Nigerian Government revenue allocation

HOW FUNDS ARE ALLOCATED TO LG, SG, AND FG NIGERIAN GOVERNMENT REVENUE ALLOCATION

The Nigerian government financial system operates a structure where funds flow to the three systems of government from what is termed the FEDERATION ACCOUNT. This presentation takes an empirical look at the components of the Federal Allocation formula and State & Local Government Allocation indices The Federation Account serves as the central pocket through which our Governments – Federal, State, and Local Government – fund developmental projects as well as maintain their respective workforce.

THE FLOW OF REVENUES OIL REVENUE (MARKET PRICE) EXCESS CRUDE BUDGETED OIL REVENUE NCS CUSTOMS & EXCISE CIT VAT SALES OF ASSETS SURPLUS FROM SOE DIVIDEND FROM SOE FIRS INDEPENDENT REVENUE FEDERATION ACCOUNT VAT POOL LOCAL GOVT STATE GOVT 13% DERIVATION LOCAL GOVT STATE GOVT FGN CONSOLIDATED REVENUE FUND OF THE FEDERATION FEDERAL BUDGET SPECIAL FUNDS NAT. RESOURCES STABILIZATION ECOLOGICAL FCT 7% Cost of Collection 93% 96% 96% 4% Cost of Collection 1.68% 0.5% 1% 1% 1% 4.18% of Federation Account 48.5% of Federation Account 14% of VAT Pool 52.68%26.72%20.60% 15% of VAT Pool 35% of VAT Pool 50% of VAT Pool Source: Budget Office of the Federation

.E REVENUE ALLOCATION FORMULA VERTICAL ALLOCATION FORMULA BENEFICIARY ALLOCATION (% Federation Account) 1 Federal Government 52.68 2 State Governments 26.72 3 Local Governments (Including Area Councils) 20.60 100.00 HORIZONTAL ALLOCATION FORMULA PRINCIPLE/FACTOR ALLOCATION (% ) (i) Equality 40 (ii) Population 30 (iii) Internal Revenue Generation Effort 10 (iv) Landmass and Terrain 10 (v) Education 4 (vi) Health 3 (vii) Water 3 100

LOCAL GOVT. ALLOCATION FORMULA OLD INDICES OCT 06 – NOV 2013 NEW INDICES FROM NOV 2013 LOCAL GOVERNMENT EQUALITY 40% POPULATION 30% LANDMASS 50% OF 10% TERRAIN 50% OF 10% REV EFFORT 25% of 10% REV EFFORT 75% of 10% PRIMARY SCH ENROLLMENT 40% OF 10% HOSPITAL BEDS 30% OF 10% WATER SUPPLY SPREAD 15% OF 10% RAINFALL PROPORTION 15% OF 10% LOCAL GOVERNMENT EQUALITY 40% POPULATION 30% LANDMASS 50% OF 10% TERRAIN 50% OF 10% INTERNAL REV EFFORT 25% of 10% PRIMARY SCH ENROLLMENT 40% OF 10% HOSPITAL BEDS 30% OF 10% TERRITORIAL SPREAD RAINFALL 15% OF 10% RAINFALL EQUALITY 15% OF 10% EQUALITY POPULATION 40% 30% IGR 10% LANDMASS/ TERRAIN 10% EDUCATION HEALTH WATER 4% 3% 3%

STATE GOVT. ALLOCATION FORMULA OLD INDICES OCT 06 – AUG 2013 NEW INDICES FROM AUG 2013 EQUALITY (40%) POPULATION (30%) LANDMASS (50% OF 10%) TERRAIN EQUITY (50% OF 10%) IGR EFFORT (25% of 10%) REV. EFFORT (75% OF 10%) PRIMARY SCH. ENROLMENT (24% OF 10%) DIRECT SEN. SEC. ENROLMENT (8% OF 10%) INVERSE SEN. SEC ENROLMENT (8% OF 10%) HOSPITAL BEDS (30% OF 10%) TERRENTIAL SPREAD (15% OF 10%) RAINFALL PROPORTION (15% OF 10%) EQUALITY (40%) POPULATION (30%) LAND MASS (50% OF 10%) TERRAIN EQUITY (50% OF 10%) IGR EFFORT (25% of 10%) REV. EFFORT (75% OF 10%) PRIMARY SCHOOL ENROLMENT (24% OF 10%) SECONDARY SCH. ENROLMENT (8% OF 10%) INVERSE SEC. SCHL ENROLMENT (8% OF 10%) HOSPITAL BEDS (30% OF 10%) WATER TERRITORIAL (15% OF 10%) RAINFALL PROPORTI ON (15% OF 10%) EQUALITY POPULATION 40% 30% IGR 10% LANDMASS/ TERRAIN 10% EDUCATION HEALTH WATER 4% 3% 3%

STATE & LOCAL GOVERNMENTS EQUALITY POPULATION LANDMASS / TERRAIN IGR EDUCATION HEALTH WATER Education is vital and its importance cannot be over-emphasized. Priority must go to these three – Water, Health, and Education. 40% 30% 10% 10% 4% 3% 3%

 CURRENT ALLOCATION FACTOR DATA (S T A T E S)

