Federal Account Allocation Committee’s statutory allocations to the 36 states and 774 local government areas between July and December 2023 rose to N3.34tn in the post-fuel subsidy era, according to figures obtained from the National Bureau of Statistics. This marks a 19.5% increase, amounting to N545bn, compared to the N2.79tn distributed in the first half of the year (January-June).

Despite the escalating challenges faced by Nigerians, including the organized Labour leaders, who spoke separately to The PUNCH on Monday, there is a call for state governors to justify the increased allocations by alleviating the hardship among the masses.

President Bola Tinubu terminated the fuel subsidy regime in his inaugural speech on May 29, 2023, citing its drain on federal allocations. He pledged to invest the savings in social programs and infrastructure. However, the removal of the subsidy led to a significant increase in product and service prices, causing hardship for citizens.

The bulk of the revenue shared at FAAC meetings comes from oil exports, taxes, and other statutory allocations. Under the current revenue-sharing formula, the Federal Government receives 52.68%, states receive 26.72%, and local governments receive 20.60%.

Despite the substantial increase in allocations, concerns have been raised about the effectiveness of governors in mitigating the impact of the fuel subsidy removal. The Local Governments (LGs) lack autonomy, and governors determine how their allocations are spent.

A breakdown of the N3.3tn allocations reveals the highest monthly allocation of N627.73bn in September, followed by N610.5bn in December, N555.75bn in August, N533bn in November, N514bn in July, and N497.97bn in October. In the first six months of 2023, states and local government areas received N2.79tn, reflecting a 22% increase from the corresponding period in 2022.

Data from the National Bureau of Statistics indicates that in 2022, states received an allocation of N3.16tn, up from N2.42tn in 2021 and N2.23tn in 2020. The Federal Government’s revised 2024–2026 Medium-Term Fiscal Framework projects a potential 109.74% increase in allocations to states and local government areas, reaching N14.04tn in 2024.

The expected rise in revenue is attributed to exchange rate effects, higher oil production projections, and subsidy removal. However, despite the increased allocations, some Nigerians argue that certain governors have not adequately addressed the impact of fuel subsidy removal due to poor road infrastructure, rising kidnappings, and insecurity.

Nigerians have expressed dissatisfaction with the quality of life, with labor leaders pointing out that there is no visible improvement despite the marked increase in allocations to states and local governments. The lack of clear separation of powers at the state level and governors’ dominance in resource control have been identified as contributing factors.

Various spokespersons from labor unions and advocacy groups have called for policies to end hardship in the country and ensure accountable governance at both the federal and state levels.

END.