- Senate increases FCT 2024 budget to ₦1.3trn
The Nigeria Extractive Industries Transparency Initiative said the three tiers of government in Nigeria, shared the total sum of N10.1 trillion from the Federation Account as statutory revenue allocation in 2023.
This was contained in the NEITI’s latest report on the Federation Account revenue allocations for the year 2023, released on Tuesday in Abuja.
Announcing the release of the report, NEITI’s Executive Secretary, Orji Ogbonnaya, said a breakdown of the revenue receipts showed that the Federal Government received about N4 trillion, representing about 39 per cent of the total allocation.
The 36 states got about N3.6 trillion representing 35 percent while the 774 local government councils of the federation shared N2.6 trillion equivalents to 25 percent.
Further analysis of the N10.143 trillion disbursements in 2023, showed an increase of about N2 trillion or 23 percent when compared to the disbursement of N8.2 trillion shared in the corresponding year 2022.
The report attributed the increase to improved revenue remittances to the federation account due to the removal of the petrol subsidy, and the floating of the exchange rate by the new administration.
It noted that while total revenues distributed from the federation account recorded an overall increase of 23 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue streams contributing to the inflows into the federation account.
A quarterly review of 2023 FAAC allocations carried out by NEITI disclosed that the federal, state and local governments cumulatively received N1.9 trillion more than the amount shared in 2022. The first quarter of 2023 increased by about N580 billion or 33 per cent when compared to the first quarter of 2022. The second quarter increased by about 10 per cent, the third quarter by 27 per cent, and the fourth quarter had an increase of 23 per cent respectively.
Further analysis shows that the Federal Government’s share increased by about N574 billion representing a 17 percent increase from the N3.4 trillion it received in 2022 to about N4 trillion in 2023.
State governments shared N3.6 trillion in 2023 compared to the N2.8 trillion they got in 2022, showing an increase of about 30 percent.
Similarly, local government councils’ share of federation allocation was about N3 trillion in 2023 compared to N2 trillion in 2023 which amounts to a 26 percent increase.
While total distributed revenue from the federation account recorded an overall increase of about 24 percent in 2023, the increase accruing to each tier of government varied, largely due to the type of revenue item contributing to the inflows into the account. In the same period (2023), states and local governments recorded increases in their allocations of 30 percent and 26 percent respectively. The increase in allocation to the federal government however was about 17 percent.
State-by-state share of the allocations showed that Delta State received the largest share of N402 billion (gross). The figure is inclusive of the state’s share of oil and gas derivation revenue.
Delta was followed by Rivers State which received N398 billion. Akwa-Ibom State received the third largest allocation of N293 billion. Nasarawa State received the least amount of N73 billion, while Ebonyi and Ekiti States received N74.3 billion and N74 billion respectively.
According to Orji, the agency embarked on the NEITI FAAC quarterly review to enhance public understanding of federation account allocations, and disbursements as published by the government.
He explained that “The ultimate objective of this disclosure is to strengthen knowledge, awareness and promote public accountability of all institutions in public finance management”.
The review observed that the first five states that topped the allocation during the period under review are amongst the major oil-producing states in the country.
On the share of 13 percent derivation revenue, nine states received the 13 percent allocated to mineral-producing states from the proceeds from mineral revenue.
The derivation revenue remains a significant portion of revenue for states like Delta, Akwa Ibom, Anambra and Rivers States. Also, the derivation revenues of states such as Delta, Akwa Ibom, and Bayelsa, which were about 161 percent, 141 percent and about 128 percent respectively, eclipsed their statutory revenues. Rivers State‘s derivation revenue was about 74 percent during the period.
Notably, the other five oil-producing states recorded lesser derivation revenue compared to the four above. For example, Ondo State had about 28 percent; Edo had 30 percent, while Abia, Anambra and Imo recorded derivation revenue of about 20 percent or less.
The NEITI report noted that solid minerals-producing states did not receive derivation revenues during the last quarter of last year, because of the need to allow the revenues to accumulate over a while before sharing can occur.
Other key findings of the report showed that revenue remittances to the account fluctuated significantly every month due to corresponding fluctuations in oil and gas revenue. Oil and gas revenues reflected crude oil prices and Nigeria’s output which in turn is significantly affected by crude oil theft and acts of sabotage.
The report pointed out that the main sources of revenue inflows to the account in 2023 were the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Federal Inland Revenue Service and Nigeria Customs Service, through earnings from the different revenue streams. This included oil, and gas royalties, petroleum profit tax, company income tax, value-added tax, and import and excise duties.
The report also revealed that revenue from the solid minerals sector is very negligible, and reflected the under-performance of the sector.
The NEITI Review proffered key recommendations for enhanced performance of the federation account, including that; the government (the National Assembly and the Executive), should adopt more conservative estimates for crude oil prices and output to enhance budgetary performance, reduce budget deficits and borrowing, and strengthen fiscal stabilisation.
