Revenue allocation to federal, state and local governments has declined from a peak of N970.57bn in July 2021 to N680.783bn in May 2022, representing a 30 per cent reduction over the period.

The decrease in allocation to these levels of government reveals the fiscal challenges facing various levels of government in Africa’s biggest economy.

“It is obvious that with this outlook, state governments will not be able to execute capital projects, pay salaries and meet other needs. This is time for states to look inwards,” said Professor of Economics at Covenant University, Jonathan Aremu, in a telephone interview last night.

Nigeria earns its biggest revenue from crude oil, but it has paid N2.1tn in the first six months of the year and could pay another N4tn by the end of the year, according to the International Monetary Fund estimates.

The opaque and fraudulent subsidy regime has made it nearly impossible for the Nigerian National Petroleum Corporation to make remittances to the government consistently.

The Federal Government has raised its budgetary allocation of N443 billion for gasoline subsidy to N4 trillion and has received approval from the National Assembly.

The situation is worsened by declining oil production and theft. Oil production fell to 1.2 million barrels per day in April 2022 from 1.238 million barrels in March, according to OPEC Monthly Oil Market Report. This is far from the oil benchmark of 1.88 million barrels per day in the 2022 budget.
Company Income Tax in Nigeria fell from N472.52bn obtained in the third quarter of 2021 to N347.81 billion in the last quarter of 2021, indicating a 26 per cent decrease over the period, according to the National Bureau of Statistics,

“A lot of states did not think the revenue would decline so fast. The revenues would go down if their sources are declining. It costs more now to construct those projects, so states need to look inwardly. They also need to plug leakages because this is not the time to waste money at all,” Aremu said.

A Lagos-based senior financial analyst and Director at Bishop and Rooks, Mr Wole Oluyemi, said it was obvious that states might not continue to fund big projects and could default on many fronts.

“There is a limitation on the number of projects they can do. Those who have a high-risk appetite and still want to continue those projects will start owing salaries because something must give way. Projects will be abandoned and some of them will start borrowing in the form of bonds for projects so that they can continue with their plans,” Oleyemi said.
He noted that the situation had forced states to become creative in order to raise more Internally-Generated Revenue from within.

Sri Lanka holds a lot of lessons for Nigeria. The country has defaulted on its debts for the first time in history, suspending $7bn repayments of loans to international debtors.

Though there are disagreements as to the causes of the crisis, some analysts attribute part of the country’s problem to the Chinese debt trap, with the country handing over one of its premier ports, Hambatota, to China to manage for 99 years in order to repay its debt.
Printing of currency in the face of inflation, arbitrary tax cuts and high food prices due to reduction in food production and ban on chemical fertilizers are also seen as culprits.

But these are similar to Nigeria. Nigeria faces high inflation, debt is over N40 trillion and its Eurobonds are nearing a junk status with investors demanding high-interest rates due to a perceived high-risk status.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said that investors perceived Nigeria as high-risk, explaining that risk premium must be paid when bonds were perceived as high-risk.

Nigeria has also borrowed millions of dollars to build railways and roads, but the conditions for such loans are shrouded in mystery.

A real sector market analyst, Ike Ibeabuchi, does not believe that Nigeria would reach Sri Lanka’s status, but cautioned that the terms of Chinese loans should be disclosed.

Aremu, on his part, said, “It is not bad to borrow, but negotiation is what matters. Nobody knows the terms and conditions given by China while lending money to Nigeria. From what we are seeing from other countries, it is not a sustainable negotiation. Because you are borrowing for the future, you have to let everybody know what you’re borrowing on their behalf,” Professor Aremu said.

Oluyemi disagreed, saying, “As a finance person, I am ready to collect loans from anyone as long as terms and conditions are favourable to me. If a bank that is not my preferred bank gives me money to build a house, why should I say no? If the terms and conditions are okay, why not?”

https://punchng.com/faac-allocation-declines-by-30-states-finances-may-worsen/

It's a pity we are in this avoidable state. Over dependent on crude oil has destroyed the national economy. The next president must be one with a rugged approach and a believer of a prosperous Nigeria.

With oil prices at 130 dollars Buhari still failing ...when we warned you about this man una say una want Napa cert

saintopus:
It's a pity we are in this avoidable state. Over dependent on crude oil has destroyed the national economy. The next president must be one with a rugged planner and believer of a prosperous Nigeria.

Stop blaming crude oil ..the problem is Buhari Buhari Buhari ..you elect a man with the brain of a flea and expect things to work ...when oil price was low he blamed oil and now oil price is at its highest ever he is still blaming oil...are you aware under Buhari our trade deficit has jumped from 800 billion naira to 7.6 trillion Naira ?

You elected a man that allowed bandit terrorist to invade his country yet you dey find progresss?

SarkinYarki:


Stop blaming crude oil ..the problem is Buhari Buhari Buhari ..you elect a man with the brain of a flea and expect things to work ...when oil price was low he blamed oil and now oil price is at its highest ever he is still blaming oil...are you aware under Buhari our trade deficit has jumped from 800 billion naira to 7.6 trillion Naira ?

You elected a man that came and invited terrorist to invade his country yet you dey find progresss?

Owomida Lalasticlala......

