Friday, 29 November 2019 06:44

FG deducts N35.51bn from states’ allocations as bail-out

Finance Minister Zainab Ahmed
Finance Minister Zainab Ahmed

The Federal Government deducted the sum of N35.51bn from allocation made to the states for external debt servicing, contractual obligations and others.

The deductions, which were for the month of September, were made from the allocations given to state governments from the Federation Account.

 

The federation account is currently being managed on a legal framework that allows funds to be shared under three major components – statutory allocation, Value Added Tax distribution and derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.

On the other hand, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.

An analysis of the Federation Account Allocation Committee report prepared by the Office of the Accountant-General of the Federation showed that the N35.51bn was made up of servicing of N3.64bn, and contractual obligations of N5.79bn.

The sum of N26.08bn was deducted from the states for national water rehabilitation projects, and National Agricultural Technology Support Programme.

Others deductions made under the N26.08bn were salary bailout, payment for fertilizer, state water supply project, state agricultural project and National FADAMA project.

Further analyses of the N35.51bn showed that Lagos State with the sum of N3.23bn recorded the highest deductions in the month of September.

 

This was followed by Osun with N2.01bn while Cross River, Bayelsa, Akwa Ibom and Bauchi followed with N1.72bn, N1.35bn and N1.33bn, respectively.

Delta recorded deduction of N1.48bn, Gombe N1.04bn, Imo N1.13bn, Ogun N1.42bn, Oyo N1.31bn, Plateau N1.79bn, Zamfara N1.26bn, Abia N857.52m, Adamawa N694.85m and Anambra N364m.

Similarly, the sum of N720.42m was deducted from Benue while Borno, Ebonyi, Edo, Ekiti, Enugu, Jigawa, Kaduna and Kano had N565.29m, N541.43m, N819.37m, N838.26m, N498.21m, N416.84m, N641.21m and N796.32m.

In the same vein, Katsina suffered deduction of N579.66m, Kebbi N552.5m, Kogi N586.64m, Kwara N754.13m, Nasarawa N610.12m, and Niger N831.08m.

Others are Ondo N946.76m, Rivers N972.82m, Sokoto N538.69m, Taraba N648.34m and Yobe N349.19m.

The Chairman, Commissioners of Finance forum of the Federation Account Allocation Committee, David Olofu, told our correspondent in an interview that the committee would work with the relevant revenue generating agencies to boost revenue into the federation account.

He said at a time when the government was having challenges generating revenue, there was need to come up with innovative solutions to shore up revenues.

He said, “We would be focusing majorly on how we can improve the inflow in terms of revenue into federation account so that the states can get more money to be able to solve a lot of problems they are facing.

“It’s not just for the states; even the Federal Government can get more money to solve a lot of problems we are facing as a nation.

“We will be looking at our sources of revenue; we will be looking at the agencies responsible for generating these revenues, and we will be working together with them to ensure that whatever revenue that needs to come in is paid into the coffers of government.”

He also said the committee would strengthen its peer review mechanism to ensure that states that were not doing well on revenue generation are assisted to boost their Internally Generated Revenues.

He added, “We will review our peer review mechanisms to see which states that are doing what, why are they doing better and see how we can assist other states that are not achieving the kind of results that those states are achieving.

“So, we will strengthen our peer review mechanisms and see how we can benchmark processes at the state level to make sure that we are not reinventing the wheels.

“If there is success recorded somewhere and if it’s something that can easily be copied, then we will see how we can copy it and try to standardise processes across the states to make sure that we increase IGR for the states because that will also enable them to do much more.

“Apart from meeting recurrent expenditure, it will help them to engage in other capital development projects, which are key to making the states competitive.”

He expressed optimism that with the support of the Federal Government, the objective to boost states IGR would be achieved.

Meanwhile, the Minister of State Budget and National Planning, Clem Agba, has challenged commissioners of budget and economic planning to devise alternative ways of revenue generation for the development of the economy.

The minister said this at a forum of Commissioners of Budget and Economic Planning in Abuja.

A statement from the ministry said Agba urged the commissioners to come up with innovative solutions to the revenue challenges.

He said, “We are not putting sufficient money in the right sectors of our economy.

“Come up with strategies on how best Nigeria can properly align the key variables of the quality of our infrastructure, policies and institutions to ensure sustainable economic diversification as the nation commences discussions on the formation of a new long-term national development plan.”

The minister also decried the nation’s continuous dependence on oil as its major source of revenue.

 

Punch

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