The FAAC distributes funds monthly, using factors such as statutory allocations, Value Added Tax (VAT), and the 13 percent derivation principle.
Abuja, Nigeria – A new report by Budgit has revealed that 14 Nigerian states, including Akwa Ibom, Bayelsa, Delta, and Taraba, are in dire financial straits, relying heavily on funds from the Federal Account Allocation Committee (FAAC) to sustain their budgets, pay salaries, and settle pensions.
The report shows that these states depend on FAAC allocations for at least 70 percent of their total revenue. Bayelsa, for instance, had a gross FAAC revenue of N347.89 billion in 2023, making up 92.17 percent of its total revenue of N406.76 billion. Akwa Ibom’s reliance on FAAC stands at 86.29 percent, followed by Delta at 83.88 percent, Taraba at 81.89 percent, and Niger at 80.19 percent.
Other states on the list include Benue (79.85 percent), Anambra (76.94 percent), Bauchi (75.33 percent), Cross River (74.87 percent), Nasarawa (74.55 percent), Gombe (72.29 percent), Enugu (70.68 percent), Edo (70.24 percent), and Kano (70.24 percent).
States primarily generate revenue from Internally Generated Revenue (IGR) and FAAC allocations, with some also seeking external loans and grants. The FAAC distributes funds monthly, using factors such as statutory allocations, Value Added Tax (VAT), and the 13 percent derivation principle.
Further analysis by Dataphyte underscores the gravity of the situation, noting that 34 out of 36 states relied on federal allocations for at least half of their budgetary needs in 2023. The report highlights that Nigeria’s 36 states collectively approved a budget of N11 trillion for the year. When total revenue is benchmarked at 56 percent dependency on IGR, only 17 states could manage to fund their budgets with internally generated revenue.
The states capable of funding more than 70 percent of their budgets from IGR include Rivers, Delta, Ekiti, and Ebonyi. Those able to sustain their budgets at the 56 percent benchmark are Osun, Enugu, Kwara, Bayelsa, Jigawa, Nasarawa, Abia, Plateau, Kano, Benue, Kogi, Lagos, and Kebbi.
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