FAAC Allocation: South-South Surges Ahead as Northern States Lag Behind

Segun Atanda/

Analysis of the Federation Account Allocation Committee (FAAC) disbursements for the period of June 2023 to June 2024, has shown the South-South geopolitical zone surging ahead as the highest recipient of allocations, with Delta, Rivers, and Akwa Ibom states leading the pack.

The analysis highlights significant disparities in allocations across Nigeria’s six geopolitical zones, driven largely by the derivation principle applied to oil-producing states.

The FAAC disbursements, covering a period of 12 months from June 2023 to June 2024, saw Delta State emerge as the highest beneficiary, receiving approximately ₦134.96 billion. This was closely followed by Rivers State, with ₦107.54 billion, and Akwa Ibom State, with ₦88.80 billion. The South-South zone, home to the majority of Nigeria’s oil-producing states, dominated the allocation charts, underscoring the financial influence of the derivation principle, which grants oil-producing states an additional 13% of revenue generated from their natural resources.

The South-South zone, comprising Akwa Ibom, Bayelsa, Cross River, Delta, Edo, and Rivers states, collectively received the highest allocation among the six geopolitical zones. This is a testament to the economic significance of this region, which continues to be the lifeblood of Nigeria’s petroleum industry.

In stark contrast, the North East and North West zones, encompassing states like Adamawa, Bauchi, Borno, Gombe, Taraba, Yobe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Sokoto, and Zamfara, received significantly lower allocations. This disparity reflects the ongoing challenges of revenue generation and economic development in these largely agrarian regions.

State-by-State Breakdown:

Delta State: The top beneficiary of FAAC allocations, receiving ₦134.96 billion, driven by its significant oil production.
– Rivers State: Following Delta, Rivers State received ₦107.54 billion, benefiting similarly from oil revenues.
– Akwa Ibom State: Received ₦88.80 billion, underscoring its role as another key player in Nigeria’s oil sector.
– Bayelsa State: With ₦78.59 billion, Bayelsa continues to capitalize on its rich oil reserves.
– Lagos State: Notably, Lagos received ₦61.31 billion, primarily from VAT allocations due to its status as Nigeria’s commercial hub

The significant allocations to the South-South region are a double-edged sword. While they highlight the economic power of the region, they also expose the heavy reliance on oil revenues, raising concerns about sustainability amidst global shifts towards renewable energy.

Additionally, the relatively lower allocations to the Northern regions could exacerbate existing developmental inequalities, potentially fueling socio-economic tensions.

The FAAC allocations over the past year underscore the enduring economic importance of Nigeria’s oil-producing states. As the nation grapples with economic diversification efforts, these allocations also serve as a stark reminder of the challenges in balancing resource distribution among its diverse regions. Policymakers are urged to consider strategies that could foster more equitable development across the country.

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