17 states insolvent as Lagos generates more IGR than 30 states

The Economic Confidential has released its Annual States Viability Index ( ASVI) which shows that seventeen (17) States are insolvent as their Internally Generated Revenues (IGR) in 2017 were far 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 unviable, and cannot survive without the federally collected revenue, mostly from the oil sector.

The IGR are generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies (MDA)s.

The report by this economic intelligence magazine further indicates that the IGR of Lagos State of N333bn is higher than that of 30 States put together whose Internally Generated Revues are extremely low and poor compared to their allocations from the Federation Account.

The states with impressive over 30% IGR apart from Lagos are Ogun, Rivers, Edo, Kwara, Enugu and Kano States who generated N607bn in total, while the remaining states merely generated a total of N327bn in 2017.

Recently the magazine published the total allocations received by each state in Nigeria from the Federation Account Allocation (FAA) between January to December 2017. The latest report on IGR reveals that only Lagos and Ogun States generated more revenue than their allocations from the Federation Account by 165% and 107% respectively and no any other state has up to 100% of IGR to the federal largesse.

The IGR of the 36 states of the federation totalled N931bn in 2017 as compared to N801.95 billion in 2016, an increase of N130 billion.

While the report provides shocking discoveries the states with less than 10% IGR have jumped to 17 from 14 states in the previous year 2016. The poor states may not stay afloat outside the Federation Account Allocation due to socio-political crises including insurgency, militancy, armed-banditry and herdsmen attacks. Other states lack foresight in revenue generation drive coupled with arm-chair governance.

The states that may not survive without the Federation Account due to poor internal revenue generation are Bauchi which realized a meagre N4.3bn compared to a total of N85bn it received from the Federation Account Allocation (FAA) in 2017 representing about 5%; Yobe with IGR of N3.59bn compared to FAA of N67bn representing 5.33%; Borno N4.9bn compared to FAA of N92bn representing 5.41%; Kebbi with IGR of N4.39bn compared to N76bn of FAA representing 5.77% and Katsina with IGR of N6bn compared to N103bn of FAA representing 5.8% within the period under review.

Other poor internal revenue earners are Niger which generated N6.5bn compared to FAA of N87bn representing 7.43%; Jigawa N6.6bn compared to FAA of N85bn representing 7.75%; Imo N6.8bn compared to FAA of N85bn representing 8.1% and Akwa Ibom N15bn compared to FAA of N197bn representing 8.06%, Ekiti N4.9bn compared to FAA of N59bn representing 8.38%; Osun N6.4bn compared to FAA of N76bn representing 8.45 %, Adamawa N6.2bn compared to FAA of N72.9bn representing 8.49%, Taraba N5.7bn compared to FAA of N66bn representing 8.70% and Ebonyi N5.1bn compared to FAA of N57.8bn representing 8%.

Meanwhile, Lagos State remained steadfast in its number one position in IGR with a total revenue generation of N333bn compared to FAA of N201bn which translate to 165% in the twelve months of 2017. It is followed by Ogun State which generated IGR of N74.83bn compared to FAA of N69bn representing 107%. Others with impressive IGR include Rivers with N89bn compared to FAA of N178bn representing 50%; Edo with IGR of N25bn compared to FAA of N75bn representing 33%. Kwara State however with a low receipt from the Federation Account has greatly improved in its IGR of N19bn compared to FAA of N61bn representing 32% while Enugu with IGR of N22bn compared to FAA of N69bn representing 32%. Kano generated N42bn compared to FAA of N143bn representing 30% while Delta State earned N51bn IGR against FAA of N175bn representing 29%.

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20%. They are Kwara, Kano, and Kaduna States. Meanwhile ten states in the South recorded over 20% IGR in 2017. They are Lagos, Ogun, Rivers, Edo, Enugu, Delta, Cross River, Anambra, Oyo and Abia States.

The states with the poorest Internally Generated Revenue of less than 10% in the South are Bayelsa, Ebonyi, Osun, Ekiti, Akwa-Ibom and Imo States while in the North we have Gombe, Zamfara, Taraba, Adamawa, Jigawa, Niger, Katsina, Kebbi, Borno, Yobe and Bauchi States

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.