Buhari have practically killed Nigeria

Vote for Obi, the economic guru

SarkinYarki:
With oil prices at 130 dollars Buhari still failing ...when we warned you about this man una say una want Napa cert

Wailer what is the IGR of your state, can’t your state provide for you without Federal Government allocation?

Shameless Thing.

JavaScript90:
Buhari have practically killed Nigeria

Lazy Man, what did your state Government add to the Federal allocation for disbursement?

Nonsense beggars, it is always the ones that add nothing, that will lament the most.

Name 1 commodity that your state government or the organized private sector in your state exported for foreign exchange to help the economy?

Others should work, so the lazy ones like you will enjoy?

Be there wherever you are, waiting for Mr President, nonsense Almijiri.

buckeyemedia:
Wailer what is the IGR of your state, can’t your state provide for you without Federal Government allocation?

Shameless Thing.

Buckeye I feel pity for you ..can't you see how much Buhari has destroyed this country ? Do you know our trade deficit is now 7.6 trillion Naira ? It was 800 billion in 2015

SarkinYarki:


Stop blaming crude oil ..the problem is Buhari Buhari Buhari ..you elect a man with the brain of a flea and expect things to work ...when oil price was low he blamed oil and now oil price is at its highest ever he is still blaming oil...are you aware under Buhari our trade deficit has jumped from 800 billion naira to 7.6 trillion Naira ?

You elected a man that allowed bandit terrorist to invade his country yet you dey find progresss?

The trade deficit has jumped? How won't it jump, when we have millions of lazy minded people like you, what did you do in helping yourself to try & reduce it? You think it is to be forming economist James Bond on Nairaland?

buckeyemedia:
The trade deficit has jumped? How won't it jump, when we have millions of lazy minded people like you, what did you do in helping yourself to try & reduce it? You think it is to be forming economist James Bond on Nairaland?

I have brought in about 200 million Naira into the Nigerian economy this year from investors abroad , how much have you brought in Buckeye ?

SarkinYarki:

Buckeye I feel pity for you ..can't you see how much Buhari has destroyed this country ? Do you know our trade deficit is now 7.6 trillion Naira ? It was 800 billion in 2015

What commodity did you trade in last year, how much did you make?

Lazy Almijiris like you are always the ones that make the most noise, but add nothing, Federal Government should come & trade for you?

Please tell me what commodity does your state have a comparative advantage in, & how much was generated from export of those commodities?

SarkinYarki:


I have brought in about 200 million Naira into the Nigerian economy this year from investors abroad , how much have you brought in Buckeye ?

Joker, if you even brought in 2 million Naira, you wouldn’t be on Nairaland from morning to night shouting Buhari.

Keep deceiving yourself.

buckeyemedia:


Joker, if you even brought in 2 million Naira, you wouldn’t be on Nairaland from morning to night shouting Buhari.

Keep deceiving yourself.

So because I come to Nairaland to I am idle ? you see why I always say your IQ is below 75 ? For your information I am a successful entrepreneur by any global standard and I have time to check NL anytime of the day through a mobile phone ..I am even having a legal meeting with my company lawyer right now as I type ..again how much have you brought into the Nigerian economy this year ?

SarkinYarki:


So because I come to Nairaland to I am idle ? you see why I always say your IQ is below 75 ? For your information I am a successful entrepreneur by any global standard and I have time to check NL anytime of the day through a mobile phone ..I am even having a legal meeting with my company lawyer right now as I type ..again how much have you brought into the Nigerian economy this year ?

Gerrout of here, Nonsense Pauper, legal meeting indeed, me I am with Dangote & Femi Otedola right now in his private jet, on our way to Monaco.

Successful entrepreneur indeed, oblivious Wailer.

I won't be shock if Tinubu is blame for this.

buckeyemedia:
Gerrout of here, Nonsense Pauper, legal meeting indeed, me I am with Dangote & Femi Otedola right now in his private jet, on our way to Monaco.

Successful entrepreneur indeed, nonsense Wailer.

Obaro You are over 35 years old with nothing to show than your failed media ambition..till today you can't even register your imaginary media company with CAC yet to go about begging politician for PR gigs you don't have the experience to handle ..

So somebody born of woman, with a brain between their 2 ears, will read all this and next year leave their house to vote for either Tinubu or Atiku? Haba! Una suffer never reach? Nigeria is effectivly bankrupt. The nation needs honest, focus leadership to repair this country or there will certianly no tbe a country left for us

They tried to make Nigerians see him as an ethnic presidential candidate it failed because we are wiser, they tried to use IPOB against him it failed because we know better.

Now, Seun with his urchins has resorted to creating hundreds and hundreds of fake accounts to promote "druggie" but it has also failed because we're watchful.

The Nigerian youths have decided to rise and take back our nation and this we must do!!.

May God bless NIGERIA and the INCOMING PO!

I think the solution is to vote APC to continue the damaging the country, ehm, I mean ruling the country.

Achilles881:
I think the solution is to vote APC to continue the damaging the country, ehm, I mean ruling the country.

You want to je Agbado and garri......

Omooba77:

You want to je Agbado and garri......

Agbado and garri mixed with eigbo na bam, baba de use am give boys moral, if you add gbegiri, you Don enter heaven.