The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N739.97bn (USD1.8bn) in October (from September revenue). This shows an increase of 6.2% or N43.1bn from the previous payout.
Based on data in the local media, we learnt that petroleum profit tax (PPT), oil and gas royalties and excise duty recorded increases while companies’ income tax (CIT), value added tax (VAT) and import duty recorded decreases over the previous month. State governments received a total of N220.3bn, including N53.8bn representing the 13% derivation for the few oil producing states.
The headline figure is made up of N577.8bn in gross statutory distribution, N159.1bn from the VAT Pool, and N3.1bn of exchange gain. From the distribution, N126.3bn was consumed by a combination of costs, transfers and unspecified refunds.
The committee put the balance in the Excess Crude Account (ECA) at USD60.9m. According to the Nigerian National Petroleum Commission (NNPC), it has in recent months made deductions from its contributions to the federation. The corporation deducted N149.3bn in October, N215.3bn in September, N170.4bn in August, N114.3bn in July, and about N126bn in June from its FAAC remittance. However, zero contributions were made in April.
Based on news from local media, we note that the first FAAC meeting in October was inconclusive as states and local governments resisted the commencement of deductions in relation to the USD418m judgement debt for consultancy services with regard to the Paris Club Loans refund.
We understand that the consultants that assisted with recovering the refund claimed a percentage of the refund as payment for services rendered to the states and local government councils.
Turning to the latest data on internally generated revenue (IGR) from the National Bureau of Statistics (NBS), we note that the total IGR for H1 ’21 stood at N849.1bn compared with N612.9bn recorded in the corresponding period in 2020. Lagos recorded the highest IGR amounting to N267.2bn followed by FCT (N69.1bn), Rivers (N57.3bn), and Ogun state (N54.8bn). While Yobe (N4.0bn), Taraba (N4.8bn), and Gombe state (N5.4bn) recorded the least IGR.
Pay-as-you-earn (PAYE) recorded the highest contribution to the total IGR amounting to N488.1bn while road taxes contributed the least (N16.8bn). The data also revealed that based on zones, South-West zone recorded the highest
revenue amounting to N385.4bn followed by South-South zone (N156.2bn), while NorthEast zone recorded the least (N42.9bn).
According to the Debt Management Office (DMO), the total debt stock for states and FCT as at 30 Jun ’21 stood at N5.99trn (USD14.5bn). A further breakdown showed that the domestic debt stock for states and FCT totalled N4.1trn (USD9.9bn). Lagos (N533.8bn), Akwa Ibom (N242.3bn), and Rivers (N213.2bn) recorded the highest domestic debt stock, while Jigawa (N32.6bn), Ebonyi (N43.4bn), and FCT (N52.7bn) recorded the least.
The external debt stock for states and FCT totalled N1.9trn (USD4.6bn) in the same period. Excluding the need to avoid overdependency on FAAC distributions, boosting IGR will avail state governments the opportunity to pursue profitable capital programmes. Furthermore, the deployment of public-private partnerships in various sectors such as agriculture, health, education, among others, could maximise revenue-generating opportunities state governments.
World Bank Lauds Kogi’s 2020 Financial Statement
The World Bank has heaped praise on the Government of Kogi State concerning the state’s audited financial statement for 2020. The financial institution was said to have described the financial report as a standard to look up to concerning transparency and accountability in the public sector.
In a statement which was dated November 21, 2021 it was said that the bank made the commendation in a letter which was sent to the Accountant General of the state.
As said in the statement, the letter which was taken by the Kogi State Accountant General on November 2025 was signed by Deborah Hannah Isser, the Task Team Leader of the States Fiscal Transparency, Accountability and Sustainability Programme (SFTAS), Nigeria Country Office, Western and Central African Region.
SFTAS is a $750 million programme which has been set up to reward states for meeting any or every one of the indicators which demonstrate improvements in fiscal transparency, sustainability and accountability.
The indicators, which are nine in number were a byproduct of the former Fiscal Sustainability Plan of the federal government where States would be rewarded for meeting up to 22 targets.
The World Bank had previously backed the federal government to give incentives to the states in order to properly execute the 22-point Fiscal Sustainability Plan, which has now gone under a revamp as the nine Disbursement Linked Indicators under SFTAS.
