14 Nigerian states insolvent, ‎have ridiculously low internal revenue – Report

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About fourteen states in Nigeria are insolvent as their Internally Generated Revenues, IGR, in 2016 were far below 10 per cent of their Federation Account Allocations, FAA, a report has shown.

Borno State map
Borno State map

According to the Annual States Viability Index
(ASVI) report published by the Economic Confidential, an economic intelligence magazine, about 14 states were insolvent in the year under review.

According to the index, without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states remain unviable, and cannot survive without the federally collected revenue.

The states that may not survive without the federation allocation due to poor internal revenue generation, according to the report, include Borno which realised a meagre N2.6 billion compared to a total of N73.8 billion it received from the Federation Account Allocation in 2016, representing about 4 per cent.

Others are Ebonyi with IGR of N2.3 billion compared to FAA of N46.6 billion representing 5 per cent; Kebbi with N3.1 billion compared to FAA of N60.88 billion representing 5.14 per cent; Jigawa with N3.5 billion compared to N68.52 billionof FAA representing 5.15 per cent and Yobe with IGR of N3.24 billion compared to N53.93 billion of FAA representing 6 per cent within the period under review.

Other poor internal revenue earners are Gombe which generated N2.94 billion compared to FAA of N46 billion representing 6.26 per cent; Ekiti with N2.99 billion compared to FAA of N47.56 billion representing 6.28 per cent; Katsina with N5.54 billion compared to FAA of N83 billion representing 6.65 per cent and Sokoto with N4.54 billion compared to FAA of N65.97 billion representing 6.88 per cent.

The report noted that internal revenues are generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies, MDAs.

Meanwhile, the index revealed that the IGR of Lagos State, put at N302 billion, is higher than that of 30 States put together excluding Ogun, Rivers, Edo, Kwara and Delta states whose IGRs are very impressive at more than 30 per cent each.

The 30 other states merely generated a total of N258 billion in 2016, the report said, adding that only Lagos and Ogun states generated more revenue than their allocations from the Federation Account.

The ratio of internal revenue to federal allocation for the two states, the report said, were169 per cent and 127 per cent respectively; adding that no other state has up to 100 percent of IGR to the federal allocation.

The IGR of the 36 states of the federation totalled N801.95 billion in 2016 as compared to N682.67 billion in 2015, an increase of N119.28 billion.

While 14 states which have less than 10 per cent IGR may not stay afloat outside the federation account allocation due to socio-political crises including insurgency, militancy and herdsmen attacks, others lack foresight in revenue generation drive coupled with arm-chair governance, the report noted.

Other states with impressive IGR drive include Rivers with N85 billion compared to FAA of N134 billion representing 63 per cent; Edo with IGR of N23 billion compared to FAA of N59 billion representing 38 per cent.

The report noted that Kwara State, however, with low receipt from the Federation Account has greatly improved in its IGR of N17 billion compared to FAA of N49 billion representing 35 per cent while Delta with IGR of N44 billion compared to FAA of N126 billion representing 6.88 per cent.

The index revealed that only three states in the entire Northern region have IGR above 20 per cent of federal allocation, and they are Kwara, Kano, and Kaduna states.

Meanwhile, eight states in the South recorded over 20 per cent IGR in 2016 and they include Lagos, Ogun, Rivers, Edo, Delta, Cross River, Enugu, and Oyo.

The states with the poorest Internally generated revenue of less than 10 per cent in the South are Imo, Bayelsa, Ekiti, and Ebonyi states while those in the North are Niger, Nasarawa, Sokoto, Katsina, Gombe, Yobe, Jigawa, Kebbi and Borno states.

The report suggested that the IGR of the states can improve through aggressive diversification of the economy to productive sectors rather than reliance on monthly federation account revenues that come from the oil sector.

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