In 2024, the Federation Accounts Allocation Committee (FAAC) made headlines by disbursing a remarkable N15.26 trillion to the Federal, State, and Local Governments, a staggering 43% increase from the previous year.
This surge was primarily fueled by the Federal Government’s fiscal reforms, including the elimination of fuel subsidies and exchange rate adjustments, which significantly enhanced oil revenue.
The fourth quarter of 2024 saw the highest allocation ever, with N4.214 trillion distributed. Notably, state allocations jumped by 62% to N5.81 trillion, while local governments enjoyed a 47% increase. The Federal Government’s share also rose by 24% to N4.95 trillion. Over the last two years, total FAAC allocations have soared by 66.2%, up from N9.18 trillion in 2022.
However, despite this influx of funds, economic challenges remain. Issues like inflation, rising debt servicing costs, and fiscal instability threaten states heavily dependent on oil revenue. To navigate these risks, the Nigeria Extractive Industries Transparency Initiative (NEITI) urged the implementation of strategies aimed at stabilizing the economy and creating jobs.
A detailed breakdown of state allocations reveals stark disparities, with Lagos State receiving the largest share, followed by Delta and Rivers. Conversely, states like Nasarawa, Ebonyi, and Ekiti received the least, highlighting a financial divide. Additionally, N800 billion naira was deducted from state allocations for debt servicing, with Lagos facing the highest deductions.
To secure Nigeria’s economic future, NEITI recommends smart policies such as stabilizing the currency, prudent revenue projections, enhancing internal revenue generation, and increasing savings in the Excess Crude Account. Transparency and accountability in managing public funds are also crucial to ensure these allocations foster real development.