Federal Government allocation is expected to increase by a staggering 109.74% to a whopping N14.04 trillion in 2024.
This news comes as a welcome relief for states and local governments who heavily rely on central funding to carry out their operations.
The projected increase stems from an anticipated rise in revenue available in the Federation Account, which is expected to climb from N11.86 trillion in 2023 to N26.61 trillion in 2024, representing a jump of 124.43%.
This surge is attributed to a combination of factors, including:
Exchange rate effects:
The Federal Government’s revised 2024-2026 Medium-Term Fiscal Framework anticipates favorable exchange rate movements, contributing to increased revenue.
Higher oil production:
Projected increases in oil production are expected to boost government revenue through increased oil sales.
Removal of fuel subsidies:
The recent removal of fuel subsidies is expected to free up significant resources that can be channeled towards other areas, including increased allocations to states and local governments.
The projected increase in federal allocation translates to a significant financial boost for states and local governments. Compared to the N6.69 trillion projected disbursement in 2023, states and local governments are expected to receive a whopping N14.04 trillion in 2024, representing an increase of over 100%.
This financial windfall is expected to have a transformative impact on subnational administrations. With increased resources at their disposal, states and local governments can invest in critical infrastructure projects. This includes key areas like road construction, healthcare facilities, and educational institutions.
This can also enhance public service delivery.
States and local governments can use the additional funds to improve the quality and efficiency of essential services such as healthcare, education, and security.
It can facilitate in implementation of social welfare programs. Increased funding can be used to provide targeted assistance to vulnerable populations, such as the poor, the elderly, and the disabled.
Another thing is Government Commitment to Fiscal Responsibility.
While this financial windfall presents a tremendous opportunity for subnational governments, it also necessitates responsible financial management.
President Bola Tinubu, while presenting the 2024 budget to the National Assembly, emphasized the government’s commitment to fiscal responsibility.
“We are currently reviewing our tax and fiscal policies. Our target is to increase the ratio of revenue to GDP from less than 10% currently to 18% within the term of this Administration. Government will make efforts to further contain financial leakages through effective implementation of key public financial management reforms,” the president said.
Echoing this sentiment, Finance and Budget Planning Minister Abubakar Bagudu highlighted the importance of efficient revenue generation.
He said “Revenue generation remains the major fiscal constraint to the country’s fiscal viability. The government is reviewing the current tax and fiscal policies, with the intention of improving revenue generation.”
The projected increase in federal allocation represents a significant milestone for subnational governments in Nigeria.
With careful planning and responsible financial management, this financial windfall can be a powerful tool for driving development, improving public service delivery, and ultimately enhancing the lives of citizens across the country.