Governors denied full N1.9 trillion FAAC money; Tinubu creates infra fund

The Federation Account Allocation Committee will not share the entire N1.9 trillion that accrued to the federal, state and local governments in June, the federal government said Thursday.

There have been concerns governors and local government authorities may misuse the windfall, the single biggest monthly distributable revenue due all three levels of government in years.

The three tiers typically share between N600 billion and N700 billion monthly. The money, used for projects and payment of workers’ salaries, is sourced from crude oil sales, tax and Customs.

The revenue this time nearly tripled from fuel subsidy removal savings and higher oil earnings due to naira devaluation.

– Infrastructure Fund

The presidency said the FAAC agreed to share only N907 billion and save N790 billion. The remaining will be used for statutory deductions, presidential spokesperson Dele Alake said in a statement on Thursday.

While many Nigerians have expressed concerns about the money being misspent, the presidency said the FAAC agreed that distributing the entire sum may make inflation worse. Consumer prices rose by 22.8% in June, according to the National Bureau of Statistics.

The saved funds will also go to support a new Infrastructure Support Fund which President Bola Tinubu approved should be set up for the 36 states “as part of measures to cushion the effects of the petrol subsidy removal on the people,” Mr Alake said.

– Key quotes to note

“The new Infrastructure Fund will enable the States to intervene and invest in the critical areas of Transportation, including farm to market road improvements; Agriculture, encompassing livestock and ranching solutions; Health, with a focus on basic healthcare; Education, especially basic education; Power and Water Resources, that will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians,” he said.

He said: “The Committee also resolved to save a portion of the monthly distributable proceeds to minimize the impact of the increased revenues-occasioned by the subsidy removal and exchange rate unification-on money supply, as well as inflation and the exchange rate.

“These savings will complement the efforts of the Infrastructure Support Fund (ISF) and other existing and planned fiscal measures, all aimed at ensuring that the subsidy removal translates into tangible improvements in the lives and living standards of Nigerians.”