Economy
Federal, states, LGs share N4.37trn FAAC allocations Jan-June 2023 – NEITI
The three tiers of government – the Federal, States and Local Government Councils (LGs), shared a total of N4.37 trillion from the Federation Account as statutory revenue allocations between January and June 2023. This is contained in the latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) on the Federation Account revenue allocations for the first half of the year. Dr Orji Ogbonnanya Orji, Executive Secretary, NEITI, who announced the report on Thursday in Abuja, said total distributable FAAC allocations to the three tiers of government in first and second quarters (Q2) of 2023 stood at N2.32 trillion and N2.04 trillion respectively. The NEITI quarterly review revealed that inflows into the Federation Account in Q2 of 2023 declined by 23 per cent which affected the distributable revenue which fell by 12 per cent when compared with the total revenue disbursed in the first quarter. “Each tier of government received more than N1 trillion over the six-month period,” he said. The report showed that a breakdown of the revenue receipts showed that the federal government received about N1.78 trillion, or 40.7 per cent, while the State governments received N1.5 trillion, or 34.5 per cent.
According to the report, the Local government councils received N1.08 trillion or 24.8 per cent of the total distributable revenue for the period. It further disclosed that a comparative analysis of the total allocations on a year-on-year basis in the corresponding quarters of 2022 and 2023 showed that the distributable revenue of N4.366 trillion shared was higher by 16.7 per cent from about N4.05 trillion shared in 2022. Consequently, it revealed that the allocation received by the federal government over the period under review increased by 19.8 per cent to N1.78 trillion in 2023, from the N1.48 trillion in the corresponding period in 2022. Similarly, the report noted allocations to the State governments grew by about 11.2 per cent to N1.42 trillion in 2023 from N1.26 trillion in 2022, while allocations to the LGs rose by 16.8 per cent to N1.08 trillion in 2023, from N926 billion in 2022. The increase in half-yearly allocations in 2023 was consistent with an upward trend from the previous period where the distributable revenue for the first half of the year rose by 16.7 per cent, from N3.47 trillion between January and June 2021 to N4.05 trillion in the corresponding period in 2022. Also , allocations to the federal, states and LGs increased across board by 8.8 per cent 26.5 per cent and 14.2 per cent respectively.
However, compared to the same period in 2022, it said the report showed that FAAC distribution in Q2 declined in absolute value with total distributable revenue of N2.02 trillion being less by 13 per cent than about N2.16 trillion distributed in the second quarter of 2022. It said further analysis of the disbursements to the states showed that Delta state received the highest allocation of N102.79 billion in the second quarter of 2023, followed by Akwa Ibom’s N70.01 billion, Rivers N69.73 billion, Lagos N60.64 billion and Bayelsa N56.34 billion. It said the total disbursements to these five states (N359.5 billion), or 35.9 per cent of the total FAAC allocations, was more than the total allocations to the next 15 states (N349.3 billion). It said the cumulative allocation to the five states was also more than the share of allocation to 19 other states put together, adding that the bottom 10 states received 17.3 per cent of the revenue shared in the second quarter of 2023.
According to the report, Nasarawa, Ebonyi, Ekiti, Gombe and Taraba states received the lowest allocations of N16.71 billion, N16.84 billion, N16.95 billion, N17.22 billion and N17.45 billion respectively. It said four of the five states with the highest allocations, except Lagos, received a significant share of 13 per cent derivation revenue allocated to oil-producing states. It said the total disbursements to these five states (N359.5 billion), or 35.9 per cent of the total FAAC allocations, was more than the total allocations to the next 15 states (N349.3 billion), while the cumulative allocation to the five states was also more than the share of allocation to 19 other states. It added that the bottom 10 states received 17.3 per cent of the revenue shared in the second quarter of 2023. It stated that the bulk of the revenues to the federation account came from remittances from the three main revenue-generating agencies. It listed them as the Nigeria Upstream Petroleum Regulatory Commission, the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS). These revenues, it explained that they came through earnings from the different revenue streams, including oil and gas royalties, petroleum profit tax, company income tax, value added tax and import and excise duties.
“Also, revenue remittances of about N1.84 trillion in Q2 2023 came from mineral and non-mineral sources, comprising of N809 billion, or 44 per cent from mineral revenue (mostly oil and gas) and N1.03 trillion, or 56 per cent from non-mineral sources. The report further revealed a huge gap between revenue disbursements from the oil and gas and solid minerals sectors, pointing out that this was a reflection of the perennial underperformance of the latter over the years. “In terms of debt service obligations and the impacts on states’ net allocations, the report showed that Lagos topped the list of 36 states with a total deduction of N9.03 billion in the second quarter of 2023, followed by Delta (N6.76 billion), Ogun (N6.10 billion), Kaduna (N5.63 billion), Osun (N5.60 billion and Imo (N5.51 billion). Jigawa, Anambra, Nassarawa, Kebbi and Enugu States had the lowest deductions of N1.16 billion, N1.29 billion, N1.45 billion, N1.51 billion and N1.88 billion respectively. The nine oil-producing states, according to the report, namely Abia, Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo and Rivers states received allocations relative to their share of the oil and gas as well as other minerals extracted from their domains,” it said.
It projected that with efficient, prudent management and utilisation of the savings of N3.6Trillion from subsidy payment in the first six months of 2023, Nigeria’s balance of payments would be boosted as demand which was served entirely by product importation would be curtailed. It said the drop in demand would inadvertently, trigger a corresponding reduction in the dollar volume needed to pay for premium motor spirit (PMS), which constituted the largest single import product by value,” he said. The report welcomed with high expectations, the unification and the floating of the exchange rate policy recently introduced to strengthen and stabilise the economy. “With the average exchange rate of N713.69 to US$1, which is about 55 per cent higher than the rate of N460.52 to the dollar recorded during Q2 will significantly raise the value of export earnings remitted to the Federation Account by more than 50 per cent. Also earnings from the new exchange rate through exports will also increase the value of foreign capital inflows, including investments, loans and grants,” it recommended. Also, the report urged the Central Bank of Nigeria to prioritise policies to stabilise the exchange rate to facilitate the effective implementation of the deregulation policy and stabilise foreign exchange-dependent inflows into the Federation Account. (NAN)
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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