A new report by BudgIT reveals that 14 Nigerian states, including Akwa Ibom, Bayelsa, Delta, and Taraba, are highly dependent on funds from the Federal Account Allocation Committee (FAAC) to sustain their 2023 budgets, pay salaries, pensions, and gratuities.
These states rely on FAAC for at least 70% of their total revenue, making them vulnerable to financial instability without federal support.
The report highlights Bayelsa’s dependency on FAAC, with 92.17% of its 2023 revenue coming from federal allocations, as its gross FAAC revenue amounted to over N347 billion, while its total revenue stood at approximately N407 billion. Similarly, Akwa Ibom’s dependency on FAAC is 86.29%, followed by Delta at 83.88%, and Taraba at 81.89%.
States generally depend on a combination of Internally Generated Revenue (IGR) and FAAC allocations to meet their financial obligations, with some also seeking external loans and grants. FAAC distributes funds monthly, factoring in components such as the 13% derivation, statutory allocations, and VAT revenue.
According to Dataphyte, 34 states relied on federal allocations for at least 50% of their 2023 budget needs. Out of the 36 states, only 17 could sustain their budgets if the benchmark for revenue to allocation reliance was set at 56%. Notably, Rivers, Delta, Ekiti, and Ebonyi were able to fund over 70% of their budgets through IGR.
This financial dependency raises concerns about fiscal sustainability and highlights the need for states to strengthen their IGR to reduce reliance on federal funds.
Leave a Reply