Everything You Need To Know About State Allocation For Rivers State

Rivers State, often referred to as the economic heartbeat of Nigeria’s oil and gas industry, is a crucial component of the nation’s fiscal landscape. Located in the resource-rich Niger Delta, Rivers State not only plays a strategic role in the extraction of petroleum resources but also contributes significantly to Nigeria's foreign exchange earnings. Understanding the state's allocation from the Federation Account Allocation Committee (FAAC), its internally generated revenue (IGR) performance, and budgetary priorities is key to appreciating how the state drives its developmental agenda.

This article explores everything you need to know about Rivers State’s state allocation, including its FAAC receipts, IGR achievements, 2024 budget details, and the developmental strides these resources have made possible.

Overview of Rivers State’s FAAC Allocation

The Federation Account Allocation Committee (FAAC) is responsible for the equitable distribution of federally collected revenues among the federal, state, and local governments. Revenues such as crude oil sales, taxes, customs, and excise duties are remitted into the Federation Account and shared monthly.

Due to its status as a leading oil-producing state, Rivers benefits not only from the general FAAC disbursements but also receives additional allocations from the 13% oil derivation fund, as stipulated in Nigeria’s constitution.

In 2023, Rivers State received a total of ₦426.84 billion in FAAC allocations, positioning it as the second-highest recipient in the country, trailing only Delta State. This remarkable figure reflects the state’s significant contributions to national oil production and highlights its strategic importance within Nigeria’s fiscal federation.

The breakdown of Rivers State’s FAAC allocation includes:

• Statutory Allocation

• Value Added Tax (VAT)

• Exchange Gain

• Excess Crude Account (when applicable)

• 13% Derivation Fund (Specific to oil-producing states)

This inflow forms the backbone of the state’s fiscal capacity, allowing it to invest in infrastructure, human capital development, security, and social services.

Rivers State’s Internally Generated Revenue (IGR) Performance

While Rivers State receives substantial FAAC allocations, the state has also made commendable strides in boosting its IGR to reduce over-reliance on federal allocations. According to data released by the National Bureau of Statistics (NBS), Rivers State recorded an IGR of ₦172.89 billion in 2023, making it one of the top three states with the highest IGR, closely following Lagos and Abuja.

The key components of Rivers State’s IGR include:

• Personal Income Tax (PAYE)

• Withholding Tax

• Road Taxes

• Business Premises Levy

• Fines and Fees from MDAs

• Revenue from licenses, permits, and rates

The state government, through the Rivers State Internal Revenue Service (RIRS), has strengthened tax compliance enforcement, introduced digital payment platforms, and partnered with private consultants to broaden the tax net and minimize leakages.

These reforms have translated into higher monthly revenues, providing Rivers with greater financial autonomy and the ability to pursue its development agenda aggressively.

Rivers State’s 2024 Budget: Priorities for Growth and Development

Governor Siminalayi Fubara presented the 2024 fiscal year budget with a total sum of ₦800 billion, tagged “Budget of Renewed Hope and Consolidation.” The budget reflects the government’s commitment to consolidating the achievements of the past while embarking on new projects that would enhance the welfare of Rivers people.

Key Highlights of the 2024 Budget

• Capital Expenditure: ₦480 billion (60% of the total budget)

• Recurrent Expenditure: ₦320 billion (40% of the total budget)

This heavy emphasis on capital spending indicates the state’s focus on infrastructure development, economic diversification, and social services delivery.

Sectoral Allocation Breakdown:

1. Infrastructure Development: ₦200 billion allocated for roads, bridges, drainage systems, and transportation infrastructure.

2. Healthcare: ₦80 billion to upgrade hospitals, improve primary healthcare centers, and expand the state health insurance scheme.

3. Education: ₦75 billion to rehabilitate schools, provide learning materials, and support higher education institutions.

4. Security: ₦40 billion to improve security infrastructure, personnel welfare, and community policing.

5. Agriculture and Rural Development: ₦30 billion to boost food security, empower farmers, and develop rural economies.

6. Youth Empowerment and Skills Acquisition: ₦20 billion for entrepreneurship programs and youth development initiatives.

FAAC and IGR: The Dual Engines of Rivers State's Development

The synergy between Rivers State’s FAAC allocations and IGR performance is central to its developmental achievements. While FAAC receipts provide predictable inflows for recurrent and capital expenditures, IGR enhances flexibility in funding developmental projects that directly impact the populace.

Development Achievements Driven by State Allocation

Infrastructure Development

Rivers State has embarked on several high-impact infrastructure projects, including:

• Completion of the Trans-Kalabari Road Project.

• Construction of the Elele-Omoku road.

• Urban renewal projects in Port Harcourt and Obio-Akpor.

• Flyovers and interchanges in strategic urban areas to ease traffic congestion.

Healthcare

The state has renovated and equipped several general hospitals, constructed new health centers in rural areas, and expanded the Rivers State Health Insurance Scheme to cover more vulnerable populations.

Education

Massive investments in education have led to:

• Renovation and construction of over 200 schools.

• Improved teacher welfare through timely payment of salaries and incentives.

• Scholarships and bursary schemes for indigent students.

Economic Diversification

Rivers State has initiated programs to diversify its economy beyond oil through:

• Agricultural transformation programs promoting cassava, fishery, and poultry value chains.

• SME funding programs in partnership with financial institutions.

• Tourism development initiatives focusing on the state’s unique cultural heritage and riverine attractions.

Challenges and Outlook

Despite these achievements, Rivers State faces several challenges, including:

• Environmental Degradation: Resulting from oil exploration activities and urbanization.

• Unemployment and Youth Restiveness: Despite economic gains, unemployment remains high, especially among youths.

• Revenue Volatility: Overdependence on oil revenues exposes the state to fluctuations in global oil prices.

• Infrastructure Deficit in Rural Areas: Many rural communities still lack access to basic amenities like roads, electricity, and potable water.

The Way Forward

To address these challenges, the Rivers State government has outlined several strategies:

• Deepen IGR by enhancing tax administration reforms and expanding the tax net.

• Intensify economic diversification through agriculture, manufacturing, and services.

• Invest in renewable energy and green economy initiatives to create new jobs and reduce environmental degradation.

• Prioritize rural development to bridge the urban-rural development gap.

Conclusion

Rivers State’s fiscal strength, powered by significant FAAC allocations and robust IGR, has positioned it as a formidable force in Nigeria’s economic and development landscape. The state’s 2024 budget reflects a bold commitment to infrastructure development, social services enhancement, and economic diversification.

While challenges persist, the state’s proactive fiscal strategies, innovative revenue mobilization, and prudent budget management suggest that Rivers State is on a sustainable path toward becoming not just the oil and gas capital of Nigeria but also a diversified economy capable of delivering prosperity to its people.

As the state continues to implement its development blueprint, the synergy between its federal allocations, internally generated revenues, and prudent fiscal management will remain pivotal in driving inclusive growth and social development.