OPINION

THE DEPENDENCY ON FAAC ALLOCATIONS: A CLOSER LOOK AT 14 STATES 

Kano City,

Once upon a time a commerce center in Nigeria. Now Kano is dead. Peter Obi, during his banking days will say if you are looking for cash, go to Singer Kano and mop up.

The Federal Accounts Allocation Committee (FAAC) plays a crucial role in the fiscal landscape of Nigeria, as it distributes revenue from the Federation Account to various states. For many states, this allocation is not just supplementary; it constitutes a significant portion of their financial resources. 

In fact, some states rely on FAAC for as much as 70% or more of their total revenue. The potential cessation of these allocations would have profound implications for the states affected, particularly in terms of their ability to pay salaries, pensions, and gratuities. 

Here, we examine 14 states that would face dire consequences if FAAC allocations were to stop abruptly.

1. Bayelsa - 92.17%

Bayelsa is heavily dependent on FAAC allocations, which constitute approximately 92.17% of its total revenue. This overwhelming reliance is primarily due to the state’s limited internal revenue-generating capacity. As a result, any cessation of FAAC funding would severely impair the state's ability to meet its financial obligations, plunging public servants and pensioners into uncertainty.

2. Akwa Ibom - 86.29%

Similarly, Akwa Ibom relies on FAAC for 86.29% of its revenue. This dependency makes the state vulnerable to fluctuations in federal revenue sharing. Any disruption in these funds would jeopardize the payment of salaries to its workforce and pensions to retirees, potentially leading to widespread discontent.

3. Delta - 83.88%

Delta state, with an 83.88% reliance on FAAC, would also face significant challenges. The state government has historically struggled with internal revenue generation, which further exacerbates its vulnerability. A sudden loss of FAAC allocations could result in delayed salary payments and an inability to fulfill pension commitments.

4. Taraba - 81.89%

With 81.89% of its funding sourced from FAAC, Taraba state would be critically impacted by the loss of these allocations. The state's developmental projects and civil service stability would be at risk, affecting the livelihood of many citizens.

5. Niger - 80.19%

Niger state’s dependency on FAAC, which accounts for 80.19% of its total revenue, indicates a stark financial reality. The state's government would be hard-pressed to meet its payroll obligations, possibly prompting delays in salary and pension payments.

6. Benue - 79.85%

Benue state, with a reliance of 79.85% on FAAC, has similarly fragile financial health. The loss of this federal funding would strain its capabilities, affecting not just salaries but also critical social services vital to its citizens.

7. Anambra - 76.94%

Although Anambra has made strides in enhancing its internal revenue generation, it still relies on FAAC for 76.94% of its funding. A sudden stop in these allocations could compromise ongoing development initiatives and create unrest among public sector workers.

8. Bauchi - 75.33%

Bauchi state’s dependency of 75.33% on FAAC highlights its fiscal fragility. Any cut in federal allocations would impact not just public salaries but could also curtail essential services such as education and healthcare.

9. Cross River - 74.87%

With 74.87% of its funding derived from FAAC, Cross River state is another example of the risks associated with high dependency on federal allocations. The financial strain could disrupt governmental operations and diminish public trust.

10. Nasarawa - 74.55%

Nasarawa's government operates with 74.55% of its revenue coming from FAAC. The cessation of these funds could lead to a significant backlog of salary payments and exacerbate poverty levels in the state.

11. Gombe - 72.29%

Gombe state, with a reliance of 72.29% on FAAC, would find itself grappling with fiscal challenges that could affect its public workforce and hinder civic progress as payment capabilities diminish.

12. Enugu - 70.68%

Enugu state's dependency on FAAC at 70.68% reflects a broader issue of fiscal sustainability. The potential ramifications of losing these funds could impede both administrative functions and social welfare services.

13. Edo - 70.24%

Edo state's allocation reliance of 70.24% implies a scenario where any interruption in FAAC funding would catalyze economic instability, affecting civil servant payments and leading to rumblings of discontent among its populace.

14. Kano - 70.24%

Kano, one of Nigeria's largest states, also finds itself in a precarious situation with a dependency of 70.24% on FAAC. This financial structure dictates that the state could experience significant disruptions in governance and public service delivery if federal allocations were halted.

Conclusion

The reliance of these 14 states on FAAC allocations is a poignant reminder of the broader issues surrounding fiscal management and economic stability within Nigeria.

The potential consequences of a sudden cessation of these funds highlight the urgent need for greater financial diversification and improved revenue generation strategies at the state level. As these states grapple with their dependency, the importance of a balanced approach to budgeting and revenue generation has never been clearer.

Failure to address these issues could lead to widespread economic challenges, undermining public trust and the social contract between governments and their citizens.

NGETRA - Services