By- Abba Hamisu Sani
Africa-Press – Nigeria. Improving internationally generated revenue remains a challenge to the 36 states of the Federation as they rely on monthly Federal allocations
Several efforts by Non- governmental organisations to assist the states in increasing their revenue sources yield fewer results due to leakages and lack of transparency in tax management coupled with corruption.
Available data shows that only Lagos and Ogun States remain the most viable interns of revenue generation in 2022 while Akwa-Ibom ,Katsina are insolvent due to poor Internally generated revenue (IGR).
According to The Economic Confidentiality seventh Annual States Viability Index (AS I) six States are insolvent as their internally Generated Revenues in 2022 were below 10 percent of their receipts from the Federation Account Allocation (FAA) in the same year .
The index carefully and painstakingly computed proved that without the monthly disbursement from the Federation Account Allocation Committee (FAAC) ,many states remain viable and can not survive without the federally collected revenue mainly from the oil sector.
States source their internally generated revenue through the following; Pay As-Earn Tax (PAYE), from workers of both public and private organisations operating in their respective states.Direct Assessment ,Road Taxes,and revenues from Ministries Department and Agencies(MDA’s).
Total IGR of 2022 for 36 states
The Internally generated revenue of Nigerian 36 states for the year 2022 stands at 1.8 trillion Naira (2,182,615,200.00 dollars) which was more than that of 2021 that stands at 1 .76 trillion Naira(2,134,112,640.00 dollars).
It is also worth noting further that ,the available statistic indicated that the Lagos State Internally generated revenue is 651 billion Naira( 789,379,164.00 dollars ) which is higher than that of the 30 other states put together whose internally generated revenues are meagre and poor compared to their allocations from the Federation Account.
Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of 651 billion naira compared to FAA of 370 billion naira( 448,648,680.00 dollars).,translating to 176 percent in the twelve months of 2022.
Ogun State is second to the Lagos in making revenues as it generate 120 billion as IGR compared to its 113 billion from the Federal Allocation representing 106 percent followed by Rivers State with 172 billion naira compared to 36.3 billion representing 48 percent ,
2022 ASVI: Again, Lagos, Ogun Remain Most Viable States- Akwa-Ibom, Bayelsa, Katsina are Insolvent Due to Poor IGR.
The Economic Confidential has released its seventh Annual States Viability Index (ASVI), which shows that six (6) States are insolvent as their Internally Generated Revenues (IGR) in 2022 were below 10% of their receipts from the Federation Account Allocations (FAA) in the same year.
The index carefully and painstakingly computed proved that without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states remain viable and cannot survive without the federally collected revenue, mainly from the oil sector.
States generate the IGR through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes, and revenues from Ministries, Departments, and Agencies (MDAs).
The IGR of the 36 states of the federation totaled N1.8 trillion in 2022 was above that of 2021 which was N1.76tr. The report by the Economic Confidential, an intelligence magazine, further indicates that the IGR of Lagos State of N651bn is higher than that of 30 other States put together, whose Internally Generated Revenues are meagre and poor compared to their allocations from the Federation Account.
Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of N651bn compared to FAA of N370bn, translating to 176% in the twelve months of 2022. Ogun State generated IGR of N120bn compared to its FAA of N113bn, representing 106%, followed by Rivers with generated N172bn IGR compared to FAA of N363bn, representing 48%; Kaduna State with 58 billion naira compared to Federal allocation of 155 billion naira representing 37%; Kwara with IGR of 35 billion naira compared to Federal allocation of 99 billion naira representing 36% and Oyo generated 62 billion naira compared to Federal Allocation of 181 billion naira representing 34% and Edo generated 47 billion naira IGR compared to 147 billion naira Federal Allocation representing 32%.
Top Seven most Viable states with 1,394,448,600.00 dollars
The total internally generated revenues of 1.15 trillion Naira ( 1,394,448,600.00 dollars) from the seven most viable states in 2022 was almost twice the total IGR of 29 remaining states put together merely generating about 650 billion naira.
Others with impressive IGR include Anambra with an IGR of 33 billion naira compared to Federal Allocation of 127 billion naira representing 27%; Enugu with an IGR of 28 billion naira compared to Federal Allocation of 111 billion naira representing 26%; Ondo with IGR of 32 billion naira compared to Federal Allocation of 135 billion naira representing 24% while Nasarawa State earned 19 billion naira IGR against Federal Allocation of 92 billion naira representing 21%. Delta generated 85 billion naira IGR against its receipt of 428 billion naira from the Federal Allocation representing 20%. Osun with IGR of 24 billion naira compared to its Federal Allocation of 122 billion naira representing 20%.
The six states with impressive IGR generated 225 billion naira in total, while the remaining 23 states generated 426 billion naira in 2022.
The report provides an amazing discovery. While some states have improved their IGR compared to previous years, others performed poorly. In 2022, six states generated less than 10% IGR compared to two states in 2021.
Adamawa narrowly escaped as it generated 13.1 billion naira compared to Federal Allocation of 116 naira representing 11.29% in 2022, less than 2% over its 13% last year.
The Nigerian states that can not survive without Federal Allocations
The six states that may not survive without the Federation Account Allocation due to their extremely poor internal revenue generation of less than 10% compared to their federal allocations are Bayelsa, Katsina, and Akwa Ibom, the home states of former Presidents Goodluck Jonathan, Muhammadu Buhari, and the current Senate President Godswill Akpabio respectively.Others are Taraba, Yobe, and Kebbi states.
The Economic Confidential ASVI analysis further showed that only three states in the Northern region have IGR above 20% compared to their respective allocations from the Federation Account. They are Kaduna, Kwara, and Nasarawa States in that order.
Meanwhile, eight states in the South recorded over 20% IGR in 2022. They are Lagos, Ogun, Rivers, Oyo, Edo, Anambra, Enugu and Ondo.
The oil-producing Bayelsa and Akwa Ibom are the only states in the South with the poorest Internally Generated Revenue of less than 10% compared to their FAA in 2022.
The other poorest IGR states are Katsina and Kebbi in the northwest; Yobe and Taraba in the northeast.
Meanwhile, the IGR of the respective states can improve through aggressive diversification of the economy to productive sectors rather than relying on the monthly Federation Account revenues that largely come from the oil sector.
The poor states with lower IGR may not stay afloat outside the monthly allocations from the Federation Account due to a lack of initiatives for revenue generation drive coupled with armchair governance. Some of the states cannot attract investors due to socio-political and economic crises, including insurgency, kidnapping, armed banditry, and herdsmen-farmers clashes.
However there is a need for states with low Internally Generated Revenue to intensify effort as many of them have potential but lack of commitment from state governments to attract investors through providing an enabling environment is what make them poor and rely heavily on the Federal Allocations.
But States like Lagos,Ogun ,Rivers and Edo should be emulated by the remaining states which have low internally generated revenues.
Another side of the matter is corruption as most of these states are generating revenues in reality but lack of transparency and accountability is the key factor in making the states poor, not lack of the revenue sources.
If these states really want to survive on their own they have to block all leakages and enhance their tax management systems by applying technology in collecting their revenues through digital means.
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