June 20, 2024/FBNQuest Research

The recent communique released by the Federation Account Allocation Committee (FAAC) shows that the federation’s revenue disbursements to the three tiers of government amounted to about N1.1trn (USD728m) in June 2024 (from May 2024 revenue). May’s gross distribution represents a marginal decrease of -5% M-o-M or N65bn relative to the previous month’s payout. Excluding a M-o-M expansion in exchange rate gains, all other revenue segments recorded M-o-M decreases during the month under review.

• Notably, the lower distributable revenue M-o-M was mainly due to a decline in statutory revenue, which almost halved to N157bn.
• Although the figures were not provided, the M-o-M decline in statutory revenue can be attributed to lower collections from import and excise duties and royalty crude and gas.  
• Revenue received from electronic money transfers, which decreased slightly to N15bn from N18bn, also contributed to the M-o-M drop in revenue disbursements.
• Also, revenue from value-added-tax (VAT) decreased slightly to N463bn in May from N467bn received in the previous month.
• However, the lower revenue contributions from other items were partially offset by higher exchange revenue gain, which increased by 16% M-o-M to N508bn.
• The M-o-M rise in exchange rate revenue can be attributed to the depreciation of the Naira exchange rate because of challenges around FX liquidity.
• For context, the Naira depreciated roughly 6% M-o-M to N1,485.99/USD on the NAFEM window.    
• In the latest round of disbursements, the federal government received N367bn, about N23bn lower than the previous month.
• Similarly, disbursements to the 36 states of the federation (ex.13% derivation for oil-producing states) and local governments decreased by -15% M-o-M and -12% M-o-M to N388bn and N282bn, respectively.
• Also, the 13% derivation allocation for oil-producing states recorded modest decreases of almost N15bn to N106bn.