September 19, 2024/FBNQuest Research

A recent report published by the Federation Account Allocation Committee (FAAC) shows that the federation’s revenue disbursement to the three tiers of government amounted to about N1.2trn in September 2024 (from August 2024). The gross payout in August was -11% m/m, or -N155bn, less than the preceding month’s payout. In addition, the m/m reduction in FAAC allocation marks the sharpest drop in gross distributions since the -18% m/m decline in Sep 2023.

• Excluding statutory revenue, which increased by +15% m/m to N187bn, all other revenue segments recorded m/m decreases during the month.
• The most significant downward pressure was from exchange rate gains, which decreased to N468bn from N582bn recorded in the previous month.
• The lower receipts from the Naira exchange rate can be attributed to the recovery of the Naira currency in August.  
• Notably, the Retail Sales Dutch Auction (RSDA) held by the CBN to alleviate the heightened demand pressures for FX in August contributed to the rebound of the Naira on the currency exchange market. As a result, the Naira gained +1.5% m/m against the US Dollar at N1585.77/USD on the NAFEM window.
• Value-added-tax (VAT), which accounted for about 44% of total FAAC disbursements, reduced by -N48bn m/m to N534bn. Electronic money transfer levies decreased by -N4bn m/m to N15bn.
• With respect to revenue allocations, all three tiers of government received lower m/m disbursements due to the m/m drop in federally collected revenue.  
• Specifically, the federal government’s (FG) share of revenue disbursements amounted to N375bn, -N56bn lower than the previous month’s payout.
• Also, federal allocations to the 36 states of the federation (ex.13%) derivation for oil-producing states) and local governments decreased by -N51bn and -N37bn to N423bn and N307bn, respectively.
• Additionally, the derivation revenue share for oil-producing states fell by -10% m/m to N99bn in August.