An Unexpected Revival in the FAAC Payout

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The total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government recovered in September (from August revenues) to N638bn (US$2.08bn) from N468bn. It is difficult to understand the swings over the past three months in the chart. It may be that coverage and compliance have suddenly improved.

Another possibility is that the collection agencies have achieved unexplained one-off gains. We are not alone in calling for rather more colour in the official narrative.

The commentary from the federal finance ministry noted a substantial rise in the take from companies’ income tax (CIT) and petroleum profits tax. We can understand the latter but struggle over CIT since we were informed one month earlier that the deadline for filing tax returns had expired.

The FGN’s payout was N261bn from the statutory allocation and an additional N12bn from VAT payments. Even when we adjust for its sizeable independent revenue, we are well short of the projection in the 2017 budget of a monthly average of N429bn from all sources.

The payout to state governments, independent of the 13% derivation bonus of N42bn for oil-producing states, amounted to N132bn as well as N42bn from VAT. Most are struggling with their finances due to the slide in the oil price three years ago and, in many cases, poor management. An independent survey in June estimated that at least 20 states were still in arrears on salaries, pensions and allowances despite the FGN’s relief programmes.

We have taken the latest payout from the local media. The accountant-general’s office provides the revenue numbers up to December 2016, distributed in January, and the National Bureau of Statistics through to July, shared in August.

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