NEITI renewed its earlier recommendations for the federal government to highly prioritise the ongoing efforts at economic diversification, and investment to improve power generation to encourage small, medium and large businesses to promote local production and reduce import and dependence on oil revenues.
The reviews also underlined the need for states to join hands with the federal government to deal with insecurity in rural communities where agro-based businesses thrive and pay attention to internally generated revenues through innovations and leadership that are citizen-centred.
Senate increases FCT 2024 budget to ₦1.3trn
The Senate on Tuesday increased the 2024 budget of the Federal Capital Territory to about N1.3 trillion after the bill scaled third reading.
The FCT authority had earlier submitted a budget proposal of N1.1 trillion for the 2024 fiscal year but the Senate added over ₦135 billion.
Presenting the breakdown, Chairman of the Senate Committee, Mohammed Ibrahim representing Yobe South, stated that ₦140 billion is for personnel cost, about ₦374 billion is for overhead cost, while the balance of ₦768 billion is earmarked for capital projects for the 2024 financial year.
While leading the debate last week, Opeyemi Bamidele, said the appropriation bill took into cognizance the FCT administration’s revenue and expenditure forecasts which are in tandem with fiscal and developmental policies of the Federal Government.
During the debate, President of the Senate, Godswill Akpabio, said the bill presented earlier than usual, will be expeditiously considered and passed to encourage the Minister of the FCT to advance reforms in the nation’s capital.
Senate confirms Alade AMCON MD, alongside three directors
The Senate has also confirmed the nomination of Gbenga Alade as Managing Director of the Asset Management Corporation of Nigeria. Three other nominees were also confirmed as Executive Directors of the agency.
The confirmation followed the consideration of the report of the committee on Banking, Insurance & Other Financial Institutions by its chairman, Abiru Adetokunbo representing Lagos East.
The confirmed executive directors are Adeshola Lamidi, Lucky Adaghe and Aminu Mukhtar Dan’amu.
The fresh development comes after the Red Chamber Committee on Banking, Insurance and Other Financial Institutions, last December, demanded the dissolution of the asset management agency over the failure to recover liabilities totaling N5 trillion.
The lawmakers made the demand when the former Managing Director of AMCON, Ahmed Kuru, appeared before it to defend the agency’s budgetary allocation for the 2024 fiscal year.
During the budget defence, Kuru told the federal lawmakers that AMCON recovered about N648bn out of the agency’s total liabilities of N5 trillion as of September 20, 2023.
The Senate then called for the dissolution of the agency, because its management was not proactive in recovering liabilities.
FG raises N475.67bn in March bond auction over rising rates rally
The auction, conducted on March 18, 2024, by the Debt Management Office, attracted an overwhelming interest from investors, demonstrating their confidence in the nation’s economic stability and growth potential.
The amount raised in March is slightly higher than what was raised in January (about N418.197 billion) and far less than what was raised in February (N1.49 trillion).
However, there has been a consistent increase in the rates offered from an average of about 15% in January to about 20% in March.
The auction featured three offerings: a new 3-year bond, alongside the reopening of 7-year and 10-year bonds, all of which witnessed remarkable demand, especially the 19.94% FGN MAR 2027 3-Year Bond and the 19.00% FGN FEB 2034 10-Year Bond.
The 3-year bond alone, offered at N150 billion, drew bids amounting to N264.628 billion, leading to an allotment of N151.928 billion at a marginal rate of 19.94%. This signifies an impressive subscription rate, nearly 76% above the offered amount, underscoring the investors’ bullish stance on Nigeria’s debt instruments.
Moreover, the 10-year bond, with the same offer amount of N150 billion, attracted bids worth N298.600 billion, culminating in an allotment of N275.850 billion at a marginal rate of 20.45%. The nearly doubled subscription volume highlights a strong belief in the country’s long-term economic prospects and stability.
While the 7-year bond reopening was not as overwhelmingly subscribed as its counterparts, it still showed healthy demand. With bids totaling N51.786 billion against an offer of ₦150 billion, the DMO allocated N47.886 billion at a 20.00% marginal rate.
This more measured response points to a strategic preference among investors, balancing short-term gains and long-term security amidst fluctuating market conditions.
The auction results offer several key takeaways for Nigeria’s economic landscape. This significant influx of funds through the bond auction is a strategic win for the Federal Government, providing essential capital to fuel its developmental and infrastructural initiatives.
It reflects the investors’ strong appetite for higher-yield investments and confidence in Nigeria’s economic management and policy direction. Also, the willingness to lock in higher rates for longer terms suggests an anticipation of inflation control and a stable interest rate environment in the foreseeable future.
The successful bond auction also highlights a broader trend of rising rates, with investors actively seeking opportunities promising higher returns in a stable economic environment.
