The Federation Account Allocation Committee (FAAC) held its meeting in December 2024, chaired by the Honourable Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
During this meeting, a total of N1.727 trillion was allocated to the three tiers of government as the federation allocation for November 2024, based on a gross total of N3.143 trillion.
This distribution for November represents a 22.5% increase compared to the N1.41 trillion shared in the previous meeting for October 2024.
The total distributable revenue comprised of distributable statutory revenue of N455.354bn, distributable Value Added Tax (VAT) revenue of N585.700bn, Electronic Money Transfer Levy (EMTL) revenue of N15.046bn and Exchange Difference revenue of N671.392bn.
Across the three tiers of government, the Federal Government received N581.856bn, the States received N549.792bn, and the Local Government Councils got N402.553bn.
Additionally, the oil-producing states received N193.291bn as a derivation fund (13% of Mineral Revenue).
Furthermore, of the gross total of N3.143trn, the sum of N103.307bn was given for the cost of collection, while N1.312trn was allocated for Transfers Intervention and Refunds.
The recent growth in the shared federal allocation numbers has been remarkable, a feat the government has attributed to improved savings from reforms such as removing petrol subsidies.
Over the years, most state governments have grown heavily reliant on monthly FAAC (Federation Account Allocation Committee) allocations, often neglecting opportunities to develop sustainable local revenue streams.
According to BudgIT’s 2023 State of States Report, states’ reliance on federal transfers increased from 58.4% in 2021 to 61.45% in 2022.
This dependency is exacerbated by the significant contribution of crude oil sales to the government’s statutory revenue.
This reliance creates a concentration risk, as fluctuations in global crude oil prices can substantially affect revenue inflow to the federation accounts.
A reduction in FAAC disbursements would critically impair states’ ability to finance both recurrent expenditures and capital projects.
The situation is further complicated by the increased financial burden from the recent rise in the minimum wage, which states are mandated to implement.
