Economy: 17 states in danger without federal allocations – Report

The Economic Confidential at the weekend released its Annual States Viability Index (ASVI) for 2018, showing that 17 states of the 36 states are insolvent as their Internally Generated Revenues (IGR) in 2018 were far below 10 per cent of their receipts from the Federation Account Allocations (FAA) in the same year.

The index computed by the report revealed that without the monthly disbursement from Federal Accounts Allocation Commission, many of the states remained unviable and cannot survive without the federally distributed handouts largely from the oil sector.

The IGRs are generated by states 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 totalled N1.1 trillion in 2018 as compared to N931 billion in 2017, an increase of N172 billion. The report by the economic intelligence magazine further indicated that the IGR of Lagos State at N382 billion was higher than that of 30 states put together whose IGRs are extremely low and poor compared to their allocations from the Federation Account.

Meanwhile, the Federal Capital Territory (FCT), Abuja, which is not a state but the nation’s capital, generated N65 billion IGR against N29 billion from the Federation Account in the same period.

Lagos State remained steadfast in its number one position in IGR generation with a total revenue of N382 billion compared to FAA of N260 billion, which translates to 146 per cent in the 12 months of 2018. It was followed by Ogun State, which generated IGR of N84.55 billion compared to FAA of N93 billion representing 90 per cent; Rivers with N112 billion compared to FAA of N237 billion representing 47 per cent and Kwara State with a low receipt from the Federation Account has maintained its impressive IGR by generating N23 billion compared to FAA of N81 billion representing 28 per cent.

Others with impressive IGR collections include Edo with N28 billion compared to FAA of N112 billion representing 25 per cent; Kano generated N44 billion compared to FAA of N183 billion representing 24 per cent; Enugu with IGR of N22 billion compared to FAA of N92 billion representing 23 per cent; Ondo with IGR of N24 billion compared to FAA of N108 billion representing 22.77 per cent; Kaduna with IGR of N29 billion compared to FAA of N131 billion representing 22.44 per cent while Delta State earned N58 billion IGR against FAA of N285 billion representing 20 per cent.

However only 10 states wcame in with impressive IGR generated at N808 billion in total, while the remaining states merely generated a total of N295 billion in 2018.

Meanwhile the report provides shocking revelation of 17 states with less than 10 per cent IGR as in the previous year, 2017, noting that the poor states may not stay afloat outside the Federal Allocation due to socio-political crises including insurgency, kidnapping, armed banditry and herdsmen-farmer clashes.

According to the report, 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 IGR are Ebonyi, which realised a meagre N6.14 billion compared to a total of N76 billion it received from FAA in 2018 representing about 7.98 per cent; Bayelsa with IGR of N13.6 billion compared to FAA of N192 billion representing 7.10 per cent; Taraba N5.96 billion compared to FAA of N88 billion representing 6.77 per cent; Adamawa with IGR of N6.2 billion compared to N97 billion of FAA representing 6.77 per cent and Borno with IGR of N6.52 billion compared to N122 billion of FAA representing 5.3 per cent within the period under review.

The key poor internal revenue earners are Katsina, which generated N6.9 billion compared to FAA of N138 billion representing 5.03 per cent; Yobe, N4.48 billion compared to FAA of N89 billion representing 4.86 per cent and lastly, Kebbi with N4.88 billion IGR compared to FAA of N101 billion representing 4.88 per cent.

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent in comparison to their respective allocations from the Federation Account.

They are Kwara, Kano and Kaduna states.

Also, seven states in the South recorded over 20 per cent IGR in 2018. They include Lagos, Ogun, Rivers, Edo, Enugu, Ondo and Delta states.

The four Southern states with the poorest IGR of less than 10 per cent compared to their FAA in 2018 are Akwa Ibom, Ekiti, Ebonyi and Bayelsa.

Similarly, 13 Northern states have  poorest IGR, namely Benue, Nasarawa, Gombe, Zamfara, Niger, Bauchi, Jigawa, Taraba, Adamawa, Borno, Katsina, Yobe and Kebbi states.

Reacting to their poor classification on the States IGR collection matrix, states administrations have dismissed the report as not a true reflection of their capacity to meet current financial obligations.

For instance, the Bayelsa State Government in its reaction, said the state is work in progress which Governor Henry Seriake Dickson has with his policies and critical investment in infrastructural development set on the  road of self-sustenance.

The Commissioner for Information and Orientation , Mr Daniel Iworiso-Markson, who stated this while reacting to the report of Economic Confidential said all what the administration has done in the past seven years to make the state self-sufficient.

According to him, there is no state in Nigeria that can survive outside the Federal allocation if it does not have key infrastructure in place that would make it conducive for investors .

Iworiso-Markson, who regretted that successive ad- ministration in the state did not attach importance to building infrastructure leaving Dickson with the onerous task to pull the state out of the doldrums of underdevelopment, expressed optimism that in the next five to ten years, Bayelsa State would be one of the leading states in Nigeria in terms of revenue generation .

“All what the Dickson administration has done in the past seven years was to make the state self-sustainable. We commenced the policy of ‘Bayelsa Beyond Oil’ to ensure the state looks at other areas that would attract investors outside oil. No state can attain self-sustainability without certain infrastructure in place. We have grown our IGR from a paltry N100million to N1billion. The airport facility the Dickson administration built is one of the infrastructure being put on ground to make Bayelsa conducive for investors. These are some of the things past administrations in the state should have done which they did not do. With all what the Dickson administration has put on ground, in the next five to 10 years, Bayelsa State would not only be off that list but would also be one of the leading states in Nigeria.

In his reaction, the Kebbi Commissioner for In- formation and Culture, Alhaji Muhammed Suleiman Marafa, in a telephone chat with Daily Sun, debunked the report that the state is not economically buoyant. Marafa observed that though he didn’t know the source of the organisation’s report, all Nigerians, home and abroad know very well that Kebbi state is doing well on rice production.

He noted the economy diversification agenda of President Muhammadu Buhari has helped the state to venture into rice farming which according to him has increased the revenue generation of the state as well other natural mineral resource endowments in the state which government is utilising.

Meanwhile when contacted for comments on tele- phone, the Ebonyi State Commissioner for Finance, Obinna Nwachukwu, said that he would not be able to speak on the matter immediately as he needed to check his records so as not to misrepresent the state.

Nwachukwu said: “I cannot react until I look at my own documents to confirm that what they are saying is correct. May be by Tuesday you can call me. I can’t react to what I am not sure now! If I react and misrepresent the state what will I say?” – The Sun.

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