The Federal Government’s revenue projections in the Revised 2024 – 2026 Medium-Term Fiscal Framework suggest a significant increase in the allocation to states and local government areas (LGs).
According to these projections, the allocation may surge by 109.74%, reaching N14.04 trillion in 2024, up from the projected N6.69 trillion in 2023.
The anticipated increase in disbursement to states and LGs aligns with the Federal Government’s efforts to boost fiscal allocations and stimulate development at the subnational level. The Federal Allocation Accounts Committee (FAAC) is expected to play a crucial role in overseeing the equitable distribution of these funds.
The revenue available in the Federation Account is estimated to witness a substantial rise of 124.43% to N26.61 trillion in 2024, compared to N11.86 trillion in 2023. This projected increase is attributed to various factors, including exchange rate effects, higher oil production projections, and the removal of subsidies.
In the first nine months of 2023, the revenue available in the federation account amounted to N7.48 trillion. States and LGs received N2.00 trillion and N1.54 trillion, respectively, during this period.
President Bola Tinubu, while presenting the 2024 budget to the National Assembly, emphasized the government’s commitment to reviewing tax and fiscal policies. The objective is to increase the ratio of revenue to GDP from less than 10% to 18% within the administration’s term. The government also aims to address financial leakages through effective implementation of key public financial management reforms.
Finance and Budget Planning Minister Abubakar Bagudu highlighted the importance of revenue generation and acknowledged the ongoing review of tax and fiscal policies to enhance revenue generation.
The move to improve federal allocations to states and LGs is expected to facilitate development initiatives and enhance the overall economic landscape at the subnational level. The increased funding is anticipated to contribute to various projects, infrastructure development, and social welfare programs across states and local government areas.
