The Federal Government’s Revised 2024 – 2026 Medium-Term Fiscal Framework foresees a substantial increase of 109.74% in federal allocation to states and local government areas, reaching ₦14.04tn in 2024.
According to the projections, disbursements to states and local governments are set to rise from the ₦6.69tn projected in 2023 to ₦14.04tn in 2024.
The Federation Account’s revenue is expected to surge by 124.43% to ₦26.61tn in 2024, up from ₦11.86tn in 2023. This anticipated increase is attributed to exchange rate effects, a higher oil production projection, and the removal of subsidies.
In the period of January to September 2023, the revenue available in the federation account totaled ₦7.48tn, with states and local governments receiving ₦2.00tn and ₦1.54tn, respectively.
During the presentation of the 2024 budget to the National Assembly, President Bola Tinubu emphasized ongoing reviews of tax and fiscal policies. The aim is to raise the revenue-to-GDP ratio from less than 10% to 18% within the current administration’s term. President Tinubu also highlighted efforts to contain financial leakages through the effective implementation of key public financial management reforms.
The Minister of Finance and Budget Planning, Abubakar Bagudu, pointed out that revenue generation remains a significant fiscal constraint and disclosed ongoing reviews of tax and fiscal policies to enhance revenue.
During a Federal Account Allocation Committee meeting in Delta, the Minister of Finance, Mr Wale Edun, represented by Permanent Secretary Mr Okokon Udo, noted the improvement in state allocations, increasing from an average of ₦650bn monthly before subsidy to over ₦1tn monthly post-subsidy. He attributed this positive trend to economic reforms, including petroleum subsidy removal and fiscal and monetary policy reforms.
Mr. Edun emphasized the government’s commitment to restoring revenue, promoting fiscal balance, and ensuring prudent management of government expenditure. The anticipated increase in federal allocation to states and local governments is poised to stimulate development in subnational entities heavily reliant on these funds.