FG, States, LGs Share N436.72 Billion

By Joseph Inokotong

The sum of N436.72 billion was distributed to the Federal, States and Local governments as statutory allocation for the month of October by the Federation Accounts Allocation Committee (FAAC), at its meeting held last week in Abuja.
The amount shows an increase of N3.92 billion above the N432.80 billion shared in September.
The increase in the total revenue collected for the month was attributed to increase in the Value Added Tax (VAT) collected in the month under review.
The sum of N85.69 billion was provided from the Domestic Excess Crude Savings Account as budget augmentation for the month, which brings the total funds declared and recommended for distribution to N436.72 billion.
The minister of state for finance, Mr. Remi Babalola in his opening remarks pointed out that States were required to seek the endorsement of their respective Houses of Assembly so as to legally support the utilization of the share of the States and Local Government Councils on the Power project funding. In this regard, he noted that 34 States have passed the resolution but the Federal Ministry of Finance has as at now been officially notified by only 31 States up from the eighteen States as at the October meeting, and called on the remaining five states to expedite action on the matter.
Mr. Babalola disclosed that following the ruling of the Supreme Court on opening of a separate Account for Gas Revenue, and in consideration of the decision of FAAC that the Office of the Accountant-General of the Federation and the NNPC should open a Gas Revenue account separate from the Oil Revenue Account, “I am pleased to inform FAAC that this has been carried out by the agencies concerned”.
He expressed concern that despite the significant improvement in the macroeconomic environment in our country, the investment and business attraction magnet is still very low, and stressed the need to upscale the country's index of competitiveness in order to actualize the aspiration of Nigeria Vision 20:20:20, which states are the critical transformation planks.
“We need to deeply reassess the relevance of FAAC in generating employment, economic growth and sustainable development, through our propositions.
“It is imperative at this critical point of our National life for our states to open up their activities for credit rating by the international rating agencies. For prospective investors, credit ratings increases the range of investment alternatives and provide independent, easy-to-use measurements of relative credit risk; this generally increases the efficiency of the market, lowering costs for both borrowers and lenders. This will eventually enhance the total supply of risk capital in the economy, leading to stronger growth. We expect each state to compete on the “Doing Business Variable” so that we can galvanize Nigeria amongst the best business environment”, said Mr. Babalola.
He also pointed out that the country's Oil production is currently constrained by under-investment as actual production is down to 2 mbpd against a producibility of 3 mbpd and a quota of 2.25 mbpd.
“As a result of dwindling revenue from the Joint Venture contracts occasioned by this drastic drop in oil production levels, there is a compelling need for us to refocus on alternative revenue sources as statutory allocation alone cannot and will not fuel our economic growth but homogenous private investment will. The double whammy of the crash of crude oil prices and production decline challenges will put pressure on our FAAC projections, as well as, the prognosis for government programmes in 2009. This situation calls for an urgent paradigm shift”, the minister warned.
He disclosed that the federal government has repeatedly cautioned that as oil resource is a depleting asset, the revenue derived should be transformed into assets that will generate sustainable income as the income so derived may be the one to be consumed, and not the inflows from the oil revenue. “Based on the foregoing, it is my desire to place before this committee for discussion the need to set up a sub-committee on Joint Venture funding with specific terms of reference to advise on how we can use some of the excess over buffer in the excess crude account for investment purposes without contravening the law” the minister pleaded.
He noted that the country has garnered relatively quick gains from the reforms in the various sectors of national life, and warned that the next steps will be more challenging, as the country strives to achieve double-digit growth to make for more rapid progress on poverty reduction.