Efforts by the 36 states and the Federal Capital Territory (FCT) to develop other sources of income in order to increase substantially, their Internally Generated Revenues (IGRs) following steady decline in their monthly allocations from the Federation Account due to falling oil earnings, seem to have started achieving appreciable results. Just last week, the National Bureau of Statistics (NBS), in its report for the first six months of 2018, revealed that total IGR recorded by the 36 states and FCT was N579.49 billion as against N453.83 billion during the same period in 2017, representing an increase of 27.7 percent.
According to the report, 28 of the 36 states recorded increases in IGR while Benue, Kebbi, Kwara, Anambra, Abia, Enugu, Ebonyi and Taraba did not record growth in IGR during half-year end of 2018. During the second quarter of 2018, Imo recorded IGR increase of N7.012 billion from N4.227 billion in 2017, representing 65.86 percent rise, while Katsina achieved 25 percent increase having posted N3.486 billion in 2018 as against N2.782 billion in 2017. In the same period, Kano realised an IGR of N18.554billion compared with N11.107 billion in 2017.
On the whole, the report is clear indication that many states are seriously looking inward for revenue generation rather than waiting till end of each month for FAAC allocation which NBS put at N1.23 trillion (half-year 2018) while total revenue available to the states was N1.74 trillion . We implore the states and FCT not to relent in their IGR drive efforts, especially now that Federal Government’s oil earnings are likely to decline further following recent reports that global oil prices have started tumbling again. States that have recorded decline in their IGRs, especially those affected by Boko Haram insurgency in the North-East, as well herdsmen attacks in some parts of the country, should not be discouraged as when there is life, there is hope. Governors in the North-East and elsewhere affected by crises should humble themselves by taking time off to learn from their counterpart in Bauchi so that they too, could turn what they perceive as disadvantages to opportunities, to increase their IGRs.
We recall that sometime in 2017, a report by Economic Confidential disclosed that of the 36 states in the country, only six were viable. This was to further buttress the fact that most of the states, including FCT, would be financially insolvent without monthly federal allocations. According to the eye-opening report, only Lagos and Ogun generated more revenues than their monthly federal allocations having realised 169 percent and 129 percent, respectively, of allocations obtained from Abuja, to position them financially solvent. In addition, of the 36 states, Lagos was placed first having attained IGR of N302 billion in 2016 compared with federal allocation of N178 billion, followed by Ogun with IGR of N72.98 billion as against federal allocation of N57 billion in 2016. Total IGR of the 36 states in 2016 was N801.95 billion as against N682.67 billion in 2015, representing an increase of N119.28 billion.
Although increases by 21.79 percent in states’ IGRs in 2018 is a welcome development, especially judging by the fact that of the 36 states in 2017, only six were financially viable and which is why over 20 states are owing workers salaries, while only three can pay the new N30,000 national minimum wage, the governors should be creative by embarking on sustainable projects that could significantly shore-up their IGRs. Widening their tax nets to accommodate more tax payers could help to increase their earnings. They should also provide enabling environment for local and foreign investors to ensure rapid socio-economic development.
Over the years, the low number of tax payers has invariably, been responsible for declining annual tax revenues as against projected figures. If internally generated revenues of Federal, State and Local Governments increase, there will be less dependence on foreign loans. In 2016, Nigeria’s debt profile was reportedly about 18 percent of its GDP while debt servicing consumed 66 percent of revenue. No wonder the national economy is in bad shape.
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