NEITI: FAAC Dis­burse­ment Hits N2.273tn in Q3 2019

VAT rev­enue drops by N36.82bn in third quar­ter

THISDAY - - FRONT PAGE - James Emejo and Chineme Okafor in Abuja

The Fed­er­a­tion Ac­count Al­lo­ca­tion Com­mit­tee (FAAC) dis­bursed N2.273 tril­lion to the three tiers of govern­ment and other statu­tory re­cip­i­ents be­tween July and Septem­ber this year, ac­cord­ing to data from the Nige­ria Ex­trac­tive In­dus­tries Trans­parency

Ini­tia­tive (NEITI).

Also, the to­tal rev­enues from Value Added Tax (VAT) dropped by N36.8 bil­lion to N275.12 bil­lion in the third quar­ter of the year com­pared to N311.94 bil­lion in the pre­ced­ing quar­ter, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics (NBS).

NEITI in a state­ment signed by its Di­rec­tor of

Com­mu­ni­ca­tions, Dr. Orji Og­bon­naya Orji, ex­plained that the dis­burse­ment was 18.79 per cent higher than the N1.913 tril­lion shared in the sec­ond quar­ter of 2019 by the par­ties.

The fig­ure was also 17.81 per cent higher than the N1.929 tril­lion dis­bursed in the first

quar­ter of the year.

It was, how­ever, lower than the N2.28 tril­lion recorded in the third quar­ter of 2018.

NEITI, in the lat­est edi­tion of its Quar­terly Re­view said it ex­tracted the data from FAAC and NBS.

It noted that for the first time since the fourth quar­ter of 2018, to­tal FAAC al­lo­ca­tions ex­ceeded N2 tril­lion in a quar­ter.

Com­bin­ing this with dis­burse­ments in pre­vi­ous quar­ters, it said it showed that FAAC dis­burse­ments ex­ceeded N2 tril­lion in four of the last six quar­ters.

“The last time this hap­pened was in the third quar­ter of 2014. This is a big im­prove­ment com­pared to N886.48 bil­lion recorded in 2016-Q2. How­ever, it is still lower than N2.607 tril­lion of 2013-Q1,” said the re­port.

It added that a break­down of the N2.273 tril­lion dis­bursed in the last quar­ter of 2019 showed that the fed­eral govern­ment re­ceived N920.2 bil­lion, while the states and lo­cal govern­ment re­ceived N724.16 bil­lion and N44.19 re­spec­tively.

It said the amount re­ceived by the fed­eral govern­ment in the third quar­ter of 2019 was 15.6 per cent higher than the N795.84 bil­lion it re­ceived in

the sec­ond quar­ter. Be­sides, it was also 14.6 per cent higher than the N803.13 bil­lion it re­ceived in the first quar­ter of the same year.

For states, it ex­plained that the amount re­ceived dur­ing the third quar­ter of 2019 was 9.6 per cent higher than the N660.2 bil­lion they re­ceived in the sec­ond quar­ter and also 7.3 per cent higher than the N675.2 bil­lion they got in the first quar­ter of the same year.

The amount re­ceived by the lo­cal gov­ern­ments for the same pe­riod, it added, was 12.02 per cent higher than the N393.95 bil­lion re­ceived in the sec­ond quar­ter and 10.73 per cent higher than the N398.44 bil­lion re­ceived in the first quar­ter.

Ac­cord­ing to the NEITI, the ag­gre­gate FAAC dis­burse­ments for the first nine months of 2019 were N6.115 tril­lion.

It ex­plained that the break­down of the ag­gre­gate dis­burse­ments showed that be­tween Jan­uary and Septem­ber 2019, the fed­eral govern­ment re­ceived a to­tal of N2.519 tril­lion, while the states and the lo­cal gov­ern­ments re­ceived N2.059 tril­lion and N1.223 tril­lion re­spec­tively.

On dis­burse­ments to state gov­ern­ments in the third quar­ter of 2019, the NEITI noted a wide

dis­par­ity be­tween Osun State, which re­ceived the low­est amount of N6.89 bil­lion and Delta State that got the high­est dis­burse­ment of N54.88 bil­lion.

