A seismic shift in Nigeria’s financial landscape has seen a record N15.26 trillion channeled into the federal, state, and local government coffers in 2024. This surge, a 43% leap from the preceding year, is detailed in the latest Nigeria Extractive Industries Transparency Initiative (NEITI) FAAC Quarterly Review, painting a picture of both unprecedented gains and looming fiscal challenges.
“The increased disbursements are directly attributable to key policy changes,” states Ogbonnaya Orji, NEITI’s executive secretary, referencing the pivotal removal of fuel subsidies and the liberalization of the exchange rate. These reforms, as I understand them, have fundamentally reshaped the nation’s revenue streams, particularly from the oil sector.
Breaking down the staggering figures, the federal government received N4.95 trillion, states collectively garnered N5.81 trillion, and local governments secured N3.77 trillion. Notably, states experienced a 62% increase in allocations, a testament to the profound impact of these reforms. “The fourth quarter of 2024 saw the highest quarterly disbursement on record, reaching N4.214 trillion,” a reflection, according to NEITI, of “sustained revenue growth and fiscal policy reforms.”
However, this windfall is not without its shadows. The report raises critical concerns about inflationary pressures, escalating debt servicing costs, and the fiscal vulnerability of states heavily reliant on oil revenues. “Debt servicing deductions from state allocations amounted to N800 billion, representing 12.3 per cent of total state disbursements,” and Lagos State alone bore N164.7 billion of that burden.
As I delve into the data, the stark fiscal disparities between states become glaring. Lagos, Delta, Rivers, and Akwa Ibom together received N1.49 trillion, more than three times the combined allocation of the bottom four states: Kwara, Ekiti, Ebonyi, and Nasarawa, which received N442.4 billion. This inequality raises questions about equitable resource distribution and the long-term economic stability of less affluent regions.
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NEITI’s report underscores the urgency for governments to adopt “conservative revenue projections to prevent budget shortfalls and improve fiscal management to ensure debt sustainability.” The call for increased savings in the Excess Crude Account (ECA) and the strengthening of non-oil revenue sources is a clear directive to mitigate future revenue shocks.
Moreover, the report stresses the need for exchange rate stabilisation, inflation control, and prudent budgeting for crude oil production and pricing. In essence, it’s a plea for proactive measures to ensure that today’s gains translate into sustained economic prosperity.
The human angle, as I see it, lies in the implications for ordinary Nigerians. Job creation, poverty reduction, and economic stability are not abstract concepts; they are the bedrock of a thriving society. The report’s emphasis on fiscal transparency and accountability, in line with Open Government Partnership (OGP) and Extractive Industries Transparency Initiative (EITI) commitments, is crucial for fostering trust and ensuring that public funds are used for the collective good.
Ultimately, the record FAAC disbursements represent a significant opportunity for Nigeria. Whether this opportunity translates into lasting economic stability and prosperity hinges on the government’s ability to navigate the looming fiscal challenges with prudence and foresight.
