May 20, 2024/FBNQuest Research

The Federal Account Allocation Committee (FAAC) published its latest monthly communiqué on the federation’s revenue distribution. According to the report, the gross monthly distribution to the three tiers of the government amounted to N1.2trn (USD784.4m) in May 2024 (from April 2024 revenue). The gross payout for April represents a modest increase of about N85bn or roughly +7% from the previous month’s payout. The M-o-M growth in distributed revenue also marks the largest increase in gross distributions since the 20% M-o-M gain in November 2023.

• Compared to the previous month, the higher revenue distribution in April was primarily due to an exchange rate gain of N439bn, up from N285bn the previous month.  
• The exchange rate market was slightly volatile in April due to a combination of sustained demand pressures for FX and supply challenges, resulting in a -5.9% m/m depreciation of the Naira to N1390.96 per USD on the NAFEM window.
• The trend of gross revenue distribution has been largely upward in recent months due to gains from FX dollar revenue because of the downward adjustment of the Naira.
• The m/m expansion in distributed sum was also supported by an increase of +29% m/m in electronic money transfer fees to around N18bn.
• Statutory revenue, which accounted for about 24% of the gross payout, decreased modestly by -8% m/m or around N26bn to N285bn.
• Broadly, with the m/m decline in statutory revenue, revenue from value-added-tax also reduced slightly by -9% m/m to N467bn in April.
• Of the distributed sum, the federal government (FG) received N390bn, N45bn higher than it received the previous month.    
• Allocations to the states (ex.13% derivation for oil-producing states) and local governments both recorded modest increases of N5bn each to N403bn and N294bn, respectively.
• Meanwhile, the 13% derivation allocation for oil-producing states rose by 34% m/m to N121bn.