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The total monthly payout by the Federation Account Allocation Committee (FAAC) for distribution to the three tiers of government amounted to N788bn (US$2.57bn) in November (from October revenues). This was an increase of N89bn from the previous month and the highest payout since N822bn in June.

The commentary from the federal finance ministry noted that the average monthly oil price had dropped from US$75.7/b to US$73.9/b. Additionally, there were pipeline shutdowns, resulting in the shut-in of some production.

However, crude oil export sales managed to pick up marginally on September.

  • VAT receipts picked up in October to N102bn from N79bn. The commentary added that inflows from oil and gas royalties and petroleum profits tax also posted strong growth.
  • This latest payout included N194bn for the states from all sources combined. Oil producing-states collectively received an additional N58bn as 13% derivation revenue.
  • To provide some colour, we see from CBN data for 2017 that the state governments spent N221bn and N87bn per month pro rata in aggregate on recurrent and capital items. It becomes clear therefore why more than half the states are unable to meet their salary and pension obligations in full.
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Revenue allocations (gross) by the FAAC (N bn)

Sources: Office of the accountant-general of the Federation (OAGF); local media; FBNQuest Capital Research
  • Data for H1 2018 released by the National Bureau of Statistics suggest when taken in conjunction with the trend rise in FAAC payouts this year, that states in aggregate are closing the gap. Their combined internally generated revenue increased by 28% y/y to N579bn. As ever, performance varied greatly between states. Over a three year period, Lagos, Delta, Oyo, Kaduna and Enugu have been among the best performers.
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