States Generate N1.3tr IGR Against N4.4trn from Federation Account — Economic Confidential

July 26, 2020 Mary

2019 Annual States Viability Index ASVI: FCT, 36 States Generate N1.3tr IGR Against N4.4trn from Federation Account Allocation
… Lagos Generates More IGR than 20 States Combined
…. RICH/Economic Viable States: Lagos, Ogun, Rivers, Kwara, Kaduna, Enugu States
… INSOLVENT/Poor IGR States: Katsina, Kebbi, Borno, Bayelsa, Taraba States

The Economic Confidential has released the Annual States Viability Index ( ASVI) which shows that seven (7) States are insolvent as their Internally Generated Revenues (IGR) in 2019 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 2019 as compared to N1.1 trillion in 2018, an increase of about N200 billion. The report by the Economic Confidential, an intelligence magazine further indicates that the IGR of Lagos State of N398bn is higher than that of 20 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 N74bn IGR against N30bn from the Federation Account in the same period.

Lagos State remained steadfast in its number one position in IGR with a total revenue generation of N398bn compared to FAA of N270bn which translate to 147% in the twelve months of 2019. It is followed by Ogun State which generated IGR of N70.92bn compared to FAA of N92bn representing 77%; Rivers with N140bn compared to FAA of N219bn representing 64% and Kwara State with a low receipt from the Federation Account has maintained its impressive IGR by generating N30bn compared to FAA of N80bn representing 38%.

Others with impressive IGR include Kaduna with IGR of N44bn compared to FAA of N129bn representing 35%; Enugu generated N31bn compared to FAA of N103bn representing 29%; Ondo with IGR of N30bn compared to FAA of N103bn representing 29%; Edo with IGR of N29bn compared to FAA of N108bn representing 27%; Anambra with IGR of N26bn compared to FAA of N98bn representing 27% while Cross River State earned N22bn IGR against FAA of N99bn representing 25%.

The ten states with impressive IGR generated N894bn in total, while the remaining 26 states merely generated a total of N440bn in 2019.

The report provides an amazing discovery, as most states have improved their IGR compared to previous years. In 2019 only seven states generated less than 10% IGR compared to 17 states in 2018.

There are seven 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. Top on the
Katsina, the home state of President Muhammadu Buhari generated the poorest and lowest IGR compared to its federal allocation in 2019. It realized a meagre N8bn compared to a total of N136bn ‘free money’ received from the Federation Account Allocation (FAA) in 2019 representing 6%. It is followed by Kebbi with IGR of N7.3bn compared to FAA of N100bn representing 7%; Borno N8bn compared to FAA of N121bn representing 7% and Taraba with IGR of N6.5bn compared to N86bn of FAA representing 8%.

Others include Bayelsa, the home state of former President Goodluck Jonathan with IGR of N16bn compared to N176bn of FAA representing 9%; Yobe with IGR of N8.4bn compared to N88bn of FAA representing 9% and Gombe with IGR of N6.8bn compared to N75bn of FAA representing 75% within the period under review.

The poor states with lower IGR may not stay afloat outside the monthly allocations from Federation Account due to 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 three states in the entire Northern region have IGR above 20% in comparison to their respective allocations from the Federation Account. They are Kwara, Kaduna and Kano States in that order.

Meanwhile, ten states in the South recorded over 20% IGR in 2019. They are Lagos, Ogun, Rivers, Enugu, Ondo, Edo, Delta, Anambra, Cross River and Delta States.
Only Bayelsa is a state with the poorest Internally Generated Revenue of less than 10% compared to their FAA in the South in 2019. The other poorest IGR states are in North-East Yobe, Gombe, Borno and Taraba State and two states from North-West, namely Katsina and Kebbi.

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.

TABLE: 2019 Annual State Viability Index ASVI by Economic Confidential

Previous Tables:
Economic Confidential ASVI 2018

Economic Confidential ASVI: 2017
Economic Confidential ASVI: 2016

By PRNigeria