Derivation being one of the bases for revenue allocation from FG coffer’s to states, of which four of these states, namely, Delta, Akwa Ibom, Rivers and Bayelsa got close to half of all Federation Account Allocation Committee (FAAC) disbursements, to the 36 states of the federation, in the first four months of 2023.
A THISDAY analysis of data sourced from the National Bureau of Statistics (NBS) made the revelation.
The review showed that while some states got just over N2 billion in the first quatre of 2023, Delta State led the pack of huge allocation receivers from the federation account, followed by Akwa Ibom, Rivers and Bayelsa respectively.
From the sum of N1.017 trillion shared to the 36 States during the period, the four states got N467.2 billion, representing 46% of the total disbursements during the period.
- Delta state received N46.1 billion, N29.3 billion, N35.5 billion and N38 billion respectively totaling N148.7 billion.
- Akwa Ibom got N48.8 billion, N24.2 billion, N24.7 billion and N24.4 billion, to hit N122.1 billion.
- Rivers state received N110 billion, being N40.3 billion, N22.7 billion, 24 billion and N23 billion, during the 4 month period.
- Bayelsa got N86.4 billion broken down into N33.2 billion, N17.4 billion, N16.8 billion and N19 billion.
The reason for the disparity in allocation between these 4 oil rich states and other states with smaller allocation is majorly traceable to “the 13% derivation fund”
This derivation fund comes from the federation revenue to oil-producing communities through the state governments. It is enshrined in section 162, sub-section 2 of the 1999 constitution.
Delta, Akwa Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Lagos and Abia currently qualify for the 13% derivation funds. However, the volume of oil produced by the four states under consideration is remarkably higher than those produced by Edo, Ondo, Imo, Lagos and Abia.
Apart from the statutory allocation to the states, other sources of payment from the federation account, includes: Value Added Tax (VAT), share of ecology fund, as well as miscellaneous sources, including levies on electronic transfers paid by Nigerians when they carry out transactions.
The disparity in incomes accruing to the 36 state of the federation is actually unacceptable. It has been variously said by concerned Nigerians that each and every state of the federation is way too endowed to have to be dependent on FAAC allocations.
Achieving this will involve tweaking the current laws to allow land owners have rights to the resources and by extension the LGAs and the States having stakes in the resources in their domains while paying something to the Federal Government to fund defense, foreign policy and other such items that are better suited for the central government.
Ceding the mining rights of the Federal Government to land owners, states and LGAs will give opportunities to localities and the states to harness their resources, thereby closing the gap in income between oil producing state and non-oil producing states of the federation.