According to the latest Federation Account Allocation Committee (FAAC) Disbursement Report, released by the National Bureau Statistics (NBS), the sum of N606.20bn was disbursed in May 2020 bringing a decrease of about 22% compared to the N780.93bn from the previous month (April 2020).
The drastic decline in the revenue generated in May 2020, compared to the previous month – April 2020, is an issue of great concern and reinforces the great importance of exploiting new sectors of the economy both on the Federal and State Government levels. No need for the long story of oil not being as lucrative as it was in the past years. I assume we are all aware of this by now.
A further breakdown of the FAAC May 2020 Disbursement Report by NBS states that the funds were distributed thus:
- the Federal Government received N255.07bn
- State Governments received N166.63bn
- Local Governments received N125.35bn and
- oil producing states shared the sum of N37.39bn as 13% derivation fund.
Revenue generating agencies such as Nigeria Custom Services (NCS), Federal Inland Revenue Services (FIRS) and the Department of Petroleum Resources (DPR) receiving the remaining part of the funds as cost of revenue collections.
- NCS – N4.55bn
- FIRS – N5.39bn
- DPR – N2.98bn
Further breakdown of the revenue allocation distribution reveals that the rest of the funds were shared thus:
- N194.19bn – FGN consolidated revenue account
- N4.59bn – Derivation and ecology
- N2.30bn – Stabilization fund
- N7.71bn – Natural resources
- N5.43bn – Federal Capital Territory (FCT) Abuja
The deductions from the total allocations for the states compromised of the listed below and summed up to N35.9 billion
- External debts
- Contractual Obligations (ISPO)
- National Water Rehabilitation Projects
- National Agricultural Technology Support Program
- Salary Bailout
- Payment for Fertilizer
- State Water Supply Project
- State Agricultural Project
- National Fadama Project
More than 50% of the total revenue available in 34 states including the FCT according to the NBS May 2020 FAAC Report are dependent on the monthly allocations from the Federal Government. Only a few states and Local Governments do not depend on the monthly statutory allocations from the central vault to run their state administration such as Lagos, Rivers and Ogun States.
Many states will be forced to experience a detrimental economic decline considering the economic downturn resulting from the COVID-19 Pandemic, seeing the impact of the COVID-19 pandemic on the economic status of a lot of countries around the world.
To ensure a working economy in this period, the Federal and State Governments need to take steps that will bring other sectors of the economy to life.
The importance of generating funds by improving the other sectors of the economy has been well overrated by the government and only a push in this direction can bring us to a promising and efficiently working economy.
Most importantly, State Governments (through their Internal Revenue Services) need to deploy effective and efficient means of shoving up their tax revenues through use of technology. This can be done through the deployment of innovative technology solutions such as those developed by Taxaide Technologies Limited (Taxtech). These revolutionary technology solutions will not only enable several State Internal Revenue Services’ generate more revenue for their States Governments but will also ease the payment of taxes for their taxpayers.
To learn more about our technology solutions which some State Governments have already tapped into and reaping the positive results visit: www.taxtech.com.ng
For more information on all tax-related issues, please do not hesitate to contact us at:
Tel: +234 700 TAXAIDE (070 829 2433), +234 1 631 0971
WhatsApp: +234 810 701 7274