Tinubu Local Government Reforms: Alimosho LG Nets N11.12 billion

In the first half of 2024, local governments across Nigeria received a record-breaking N1.55 trillion from the Federal Account Allocation Committee (FAAC), marking a significant milestone under President Bola Tinubu’s economic reforms.

This unprecedented allocation is part of a broader disbursement of N10.13 trillion to the three tiers of government within the period, driven by the administration’s decision to remove petroleum subsidy and boost revenue through enhanced tax collection.

The Big Winners: Local Governments with the Highest Allocations

Among the 774 Local Government Areas (LGAs) in Nigeria, several stood out due to their substantial allocations. Lagos State, which is home to some of the country’s most economically vibrant areas, received the highest overall allocation for its LGAs, totalling N161 billion. Within Lagos, Alimosho LGA, the most populous and one of the largest in terms of economic activity, topped the charts with a significant share of the state’s allocation—N11.12 billion.

In the northern part of the country, Katsina State also received a considerable share, with its 33 LGAs collectively receiving N65.82 billion. The state’s capital, Katsina LGA, saw the highest individual allocation within the state, reflecting its central role in regional governance and economy, having received N2.50 billion.

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Borno State, known for its ongoing security challenges, received N52.69 billion for its 27 LGAs, a crucial financial boost that is expected to aid in reconstruction and humanitarian efforts in the region.

The Underdogs: Local Governments with the Lowest Allocations

On the other end of the spectrum, some local governments received notably lower allocations. Bayelsa State, despite its wealth in natural resources, received the lowest overall allocation among states, with its eight LGAs receiving a total of N20.15 billion.

The small size and lower population of these LGAs contribute to their modest allocations, underscoring the disparities in financial needs and economic activities across Nigeria.

Comparing with H1 2023: A Dramatic Rise

The H1 2024 allocation represents a 179 per cent increase compared to the same period in 2023. Last year, local governments across Nigeria received significantly less, reflecting the impact of subsidy payments and lower revenue collection at the time.

Tinubu’s economic reforms, which include the removal of petroleum subsidy, coupled with improvements in tax collection efficiency, have dramatically changed the fiscal landscape, resulting in a substantial increase in funds available for distribution.

In H1 2023, the total FAAC allocation for all three tiers of government was just under N4 trillion compared to N10.13 trillion for the same period in 2024, with local governments receiving a fraction of what they did in 2024. The stark difference highlights the impact of President Tinubu’s economic reforms on government finances, providing local governments with much-needed resources to support public services and infrastructure development.

Revenue Sources and Economic Impacts

The funds allocated in H1 2024 were primarily sourced from oil revenues, petroleum profit taxes, corporate income taxes, customs duties, and value-added tax (VAT), according to the allocation committee. The global rise in oil prices and a broadened tax base contributed significantly to the increased revenue.

These reforms have not only stabilised Nigeria’s economy but have also provided a financial lifeline to local governments, many of which rely heavily on FAAC allocations due to insufficient internally generated revenue (IGR).

Looking forward, the increased allocations are expected to drive substantial improvements in public services, infrastructure, and overall economic development at the local level. However, the effectiveness of these funds will largely depend on the transparency and accountability of their management.

The Federal Government has emphasised the need for stringent oversight to ensure that these funds are used efficiently and that corruption is minimised.

The ongoing reforms are part of a broader strategy to stabilise Nigeria’s economy, promote sustainable growth, and reduce reliance on oil revenue. As Nigeria continues to navigate these economic changes, the success of these reforms will be closely watched by stakeholders both domestically and internationally.

In summary, the N1.55 trillion bonanza received by local governments in H1 2024 marks a new era in Nigeria’s fiscal policy, reflecting the profound changes brought about by President Tinubu’s administration. As these funds begin to flow into local economies, their impact on development and governance will be a key indicator of the success of these reforms.

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