita (or revenue per head)
For instance, even though Kano, Kaduna and Katsina
got more money than the oil-producing Abia or Imo, it
only amounted to a 12-year aggregate revenue per
capita of N128,970, N140,633 and N160,239 (at the
36th, 35th and 30th positions) respectively while Abia,
Edo, Imo and Cross River – got a 12-year aggregate
revenue per capita of N223,588, N210,686, N187,548
and N203,584 (11th, 12th, 22nd and 16th positions)
These statistics show that increasing state population
without developing individual state resources will not
suffice in the long run.
Each state in Nigeria has an area of comparative
economic advantage that could be tapped into, both in
human and natural resource, to create the wealth of
their own. Higher productivity, whether in the
exploration of mineral resource or through full
employment of manpower creates higher income
levels for the residents of a state.