NBS IGR data and states financial viability
Against the background of continued clamour for more states in Nigeria, the recent state Internally Generated Revenue (IGR) data released by the National Bureau of Statistics (NBS) not only raises questions about the financial strength of a majority of the existing Nigerian states, but casts doubt on even the revenue capacity of proposed new states.
Lagos State has the highest IGR among the 36 states of the federation, according to the NBS. Lagos State is the commercial nerve center of the country and benefits from a huge population and infrastructure development. Lagos has over the decades attracted people and investments because thus creating a basis for huge tax revenue.
An analysis of the most income generating state from each region showed that for the South-West region, Lagos led with N219.2 billion, South-South: Rivers N66.2 billion, South-East: Ebonyi N14 billion, North-Central: Benue N8.4 billion, North-West: Kaduna N11.5 billion, and North-East: Adamawa N4.6 billion.
Collectively the six western states of the federation generated N265.2 billion and of this total, Lagos contributed the lion’s share, with 95 percent (N219.2 billion) compared with Ekiti with just 1 percent (N3.78 billion).
Rivers State, one of the states in the south-southern part of the country came second after Lagos, with an IGR of N66.28 billion followed by Delta with N45.56 billion.
Only three states generate tax revenues of above N1,000 per head and these are Lagos (pop. 20 m) with IGR per capita of N10,851, Rivers (pop. 6.1 m) with IGR per capital of N3,280 and Delta (pop. 4.8 m) : IGR per capita of N2,258.
Some analysts have questioned the creation of new states even in the 1990s given that some of the states have not been able to generate IGR above N10 billion.
Notably, Ekiti, Kebbi, Katsina, Osun, Zamfara, Taraba, Gombe, Nassarawa and Benue created in the aforementioned period, showed a combined IGR of N41.65 billion; this is 425 percent and 60 percent lower than those of Lagos and Rivers State respectively.
Contributing to the anemic situation of some states is the fact that a majority of them are also highly indebted. Analysis of a recent report released by the Debt Management Office (DMO) shows that Yobe had $31.8 million (N5.088 billion) in external debt as at June 2013, equivalent to 180 percent of its IGR for the whole of 2012.
Analysts believe that the relative availability of skilled labour, good governance and security put places like Lagos in an advantageous position, compared to other states, especially those from the North-Eastern part of the country. It is clear that states like Yobe and Borno have experienced poor commercial activity and stunted growth owing to the Boko Haram insurgency..
Of all the states in the country, Lagos State stands out positively in the area of revenues, financial strength and economic potential. Its economy is sub-Saharan Africa’s sixth biggest economy at $31 billion.
Analysts are optimistic that after the rebasing of the Gross Domestic Product (GDP) of Nigeria, Lagos GDP may hit $45 billion, which is equivalent to the GDP of Ghana’s economy.
Rather than rely on jostling for hand-outs from the federation account that are frittered on non-capital expenditures, state governments should focus more on transforming their states to become havens for both local and foreign investments that would create positive multiplier effects for both the state coffers and the well being of their citizens.
By: BusinessDay