By ALEXANDER C. NWUSULOR

Understanding Internal Generated Revenue (IGR)

According to the IOSR Journal of Economics and Finance, internally generated revenue (IGR) is revenue generated by local governments within their jurisdiction. The ability of local governments to make money internally is one of the most important considerations in forming a local council. Note these imports from various sources within the territory are PAYE, road taxes, direct valuations, fines, licenses, investments and include taxes such as royalties and fees for government assets. Internally generated imports (IGRs) are primarily generated income within the Federation of Nigeria, regardless of the share of income earned in the federation’s account.

The economic struggle continued and new demands were raised for the Nigerian government to diversify its economy in the oil and gas sector. Unfortunately, Nigeria's reliance on its oil sector is critical, and the impact of Nigeria’s declining oil imports is damaging with repercussions beyond the federal government. Experts believe that state governments, which rely primarily on statutory allocations from federal accounts, have found that their ability to provide the most basic public services (education, health, etc.)

Considering Nigeria’s severe economic downturn caused by falling oil prices in the international oil market. The federal quota accruing to the state has significantly reduced the previous level. Oti, Odigbo and Odey (2016) stated that the instability of oil revenues from the oil market is one of the main causes of concern about the state's reliance on federal revenues. Therefore, state governments seek ways to increase internally generated income to increase coalition quotas. Dang, Bako and Ishiya (2015) recently confirmed that mobilization of federal accounts was hardly sufficient to meet the country’s immediate needs. Therefore, it is the responsibility of the state government to internally seek ways to mobilize more internally generated revenues.

Enugu State’s IGR keeps growing

According to the National Bureau of Statistics (NBS), the IGR at the state level for the 36 states and the Federal Capital Territory (FCT) fell to N612.87 billion between January and June 2020 compared to N693.91bn recorded in half-year (H1) 2019. This indicates a negative growth of 11.7 per cent year-on-year. While revenue from taxes accrued to the sum of N528 billion (86.28 per cent), revenue from Ministries, Departments and Agencies (MDAs) alone represent 13.72 per cent of the total half-year IGR.

The decline economist believe is due to the effects of the covid-19 pandemic on the various states of the federation, as they were forced to implement lockdown protocols to curb the spread of the disease in the country.

Similarly, on a quarter-on-quarter basis, the Q2 2020 IGR figure for states and FCT declined by 26.5 per cent to N259.73 billion in Q1 2020 from N353.14 billion recorded in Q1 2019. Comparing the Q2 2020 figure to the corresponding quarter (2019), the IGR had dropped by 33.63 per cent from N391.32 billion.

The severe impact of the coronavirus pandemic has brought to bear an adverse effect on the revenue generation power of the Nigerian government which over the past months has recorded a tepid growth in its total collected revenues across the states of the federation.

This is why there were jubilations when the fifth Annual States Viability Index, ASVI of The Economic Confidential show Enugu with an IGR of N23bn compared to Federation Account Allocations (FAA) of N87bn representing 27% joining Lagos as one of the ten states with impressive IGR. Other states include Ondo, Rivers, Ogun, Kaduna, Oyo and Anambra. The index carefully and painstakingly computed proved that without the monthly disbursement from the Federation Account Allocation Committee, FAAC, many states remain not viable, and cannot survive without the federally collected revenue, mostly from the oil sector.

What does this mean for Enugu State?

Mr Iheanyi Igboko, the Director Centre for Memories Enugu, says it “means that Enugu state is starting to create a more entrepreneurial/ Business-friendly environment.” This welcoming feeling is what keeps ensures steady flow and exchange of market. Among other things this flow needs to be studied that way, both the people and the government can understand the factors at work. Enugu state is one state in the southeast that can boast of a viable Small Medium Entrepreneur Centre, measurable Technological innovation, the sustained university community and an emerging entertainment scene.

According to Victor Ejechi, a Data Analyst with TheCable Newspaper, it also means that Enugu State can become like Lagos if only they will still look inward and take the opportunity of other means to create revenue in the state, which in turn will increase the IGR of the state.

Enugu can be a self-sustaining state, says Mr Chima Ozuzu, the Assistant IT Audit Manager PwC. “It also means Enugu has diversified its revenue-generating channels beyond traditional sources that are impacted by COVID-19. For investors, it shows that there are a variety of viable business types,” he says.

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