POPULATION (138,568,341 Million) STATE POPULATION KANO 9,383,682 LAGOS 9,013,534 KADUNA 6,066,562 KATSINA 5,792,578 OYO 5,591,589 RIVERS 5,185,400 BAUCHI 4,646,465 JIGAWA 4,348,649 BENUE 4,219,244 ANAMBRA 4,182,032 BORNO 4,151,193 DELTA 4,098,391 NIGER 3,950,249 IMO 3,934,899 AKWA IBOM 3,920,208 OGUN 3,728,098 SOKOTO 3,696,999 ONDO 3,441,024 STATE POPULATION OSUN 3,423,535 KOGI 3,278,487 ZAMFARA 3,259,846 ENUGU 3,257,298 KEBBI 3,238,628 EDO 3,218,332 PLATEAU 3,178,712 ADAMAWA 3,168,101 CROSS RIVER 2,888,966 ABIA 2,833,999 EKITI 2,384,212 KWARA 2,371,089 GOMBE 2,353,879 YOBE 2,321,591 TARABA 2,300,736 EBONYI 2,173,501 NASSARAWA 1,863,275 BAYELSA 1,703,358

LANDMASS / TERRAIN (930,309.75sq. km) STATE LANDMASS BORNO 75,541 NIGER 74,109 TARABA 60,292 BAUCHI 49,934 YOBE 46,910 KADUNA 45,711 ADAMAWA 38,823 KEBBI 37,728 ZAMFARA 35,171 KWARA 34,468 SOKOTO 33,777 BENUE 31,277 KOGI 29,582 OYO 28,245 NASSARAWA 27,271 PLATEAU 27,217 KATSINA 24,971 JIGAWA 24,516 STATE LANDMASS CROSS RIVER 21,637 KANO 21,277 EDO 19,819 GOMBE 17,982 DELTA 17,239 OGUN 16,981 ONDO 15,820 RIVERS 10,432 BAYELSA 9,416 OSUN 9,026 ENUGU 7,660 AKWA IBOM 6,772 EBONYI 6,421 EKITI 5,888 IMO 5,183 ABIA 4,902 ANAMBRA 4,816 LAGOS 3,496

INTERNALLY GENERATED REVENUE EFFORT STATE AMOUNT (N) KOGI 309.7 NASSARAWA 247.99 ENUGU 247.76 CROSS RIVER 247.73 BAYELSA 244.92 GOMBE 236.22 PLATEAU 228.25 SOKOTO 225.89 EKITI 221.93 JIGAWA 219.71 EBONYI 215.78 KANO 208.81 BORNO 205.8 KEBBI 202.51 NIGER 201.82 ABIA 201.58 BENUE 201.23 IMO 199.58 STATE AMOUNT (N) YOBE 194.69 KADUNA 170.42 ZAMFARA 167.13 KATSINA 156.2 BAUCHI 154.86 AKWA IBOM 143.5 ADAMAWA 137.22 ANAMBRA 120.29 TARABA 117.78 DELTA 116.37 ONDO 109.49 RIVERS 108.24 KWARA 106.85 EDO 102.17 OSUN 67.13 OGUN 50.73 OYO 48.54 LAGOS 13.64

SCHOOL ENROLMENT – PRY & SEC. STATE PRIMARY SECONDARY KANO 1,806,269 1,758,839 KATSINA 1,804,579 1,195,378 AKWA IBOM 1,703,182 645,705 KADUNA 1,552,931 1,274,873 BAUCHI 1,521,363 1,063,806 BENUE 1,352,752 809,611 KOGI 1,331,025 743,638 BORNO 1,158,720 858,070 OYO 1,113,306 839,865 IMO 1,109,835 939,548 PLATEAU 1,055,255 855,057 TARABA 1,049,741 263,829 ENUGU 976,004 710,866 NASSARAWA 941,695 432,448 SOKOTO 938,710 792,034 JIGAWA 922,798 478,422 EBONYI 920,015 534,643 OSUN 898,878 591,093 STATE PRIMARY SECONDARY KEBBI 891,583 716,616 ANAMBRA 872,088 789,246 CROSS RIVER 832,139 663,792 YOBE 813,283 593,854 NIGER 774,627 481,007 BAYELSA 750,852 546,734 ONDO 733,930 525,238 ADAMAWA 706,665 708,162 ABIA 697,051 823,412 DELTA 664,186 768,357 GOMBE 604,276 819,519 LAGOS 573,255 1,009,816 EDO 557,264 768,418 EKITI 526,884 521,992 RIVERS 500,299 923,832 KWARA 457,566 397,686 OGUN 439,332 516,352 ZAMFARA 412,017 355,938

HOSPITAL BEDS STATE HOSPITAL BEDS LAGOS 19,901 KANO 19,424 BAYELSA 17,265 EBONYI 14,628 ABIA 14,521 IMO 14,424 OSUN 14,167 SOKOTO 13,636 DELTA 13,461 JIGAWA 13,124 KEBBI 13,039 BORNO 12,673 RIVERS 12,637 OGUN 12,346 EDO 12,249 ENUGU 12,246 YOBE 12,208 PLATEAU 12,188 STATE HOSPITAL BEDS ANAMBRA 12,174 BAUCHI 11,903 CROSS RIVER 11,531 GOMBE 11,388 EKITI 11,170 KWARA 10,054 AKWA IBOM 10,002 KATSINA 9,584 KADUNA 9,479 KOGI 9,036 ADAMAWA 8,792 BENUE 8,775 ZAMFARA 8,266 NASSARAWA 7,117 OYO 7,049 TARABA 6,696 NIGER 6,646 ONDO 6,498