What Happened To The Revenues GENERATED By The Federal Government Ministries, Departments & Agencies In The Eye of The Law – Daily Watch Press
A look at the way and manner under our laws Revenue Generated by the Federal Government of Nigeria is being shared among the three (3) Federating Units; Federal, States and Local Government Areas (LGA’s).
Nigeria is a Federation with three federating units made up of the Federal, State and Local Governments. Federation revenue is therefore owned by the three federating units. Section 162 of the 1999 Constitution of the Federal Republic of Nigeria (as Amended) defines “REVENUE” as any income or returns accruing to or derived by the Government of the Federation from any source including:
any receipt, however described, arising from the operation of any law;
any return, however described, arising from or in respect of any property held by the Government of the Federation;
any return by way of interest on loans and dividends in respect of shares or interest held by the government of the federation in any company or statutory body. Section 162 subsection (1) of the 1999 Constitution, states that “The Federation shall maintain a special account to be called “The Federation Account” into which shall be paid all revenues collected by the government of the Federation, except the proceeds from the Personal Income Tax of the personnel of the Armed Forces of the Federation, the Nigeria Police Force, the Ministry or Department of Government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja”.
Subsection (3) of the same section further states, “Any amount standing to the credit of the Federation Account shall be distributed among the Federal, States and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly”.
That’s why every month, representatives of the Federal and State Governments hold a Federation Account Allocation Committee (FAAC) Meeting. The committee is chaired by the Minister of Finance. At this meeting, revenue generated in the month is distributed among the three tiers of government, other agencies and special saving fund accounts. Revenue is shared in accordance with the vertical formula, as determined by RMAFC and approved by the National Assembly. The formula allocates 52.68%, 26.72% and 20.60% to the Federal, States and Local Governments respectively. The 52.68% to the Federal Government are paid into the Federation Account; while 26.72% and 20.60% accruing to the States and Local Governments are shared among the constituents by applying factors such as equality, population; land mass, IGR and social development. 13% is deducted as a first line charge and is further shared among the oil producing States.
Therefore, it’s worthy of note that monies generated by the NNPC, FIRS, Nigerian Customs and all revenue generating MDAs or sources of the Federal Government, except those exempted by the Constitution or any other legislations must be shared by the Federation Account Allocation Committee (FAAC).
This is to clear the misconception that many have about the funds of the Federal Government. Hope it provide some impetus for understanding.