• Report says Lagos Generates More IGR than 22 States Combined
A new report has revealed that eight states are insolvent due to their low Internally Generated Revenue (IGR).
The report titled Annual States Viability Index (ASVI) which is the fifth since its inception was published by The Economic Confidential.
The new report shows that eight (8) States are insolvent as their Internally Generated Revenues (IGR) in 2020 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 IGR of the 36 states of the federation totalled N1.3 trillion in 2020 was the same figure in 2019.
The report by the Economic Confidential, an intelligence magazine further indicates that the IGR of Lagos State of N418bn is higher than that of 22 other States put together whose Internally Generated Revenues 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 N92bn IGR against N30bn from the Federation Account in the same period.
Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of N418bn compared to FAA of N299bn which translate to 139% in the twelve months of 2020. It is followed by Rivers State which generated IGR of N117bn compared to its FAA of N198bn representing 58%; Ogun with N50bn compared to FAA of N88bn representing 57%; Kaduna State with N50bn compared to FAA of N124 bn representing 40%; Oyo with IGR of N38bn compared to FAA of N127bn representing 29.7% and Anambra generated N28bn compared to FAA of N94bn representing 29.6%.
The total internally generated revenues of the six most viable states in 2020 at N695bn as computed by the Economic Confidential was more than the entire IGR collected by the remaining 30 states put together which was less than N600bn.
Others with impressive IGR include Edo with IGR of N27bn compared to FAA of N99bn representing 27%; Enugu with IGR of N23bn compared to FAA of N87bn representing 27%; Ondo with IGR of N24bn compared to FAA of N97bn representing 25.6% while Kwara State earned N19bn IGR against FAA of N77bn representing 25.5%.
The ten states with impressive IGR generated N796bn in total, while the remaining 26 states excluding FCT merely generated a total of N418bn in 2020.
The report provides an amazing discovery. While some states have improved their IGR compared to previous years, others performed poorly. In 2020 eight states generated less than 10% IGR compared to seven states in 2019. Borno State narrowly escaped as it generated N11.57bn IGR compared to FAA of N115bn representing 10% more in 2020 which was more than 3% over its 7% last year.
The eight states that may not survive without the Federation Account due to their extremely poor internal revenue generation of less than 10% compared to their federal allocations are Bayelsa, the home state of former President Goodluck Jonathan which generated the poorest and lowest IGR compared to its federal allocation in 2020. It realized a meagre N12bn compared to a total of N152bn from the Federation Account Allocation (FAA) in 2020 representing 8%.
It is followed by Jigawa with IGR of N8.6bn compared to FAA of N107bn representing 8.1%; Katsina, the home state of President Muhammadu Buhari generated N11.3bn compared to FAA of N130bn representing 8.8% and Adamawa with IGR of N8.3bn compared to N91bn of FAA representing 9.1%.
Others include Yobe, the home state of Senate President Ahmed with IGR of N7.7bn compared to N84bn of FAA representing 9.2; Niger with IGR of N10.5bn compared to N109bn of FAA representing 9.6%, Taraba with IGR of N8.1bn compared to N82bn of FAA representing 9.8% and Benue with IGR of N10.46bn compared to N106bn of FAA representing 9.8% within the period under review.
The poor states with lower IGR may not stay afloat outside the monthly allocations from the Federation Account due to a lack of initiatives for revenue generation drive coupled with arm-chair governance. Some of the states cannot attract investors due to socio-political and economic crises including insurgency, kidnapping, armed banditry, and herdsmen-farmers clashes.
The Economic Confidential ASVI further showed that only four states in the entire Northern region have IGR above 20% in comparison to their respective allocations from the Federation Account. They are Kaduna, Kwara, Zamfara and Plateau States in that order.
Meanwhile, ten states in the South recorded over 20% IGR in 2020. They are Lagos, Rivers, Ogun, Oyo, Anambra, Edo, Enugu, Ondo, Delta and Osun States. Bayelsa is the only state in the South with the poorest Internally Generated Revenue of less than 10% compared to its FAA in 2020.
The other poorest IGR states are Jigawa and Katsina in North-West; Benue and Niger in the North-Central and Adamawa, Taraba and Yobe in the North-East.
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.
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