Thirty-two per cent jump in Federal Account Allocation Committee (FAAC) disbursements to the three tiers

The surprise thirty-two per cent jump in Federal Account Allocation Committee (FAAC) disbursements to the three tiers of government in June was a result of a more transparent reporting of the federation’s gross revenues BusinessDay can report.

The unexplained rise at a time of a continued fall in international crude oil prices left many analysts wondering but investigation by BusinessDay has showed that the transparent reporting method imposed by the two-month old Buhari administration meant that revenues that were hitherto unaccounted for, had to be brought into the collective pool for sharing.

The total disbursable fund for June amounted to N539bn or $2.71bn, up by 32 per cent from the level for May.

The statutory allocation, the largest element of the payment, brought an increase of N162b or the equivalent of $810m on May revenues.

A state like Edo, for instance saw its June allocation rise significantly, by more than N500m and governor Adams Oshiomhole who confirmed the development was unequivocal that the additional funds would not have come in if government agencies were left to account for their revenues in their old ways.

“I can tell you that my state got much more than it would normally get and this additional funds came because they (federal agencies) could no longer hide or cook their books”, the governor told BusinessDay in Ndola, Zambia, on the sideline of the commissioning of the 1.5MT cement plant build by Dangote Cement.

The governor, who is one of those selected by the National Economic council to beam a searchlight on the irregularities in flows into FAAC, added, “we are already seeing the benefit of the attitude of the Buhari administration to our collective resources and this is welcome, especially because we have just started and their scope for getting better. We all can now see that the days of impunity are gone.”

Governor Oshiomhole’s explanation has helped to shed light on the jump in the federal allocation disbursement.

In its August 5 daily note, FBN Capital had said, “we struggle to explain the marked increase in the allocation which is predominantly derived from the oil industry.”

On Friday, FBN Capital welcomed the recovery in foreign reserves, which rose $2.5bn in July to $31.5bn on a 30-day moving average basis.

FBN Capital said the increase in reserve couldn’t be explained by just the savings from the ban on 41 items, which hitherto accounted for about $900m in FX utilisation per month, on the basis of figures for Q1.

Analysts at FBN Capital said, “we have to look elsewhere for additional explanations for the pick up in reserves in July.”