“This im­plied that Delta State re­ceived almost eight times what Osun State got,” the NEITI ex­plained.

The NEITI also showed that the four states with the high­est net dis­burse­ments were all in the South-south geopo­lit­i­cal zone and they re­ceived a com­bined to­tal of N173.65 bil­lion.

“This was more than the com­bined to­tal of N164.58 bil­lion re­ceived by the 14 states with the low­est dis­burse­ment,” it added.

On direct de­duc­tions from states’ al­lo­ca­tions in the third quar­ter of 2019, it said Yobe State had the low­est de­duc­tions of N593.03 mil­lion while La­gos recorded the high­est de­duc­tion of N12.09 bil­lion.

The NEITI Re­view also dis­closed that, “com­bined FAAC dis­burse­ments for the first three quar­ters of 2019 - taken as a per­cent­age of 2019 bud­gets - were above 30 per cent in only seven states.”

The re­port fur­ther noted that the ma­jor­ity of the states had re­ceived be­low 30 per cent of their an­nual bud­gets in FAAC

dis­burse­ments af­ter the ninth month of 2019.

“Net FAAC dis­burse­ments be­ing be­low 30 per cent in most states is worrying, be­cause most states de­pend on FAAC dis­burse­ments for at least 80 per cent of their rev­enues.

“The im­pli­ca­tion is that most states’ bud­gets will be un­der­funded this year. The pos­si­ble ex­cep­tions are La­gos, Rivers and Ogun states, which have con­sid­er­able his­tory of high in­ter­nally gen­er­ated rev­enue (IGR),” it ex­plained. VAT Rev­enue Drops by N36.82bn in Q3 Mean­while, the to­tal rev­enues from VAT dropped by N36.8 bil­lion to N275.12 bil­lion in the third quar­ter of the year com­pared to N311.94 bil­lion in the pre­ced­ing quar­ter, ac­cord­ing to the NBS.

The NBS, in its sec­toral dis­tri­bu­tion of VAT data for Q3 added that the fig­ure rep­re­sented a con­trac­tion of 11.81 per cent on a quar­teron-quar­ter anal­y­sis and 0.59 per cent in­crease (year-on-year).

Ac­cord­ing to the re­port, pro­fes­sional ser­vices gen­er­ated the high­est amount of VAT of N32.09 bil­lion, closely fol­lowed by man­u­fac­tur­ing with N30.27


VAT from com­mer­cial and trad­ing to­talled N14.47 bil­lion while min­ing gen­er­ated the least and closely fol­lowed by tex­tile and gar­ment in­dus­try and phar­ma­ceu­ti­cal, soaps and toi­letries with N44.30 mil­lion, N253.83 mil­lion and N291.06 mil­lion, re­spec­tively.

The sta­tis­ti­cal agency ex­plained that out of the to­tal amount gen­er­ated in Q3, N150.74 bil­lion was gen­er­ated as non-im­port VAT lo­cally while N63 bil­lion was re­alised as non-im­port VAT for for­eign.

It stated that the balance of N61.37 bil­lion was gen­er­ated as NCS-Im­port VAT.

The Nige­rian govern­ment is cur­rently faced with huge rev­enue chal­lenges.

Pres­i­dent Muham­madu Buhari had sought to raise VAT rate from five per cent to 7.5 per cent amidst other fis­cal ad­just­ments to boost tax re­ceipts.

Ear­lier Oc­to­ber, he pre­sented the Fi­nance Bill, along­side the 2020 Ap­pro­pri­a­tion Bill to a joint ses­sion of the Na­tional Assem­bly for con­sid­er­a­tion and pas­sage into law.

The bill, which was passed by the Se­nate last month, com­prises seven bills, seek­ing to amend

six tax pro­vi­sions and make them more re­spon­sive to tax re­form poli­cies.

Although the move to raise the VAT by the fed­eral govern­ment has been op­posed by a sec­tion of Nige­ri­ans, the coun­try's VAT rate re­mained one of the low­est in the world.

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