Federal Allocations To State Governments Fell 40% In Half Year 2017

Nigeria’s thirty-six state governments received N2.7 trillion out of N4.7 trillion of their budgeted allocation in the first half of 2017. This translates to 40.7 percent lower than their expectation this year.

“The volatility nature of disbursements to all tiers of government in the first half of 2017 would suggest difficulty in implementing budgets at Federal, States and Local government levels,” said the Nigerian Extractive Industries Transparency Initiative quarterly review.

The organisation further said, “The volatility in revenue inflows will adversely affect planning and expenditure of government and thus likely hamper efforts at stimulating growth and development.”

The impact is already being felt across the states where lack of funds has led to postponement of projects, debts to civil servants and non-payment of salaries to teachers.

In Kogi State, the House of Assembly was forced to summon the Head of Service last month over non payment of salaries to civil servants running into months.

Prior to the announcement by Bimbo Kolade, Oyo State Commissioner for Local Government and Chieftaincy Matters, last Wednesday, saying that the state was releasing N13bn to pay workers salaries, civil servants including primary school teachers and pensioners have been owed for over five months.

However this has not deterred profligacy by the state governors who despite earning pittance as internally generated revenue, spend with reckless abandon. A recent news story by TheCable recently said that Yahaya Bello, Kogi state is building a multibillion naira mansion despite owing workers salaries.

Fall in crude oil prices has severely impacted government income, making it miss revenue projections and has led to accumulation of debts by the Federal government.
“Coupled with the low price of oil is the country’s difficulty in meeting the targeted/budgeted production rate of 2.2 million barrels per day. Production has consistently fallen below two million barrels per day since March 2016,” says NEITI.

This situation is aggravated by Nigeria’s inability to diversify its income from crude oil which still accounts for over 80 percent of national income.

“This fact puts Nigeria in a precarious situation, especially in view of emerging global trends that is characterised by a shift away from traditional forms of fossil-fuel based energy, to alternative energy sources, thus under-scoring the critical need for Nigeria to rapidly diversify its revenue base,” said Michel Arrion, EU ambassador to Nigeria and ECOWAS at a trade function in Enugu.

While Nigeria’s economy is sufficiently diversified into different sectors with sectors like telecommunication, agriculture and services contributing significantly to economic activities, 85% of  country’s income still comes largely from crude oil sales.

According to NEITI’s quarterly review, out of $2.788tn disbursed in the first half of 2017, the Federal Government received N1.09tn; 36 state governments received N923bn; while N549.8bn went to the 774 local governments in Nigeria.


A further breakdown shows that total releases to the three tiers of government amounted to N430.16bn in January, N514bn in February, N496.4bn in March, N418.82bn in April, N418.82bn in May and N462.36bn  in  June.

Source: http://www.businessdayonline.com/federal-allocations-state-governments-fell-40-half-year-2017/