Some of the criteria on which judgement will be based on are: improvement in financial reporting and budget reliability, improved cash management, increased openness, citizen participation in the budget process, reduced revenue leakages through the execution of State Treasury Single Account (TSA), a strengthened Internally Generated Revenue (IGR) collection, biometric registration and Bank Verification Number (BVN) used to reduce payroll fraud.
The World Bank commended the Kogi State government for preparing its audited financial statements in line with the basis of the International Public Sector Accounting Standards.
Nigeria’s Rigid Forex Policy Discouraging Investors, Fueling Inflation – World Bank
The World Bank has blamed the Central Bank of Nigeria’s rigid forex policy for the drop in Nigeria’s capital importation and rising inflation rate.
The bank disclosed in its November report, Nigeria Development Update.
Explaining modalities for its position, the World Bank stated that there had been constant pressure on the Nigerian Naira with the current forex policy, forcing the central bank to consistently increase its nominal official exchange rate in an effort to ease some of the pressure.
This, it blamed on the rigid foreign exchange management system of the Central Bank of Nigeria, saying the system has also been responsible for the rising inflation rate in Nigeria.
The report read in part, “The government’s exchange rate management policies continue to discourage investment and fuel inflation. Exchange rate stability is a key CBN policy objective, and to preserve its external reserves the CBN continues to manage FX demand and limit the supply of FX to the market.
“Pressure on the naira remains intense, and while the CBN has raised the nominal official exchange rate three times since the start of the pandemic (by 15 per cent in March 2020, five per cent in August 2020, and seven per cent in May 2021), FX management remains too rigid to respond to external shocks. Meanwhile, exchange-rate management has emerged as one of the key drivers of inflation.”
The World Bank further stated that the central bank foreign exchange system needs to be more flexible to withstand external shocks, especially given Nigeria’s mono-product nature. It added that the NAFEX rate does not reflect the true market rate but the central bank managed rate.
It read in part, “While the CBN supplied an average of $2.5bn to the Investors and Exporters forex window in the months just prior to the COVID-19 crisis, it only supplied an average of $0.5bn in the months thereafter.
“The NAFEX rate, which is now the guiding exchange rate for the economy, continues to be managed and is not fully reflective of market conditions. The parallel market premium over the NAFEX rate reached 29 per cent in August 2021 after the CBN cut off its weekly supply of $20,000 per bureau de change. The CBN has intermittently supplied forex to BDCs since 2005, providing ample opportunities for currency round-tripping.”
The institution however advised that Nigeria adopt a more predictable, transparent and flexible foreign exchange management system in order to attract and sustain private investment flows.
Nigeria’s Non-oil Revenue Now N1.15 Trillion – Minister of Finance
Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, has said that Nigeria’s non-oil revenue is now N1.15 trillion, representing 15.7 percent above the country’s target. This, she claimed, was a result of the federal government’s efforts at diversifying the nation’s economy.
Mrs. Ahmed disclosed this at the Institute of Directors (IoD) 2021 Annual Directors Conference which was held on Wednesday in Abuja.
According to the News Agency of Nigeria (NAN) the event with the theme: “Creating the Future: Deepening the Corporate Governance Practice through Multi-Sectoral and Multi-Generational Collaborations,” was meant to discuss economic development.
Mrs Ahmed added that the recent development was in line with President’s commitment to further diversifying the Nigerian economy which is heavily dependent on oil. She observed that Nigeria was showing resilience in recovery from recession from coronavirus (COVID-19) pandemic which intensely affected global economies.
The minister said the federal government alongside the private sector had implemented a wide range of monetary measures to stimulate economic recovery, growth and development, job creation and improved standards of living.
She also explained that the government was doing everything to improve and diversify Nigeria’s revenue generation.
“Nigeria was quickly able to exit recession and is on her way to path of sustainable growth and we are intensifying efforts to grow and diversify our revenue sources to grow revenue from the current 8 per cent.”
“Our non-oil revenues have grown to N1.15 trillion, representing 15.7 per cent above set target. We are working on the 2021 finance bill and it’s nearing completion. Also, the recent approval of the medium-term national development plan is an important milestone of Buhari’s commitment to delivering sustainable growth and we require strong support and monitoring during implementation,” she said.
Mrs Ahmed reinforced the government’s decision to do something about infrastructure and reduce the cost of production for businesses in the country.
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