By Omoh Gabriel,Business Editor
THE Federal Government has received a total of N5.137 trillion as its share of the federation account in the last six years representing 45.9 per cent of the total allocation from the federation account.
States, local governments and the federal capital territory FCT got N6.047 trillion during the period which represents 54 percent of the allocation from June 1999- December 2005. This brings the total amount shared out from the federation account in the six years period to N11.185 trillion for the three tiers of governments. This amount is the total net allocation to the various tiers of government in the country after allowance was made for total deductions from states for external and contractual obligations.
Figures released by the Federal Ministry of Finance showed that between June and December 1999, the first six months of this administration, the Federal Government got N154.633 billion while states and local governments combined got N131.655 billion. In 2000, the Federal Government share of the federation account amounted to N531.612 billion as against the N515.451 billion allocated to states and local governments.
According to the figures, in 2001 the federation account rose with the Federal Government receiving N723.920 billion while states and local governments received N662.947 billion. The allocation to the various tiers of government further improved in 2002 as the Federal Government got from the federation account a total of N791.030 billion while states and local governments got N763.109 billion.
In 2003 when the revenue allocation formula was adjusted, the Federal Government had N739.208 billion allocation while states and local governments had N954.687 billion. In 2004 the federal government got a total of N967.244billion while states and local got received from the federation account a total of N1.324trillion. Last year the federal government drew from the federal account as its own share the sum of N1.229trillion while states and local government got a total of N1.695trillion.
The boost in government revenue from the federation account rose on account of the favourable conditions in the crude oil market where the price has always been above the budget bench mark since the inception of this administration. Part of the allocation is the contentious excess crude revenue. Since assumption of office by the administration seven years ago, the average price of crude oil in the international market has been above the budget benchmark.
While the budget was based on $22 or $25, and more recently $33 per barrel, the price of crude has always risen during the period on the average to between $40 and $65 per barrel, thus giving rise to oil windfall sometimes referred to as excess crude oil proceeds.
The proceeds have, most of the time, generated disagreement between the Federal and state governments which clamour for the sharing of the money.
The Minister of Finance Dr. Ngozi Okonjo-Iweala recently provided details of the current position of excess crude revenue account saying that;
Р“$25.66 billion has been collected since the saving of excess crude started in January 2004
– The yearly breakdown is 2004 – $5.918 billion; 2005 – $13.036 billion and 2006 (so far) – $6.036 billion.
– Of this total, $2.959 billion or half of the 2004 savings was shared by common consent between all tiers of government in 2005, leaving a balance of $22.66 billion in the account
There have been 22 payments made out of this sum of $22.66 billion since October 2005. These can be summed up as follows: Three payments totaling $12.119 billion for payment of Paris Club debts
Fifteen payments totaling $1.042 billion for 7 Delta Power stations and associated gas development
Three payments totaling $1.146 billion to the three tiers of government to compensate for the difference between bench mark and budget price of $35 a barrel when budget was appropriated and the $30 bench mark at which we had been disbursing for the first 3 months of the year prior to passage of the appropriation bill.
One payment totaling $17, 331, 168 to NPC and UNDP for the additional 2 days of census.
With $14.325 billion in total payments, what is left in the account now is $8.33billion.
The Minister emphasized that the excess crude account is managed transparently with oversight by all tiers of government every month at the monthly meetings of Federal Allocation Accounts Committee (FAAC) where a statement of accounts on the excess crude savings is made available.”
The gains from crude oil earnings and favourable revenue generated by the various tiers of government in Nigeria ordinarily should have enhanced the welfare of Nigerians but this seems not to have impacted positively on the citizenry in terms of improved standard of living which, by current estimate, has gone down as more than 70 per cent of the population are said to be living below one dollar per day.
Available data with the Central Bank of Nigeria showed that in 1999, the Federal Government spent a total of N947.690 billion when Obasanjo took over the Presidency of the country. In 2000, CBN records showed that government had a total expenditure of N701 billion while in 2001 it spent a total of N1.018 trillion. The sum of N1.018 trillion was spent by the Federal Government in 2002 and N1.225 trillion in 2003. But the same government in these years of bumper price from the international oil market has run its affairs on deficit, borrowing huge sums from the money market to finance its expenditure at very high cost.
Alleged profligacy of the Federal Government drew flak from the International Monetary Fund (IMF) and the World Bank which described Nigeria as a country where oil wealth has not benefitted its populace. Despite government’s excess earnings from crude oil which is far above successive budget estimates, government, in 1999, incurred a deficit of N285 billion.
CBN data showed that in 2000, government incurred a deficit of Nl 03 billion, N22 1.04 billion in 2002 and in 2003, N301 .4 billion. As a result of this huge deficit financing, despite government earnings, the Federal Government spent a total of N556 billion to service domestic debt. This implied that because a chunk of the money was borrowed from the banking system, government spent a large portion of its yearly recurrent budget in paying domestic as well as external debts.
Financial analysts were worried that much of the country resources is being frittered away on debt servicing. In 2002, government spent N12.4 billion on agriculture, one of its priority sectors, while a total ofN3 3.3 billion was spent on servicing domestic debt. Another priority area of government– road and construction– had only N9.27 billion as total expenditure in the recurrent expenditure of government, while health received N50 billion. The organised private sector at various fora has lamented government’s poor handling of the economy.
