New Telegraph

Poverty, Hunger Thrive Despite Trillions FAAC Allocations to FG, States, 774 LGs

Why Allocations Don’t Translate to Development –Experts

Call for Governors to Let Go of LGs Funds

Despite a consistent rise in monthly allocation shared by the Federal Government, states and the 774 Lo- cal Government Areas in Nigeria, amounting to trillions in naira, poverty, underdevelopment have persist- ed across the country, Sunday Telegraph findings revealed. In the last couple of months, the monthly revenue shared by the Federation Accounts Allocation Committee( FAAC) to three tiers of government crossed from the billion Naira to the trillion Naira mark as a result of fuel subsidy removal. While the Federal Government, states and Local Governments’ revenues experienced upsurge in monthly revenue from the FAAC purse, poverty level, insecurity and social development are worse off. Within the first six months of President Bola Ahmed Tinubu administration in November, a total of N4,784.61 trillion was shared as revenue allocation to the three tiers of governments, comprising federal, states and local governments .

The amount shared consists of statutory revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL) revenue, Exchange Difference revenue and augmentation. A recent FAAC data by National Bureau of Statistics (NBS) revealed that FAAC statutory revenue allocation to 36 states and 774 Local Government Areas from July to December 2023, increased to N3.34 trillion in the aftermath of fuel subsidy removal. The 774 Local Government Councils in the federation received a total of N2.4 trillion as statutory revenue al- location from January 2023 to January 2024, according to Sunday Telegraph compilation. Of the amount shared, the sum of N1.4 trillion was shared under the current administration of President Bola Ahmed Tinubu ( June,2023 to January 2023) while the latter was disbursed under the previous government of President Muhammadu Buhari.

More money, more poverty

Despite the funds shared to three tiers of government, Nigeria’s poverty level is consistently on the rise . Increase in poverty level among the masses is tied to the current high stake in kidnapping, armed robbery and other vices disrupting peaceful atmosphere of the country. Nigerians are leaving the country daily to other nations in droves to escape rising poverty and insecurity. The World Bank in a recently released poverty document titled, “macro poverty outlook’, which analysed poverty level country by country, disclosed that rising inflation and low economic growth in Nigeria will push further, 2.8 million people into poverty by 2023’s end. “By the end of 2023, the rise in inflation and low economic growth will have contributed to an increase of 2.8 million people in poverty (y-o-y), a 0.4 percent- age points bump to 37.5 per cent of the population.”

It noted that Nigeria’s high inflation reached a 17-year high of 24.1 per cent (y-o-y) in July 2023, partly reflect- ing surging food prices and the temporary impact of the removal of the fuel subsidy. Nigeria’s biting inflation closed the year 2023 at 28.92 per cent from 28.20 per cent in November 2023.

Hunger, poverty take over

The acute hunger and poverty level faced by millions of Nigerians jolted the Federal Government to convey an emergency meeting to address the spate of protests in some parts of the country following the rising cost of food nationwide.

FG responds

As part of the short term measure to address rising food inflation and hunger in the country, the Federal Government is juggling a number of options , including food importation as a short term measure. Minister of Information, Mohammed Idris, who briefed State House Correspondents last Thursday, revealed that the Federal Government may resort to food importation as a short-term strategy to address the increase in the prices of food items in the country. Idris disclosed this after the last leg of a series of three meetings of the Special Presidential Committee on Emergency Food Intervention at the Aso Rock Villa . ∆According to him, the government would be exploring different options to address the food inflation crisis in the country, which currently stands at 33.93 per cent as of December 2023.

The minister also affirmed the government’s readiness to take punitive measures against those he called food hoarders. According to Idris, President Bola Tinubu directed the prompt release of over 102,000 metric tons of diverse grain varieties from both the National Food Reserve and the Rice Millers Association of Nigeria as a step to arresting the food crisis in the country.

