Benue State, located in Nigeria’s North-Central region, is popularly referred to as the “Food Basket of the Nation” due to its robust agricultural economy. The state is known for its large-scale production of crops such as yam, rice, maize, and soybeans. However, despite its agricultural prowess, Benue—like many other Nigerian states—relies significantly on federal allocations to fund its budget and deliver public services.
Understanding how Benue State receives and utilizes its share of federal allocation is crucial for evaluating its economic resilience and governance strategy. This blog post explores the intricacies of state allocation for Benue State, including the revenue structure, 2024 budget, fiscal challenges, and opportunities for growth.
The Structure of Federal Allocation in Nigeria
Before delving into Benue's specific allocation, it is important to understand the broader revenue-sharing system in Nigeria. The Federation Account Allocation Committee (FAAC) is responsible for distributing revenue generated from the country’s major income sources—including crude oil sales, customs duties, Value Added Tax (VAT), and corporate taxes—among the federal, state, and local governments.
The revenue-sharing formula used by FAAC currently stands as:
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Federal Government: 52.68%
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State Governments: 26.72%
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Local Governments: 20.60%
This arrangement ensures that all levels of government receive funding necessary to perform their constitutional duties. However, it has also made most states, including Benue, heavily dependent on federal disbursements rather than developing robust internal revenue sources.
Benue State's Share of FAAC Allocation
As a non-oil-producing state, Benue receives a relatively moderate portion of monthly FAAC disbursements. The amount varies based on revenue performance at the national level, but for a state with limited internally generated revenue (IGR), federal allocation constitutes a significant portion of its budget.
In June 2024, FAAC shared ₦2.32 trillion among the three tiers of government, a notable increase due to improved oil prices and tax collections. While the specific amount allocated to Benue was not isolated in public reports, its share would have been calculated based on factors such as population size, land mass, and derivation principles used in the FAAC formula.
These funds are pivotal to keeping the state’s machinery running, especially in areas such as salary payments, road construction, education, and health services.
Benue State’s 2024 Budget: Focus and Allocations
Under the leadership of Governor Hyacinth Alia, Benue State unveiled an ambitious budget for 2024 aimed at revitalizing the economy and addressing infrastructural deficits. The budget aligns with the administration’s objective to reposition Benue as a center of agricultural excellence, educational reform, and public service delivery.
Although the complete breakdown of the 2024 budget is still being implemented, key sectoral allocations indicate the government’s focus areas:
1. Ministry of Works and Transport
This ministry received one of the largest budget allocations, reflecting the government’s commitment to improving the state's road network. Better roads are essential for transporting agricultural produce from rural areas to markets across Nigeria.
2. Ministry of Education
Education is a cornerstone of Governor Alia’s development blueprint. Funds are earmarked to renovate existing schools, train teachers, provide learning materials, and improve school enrollment rates, particularly in rural communities.
3. Ministry of Health
Healthcare services are expected to witness improvement through the provision of modern equipment, recruitment of health professionals, and renovation of primary healthcare centers.
4. Ministry of Agriculture and Natural Resources
Considering Benue’s agricultural heritage, this sector is prioritized. Investments will focus on providing fertilizers, farm inputs, irrigation systems, and extension services to support farmers.
Revenue Sources: Federal and Internally Generated
Benue’s financial sustainability depends on a mix of federal allocation and internally generated revenue. However, the state's revenue profile shows a stark dependence on FAAC disbursements.
Breakdown of Revenue Sources:
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Statutory Allocation: This remains the primary income stream, forming a major part of the state’s budget.
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Value Added Tax (VAT): Benue shares in the monthly VAT distribution from the federal pool.
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Internally Generated Revenue (IGR): IGR includes taxes, levies, fines, licenses, and fees collected within the state. Unfortunately, Benue’s IGR remains among the lowest in Nigeria.
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Grants and Donations: These come from international agencies, NGOs, and federal interventions for specific development programs.
To improve fiscal autonomy, the Benue State government is actively working to expand its tax net, encourage voluntary compliance, and digitize revenue collection platforms.
Challenges Facing Benue State
Despite the potential for economic growth, Benue faces a number of fiscal and structural challenges:
1. Overdependence on Federal Allocation
This leaves the state vulnerable to external economic shocks, such as a drop in oil prices or disruptions in national tax collection.
2. Low Internally Generated Revenue
Benue's IGR capacity is limited due to a narrow industrial base, low formal employment rates, and an inefficient tax system.
3. Security Challenges
Frequent herder-farmer conflicts have disrupted farming activities, reduced food production, and discouraged investment in rural areas.
4. Infrastructure Deficits
Poor road conditions, dilapidated schools, and under-equipped health centers limit the state’s ability to deliver services effectively.
Opportunities for Fiscal Growth and Economic Development
Despite these challenges, Benue State is well-positioned to grow economically if strategic measures are taken:
1. Agribusiness Expansion
With vast arable land and a large farming population, Benue can attract agribusiness investors to set up food processing plants, which would increase job creation and state revenue.
2. Tourism Development
Benue has rich cultural heritage sites and festivals like the Tiv and Idoma celebrations. Promoting cultural tourism can diversify the state’s income sources.
3. Renewable Energy Investment
The state can tap into solar and small hydroelectric projects to address energy shortages in off-grid communities.
4. Public-Private Partnerships (PPPs)
The government can enter partnerships with the private sector to fund and manage critical infrastructure like roads, markets, and schools.
Conclusion
State allocation remains a lifeline for Benue State, providing the financial backbone for governance and development. However, overdependence on FAAC funds presents long-term risks, especially in a volatile national economic environment. The 2024 budget reflects a strategic effort to invest in key areas such as agriculture, infrastructure, education, and healthcare. Nonetheless, for Benue to realize its full potential, it must aggressively pursue economic diversification, improve internally generated revenue, and create a conducive environment for investment.
With strong leadership, community involvement, and transparent governance, Benue State can shift from being dependent to self-sustaining—truly living up to its title as Nigeria’s Food Basket, not only in agriculture but in economic innovation and fiscal responsibility.