A break down of allocation to states in the six geo-political zones show that the South-South states where the oil producing states are received the highest allocation of N1.602trillion for both states and local governments in the zones. This was closely followed by the North West zone which had a combined allocation to the seven states and local governments in the area N1.182trillion. South West zone had a total of N952.239billion allocation to the six states and the various local governments in the zone. North East zone followed with a total allocation of N789.210billion in the seven years this administration has been in power. North Central zone had a seven year allocation to both the states and local governments in the zone a total of N757.654billion while states and local governments in the South East had a total allocation of N625.620billion.
A further break down of the net allocation to states of the federation showed that Delta got the highest allocation during the period.
The state government, according to figures released by the Federal Government, got a total of N387.431billion of the total net allocation to states and local governments. While the state government within the seven year period got N321.0billion, allocation to Local governments in the state totaled N66.429billion. Second is Rivers State with a total allocation of N357.506billion made up of N286.395billion allocated to the state government and N71.11billion allocated to local governments in the state.
Akwa Ibom with N313.574billion was next. The state government received a total allocation of N238.0billion while its local governments received a total of N75.568billion during the six year period. Bayelsa State got N285.636billion to place fourth as the state government got N259.882billion from the federation account while its local government councils were allocated a total sum of N25.754billion. Kano state placed fifth largest in the allocation of federal resources as the state got a total of N254.388billion made up of N123.494billion state allocation and N130.893billion as allocation to local governments in the state.
Lagos was next with a total of N226.6billion made up of N125.6billion allocation to the state government and N101.056billion to local governments in the state.
According to federal ministry of Finance data Katsina state was seventh with a six year allocation of N192.9billion made up of N96.824billion allocation to the state government and N96.085billion allocated to local governments in the state.
Following was Oyo state with a total of N180.299billion made up of N94.561billion state government allocation and N85.738billion allocation to local governments in the state. Kaduna state followed with a combined allocation of N177.416billion; N96.803billion for the state government and N80.613 for the local government. Borno state on its part got N165.562billion both for the state and local governments; Of this amount N86.641billion was allocation to the state government while N78.920billion was local government allocation. Ondo state one of the oil producing state also got N165.256billion for state and local government. It got N115.556billion as state allocation and N49.700billion as allocation to local governments. Niger state got a total of N164.525billion made up of N87.755billion for the state government and N76.769billion for the local governments.
Imo State which got the highest in the South East received N155.539 just as Jigawa and Benue got N151billion allocation for both the state and local governments. Sokoto and Bauchi had a grand total of N146billion each while Osun state got a total of N143.515billion. Adamawa had N136.914billion while Kebbi got N134.683billion. Edo and Abia States got N47,673,975,707.47 and N47,875,075,118.36 respectively. Cross River got the lowest allocation of N45, 546,887,628.44.
A break down of the allocation shows that Delta in the second half of 1999 got N3.131 billion. In 2000, it was allocated the sum of N27.358 billion and in 2001, the state’’s share of the federation account rose to N40.531billion. The amount further rose to N43.610 billion in 2002 and N52.365 billion in 2003. In the first half of 2004, the state got N40.208 billion.
Rivers State on the other hand received the sum of N3.013 billion in the first half of 1999, N17.805 billion in 2000 and N22.128 billion in 2001. The allocation to the state improved to N30.169billion in 2002 and N40.928 billion in 2003. In the first half of this year, Rivers has received N31.746 billion from the federation account.
In the same vein, Akwa Ibom State in 1999 got N2.832 billion as its due from the federation account and in 2000 the state’’s share of the federation account leaped to N21.853 billion. It went up to N30.858 billion in 2001 but declined to N18.793 billion in 2002. In 2003 however, it went up again to N32.445 billion and N30.403 billion in the first half of this year.
Bayelsa, the fourth highest recipient from the federation account, got N2.175 billion between June and July 1999 and N17.071 billion in 2000. In 2001 the state’’s share from the federation account climbed to N22.473 billion and fell to N18.082 billion in 2002. It rose to N32.855 billion in 2003 and further to N33.252 billion in the first half of 2004.
The breakdown of other states allocation in the oil producing states shows that Ondo State in the second half of 1999 got N2.3 billion and in 2000 it received N11.4 billion. This rose to N16.662 billion in 2001 but declined to N12.829 billion in 2002. In 2003, the state got N16.569 billion and between January and July this year the state received N13.640billion from the Federal Government.
Further breakdown showed that Imo State got a net allocation of N2.205 billion in the second half of 1999 and N8.659 billion in 2000. In 2001 it was allocated N11.769 billion but dropped to N10.120 billion in 2002. In 2003, the state got N12.132 billion and in the first of 2004, N11.027 billion.
Abia State got N1.880 billion in the second half of 1999 and N7.068billion in 2000. In 2001, a total of N8.997 billion was its net allocation and this rose to N9.054 billion in 2002 and further to N11.285 billion in 2003. In the first half of this year the state received N9.590 billion.
Edo State on its part was allocated N2.240billion in the first half of 1999 and N7.663 billion in 2000. In 2001 the state collected N9.730 billion as its share of the federation account. This declined to N7.436 billion in 2002 and improved to N10.775 billion in 2003. In the first half of 2004, Edo State has already collected the sum of N9.827 billion from the federation account.
Allocations to state governments have improved considerably since the inception of this administration. Since 1999, the fortune of governments in the country has improved as a result of higher prices of crude oil in the international market.