Labour Unions angry

Midway into the month of February 2024, civil servants are yet to receive their January salary. The plight of government workers in state and Federal Government has , attracted another impending strike . The Nigeria Labour Congress( NLC ) and the Trade Union Congress of Nigeria on Thursday issued a 14- day nationwide strike notice to the Federal Government over the failure of the Bola Tinubu-led government to implement the agreements reached on October 2, 2023, following the removal of the subsidy on Premium Motor Spirit(PMS) otherwise known as petrol. Leaders of the NLC and TUC are sad that despite Organised Labour’s efforts to ensure industrial peace, the government seems unperturbed by the mass suffering and hardship across the country.

The October 2 agreement was “focused on addressing the massive suffering and the general harsh socio-economic consequences of the ill-conceived and ill-executed IMF/World Bank-induced hike in the price of PMS and the devaluation of the Naira. These dual policies have had, as we predicted, dire economic consequences for the masses and workers of Nigeria,” the statement by the unions said on Thursday.

What to do by experts

Speaking to Sunday Telegraph about the current hardship, deepening poverty level and underdevelopment across the level of government, Wealth Management Expert and Managing Director, SD& D, Mr. Gabriel Idakolo, blamed it on bad leadership. He attributed the rise in FAAC allocation as witnessed recently to the removal of Petroleum subsidy and floating of exchange rate. He said: “The reason for the increased revenue sharing is as a result of the removal of subsidy and floating of the exchange rate. These policies although increased government revenue but came at a very high cost to the people.” Idakolo suggested steps to be taken by the government to arrest the current hardship amongst mass Nigerians. “The government welfare package to the indigent poor must be finetuned to reflect the reality of hardship and must be transparent and seen to actually be alleviating poverty.

The government intervention in the transportation sector and agriculture needs to be bold and impactful, so as to address the endemic poverty being experienced by the people. Second, the Federal Government should lead by example by ensuring that the executive, legislature and judiciary eradicate wasteful spending and corruption; then, they can have the moral fortitude to call the malfeasance of the state government to question. The state governments received over 60 per cent increase in revenue allocation in the past six months but they still have nothing to show because of entrenched corruption. The EFFC should ensure that no corrupt government appointee or state governor is left to go scot free with their loot “, he said. An Economist, Dr. Aliyu Ilias, said the huge allocation shared to three tiers of government without significant development shows failure of governance.

“It’s true that the government now gets more FAAC sharing but of no impact . If you share more money and the money does not have a value, it becomes a problem. If you notice, between four to five days after FAAC allocation sharing, you notice the dollar will increase . What it tells you is, they are converting shared allocation to the dollar. The value of money former President Muhammadu Buhari shared to three tiers of government had more purchasing power than value of money current three tiers of government are receiving during Bola Ahmed Tinubu administration because of the value of the naira. There’s a serious problem in sharing palliative. It doesn’t have long term benefits . The so-called palliative shared doesn’t reflect on the majority of Nigerians.

Had the government channeled the funds into the productive sector, making infrastructure available ,it will fasttrack development”, Dr. Aliyu said. He predicted that the hardship could continue unless the government varies her approach. He suggested granting autonomy to the local government councils as a way to domestic development at the grassroots. “The woes in the economy may continue unless we do the right thing. The only thing mass Nigerians were benefiting was fuel subsidy. I mean, poor Nigerians. Now you have removed the fuel subsidy, you have floated the naira . These have negatively impacted the cost of living within the ranks of mass poor Nigerians. So, all the three tiers of government receiving fat monthly allocation may not translate to development. It’s a case of more money, less value . We have to find a way of attracting value to our currency.

More importantly, governors should allow the local government to be independent. Granting Local Governments autonomy is very crucial and important for economic development. If there must be economic development in Nigeria, it has to start from the local governments. State governors are doing what they think and not what local governments need. Governors come to Abuja every month for FAAC allocation without developing a robust mechanism for Internally Generated Revenue IGR”, he said.

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