17 shortfall hits states’ internally-generated revenue, debts rise to N5.5tn

About 25 states in Nigeria suffered a shortage fall in internally generated revenue and struggle with cash crunch in the first quarter of 2023, findings by The PUNCH have shown.

Data obtained from the budget implementation report of each state showed that 25 states earned N182.26bn in Q1 2023.

This was a shortfall of 3.07 per cent or N5.77bn from the N188.03bn made in Q4 2022, based on a quarter-by-quarter analysis.

Although there are 36 states in Nigeria, Rivers and Sokoto have no data for Q1 2023 yet; Akwa Ibom has no data for Q1 2022, while Kwara, Edo, Kaduna, Lagos, Bauchi, Zamfara, Yobe, and Ogun have no data for Q4 2022.

Therefore, the figure for IGR was limited to 25 out of the 36 states in the country.

The PUNCH findings showed that the 25 states projected an IGR of N219.56bn for Q1 2023 but only made about N182.26bn, which means that they had a revenue performance of 83.01 per cent.

This also means that the revenue underperformed by 16.99 per cent as it failed to hit the states’ revenue target.

However, the states recorded an increase in revenue by 30.34 per cent from N139.83bn recorded in Q1 2022.

Among the 25 states, Delta had the highest IGR of N40.51bn in Q1 2023.

It was followed by Anambra (N13.03bn), Oyo (N13.01bn), Ondo (N10.79bn), and Osun (N9.06bn).

It was also observed that Enugu had the lowest IGR of N2.32bn.

It was followed by Niger (N3.04bn), Taraba (N3.08bn), Imo (N3.16bn), and Katsina (N3.22bn).

The PUNCH also learnt that these 25 states have a total domestic debt of N3.12tn in Q1 2023.

This was an increase of N130bn in three months, according to data from the Debt Management Office.

Delta was the top debtor with about N421.78bn as of March 31, 2023.

It was followed by Imo (N202.55bn), Cross River (N196.27bn), Oyo (N161.73bn), and Plateau (N148.12bn).

Jigawa had the least domestic debt of N43.59bn as of March 31, 2023.

It was followed by Kebbi (N60.94bn), Katsina (N62.37bn), Nasarawa (N71.45bn), and Ondo (N75.51bn).

The PUNCH also learnt that 36 states got at least N713.57bn in Q1 2023, which was an increase of 20.85 per cent from N590.45bn in Q1 2022, according to reports from the Federation Accounts Allocation Committee.

A breakdown for 2023 showed that the states received N244.98bn in January, N236.46bn in February, N232.13bn in March.

A breakdown for 2022 showed that the states received N221.19bn in January, N179.25bn in February, N190.01bn in March.

According to the National Bureau of Statistics, states generate IGR from MDAs revenues, direct assessment (income tax), Pay-As-You Earn, road taxes, and other taxes such as levies on market traders, land registration, etc.

FAAC gets money from oil revenues and related taxes, revenues generated from the Nigerian Customs Service trade facilitation activities, company income tax, any sale of national assets as well as surplus and dividends from State Owned Enterprises.

A political economist, Prof Pat Utomi, earlier urged states to create an environment for wealth creation rather than depend solely on the federal allocation.

He said, “States must focus more on creating the environment for wealth creation. If you go back to the late 50s and early 60s, most of the developments that took place in Nigeria are from the subnational governments. They collected the revenues, and send 50 per cent of it to the centre but the military ruined all of that.

“So, Nigeria became more focused on sharing revenues than on the fundamental way of governing, which is the production and taxing earned revenue. Whenever there is no revenue to share, the States are in complete trouble and they become bureaucracies that are unable to manage themselves because they are dependent. This is not the way they should function.”

The PUNCH earlier reported that at least eight states failed to attract any foreign investments but piled up N194.09bn debt between 2019 and 2022.

Data from the Capital Importation reports of the NBS revealed that Bayelsa, Gombe, Ebonyi, Jigawa, Kebbi, Taraba, Yobe, and Zamfara did not attract any foreign investments to their states.

In an earlier PUNCH report, an ECOWAS Common Investment Market consultant, Prof Jonathan Aremu, said, “The factors that attract foreign investment are not available in those states. One thing about investment is that it is crisis shy. Investment doesn’t go to places where there are crises. Why? Because investors want stability and predictability in their investments, particularly, having returns on their investments.

“When an economy is witnessing what we are witnessing currently, despite the investment potentials of that kind of economy, investors will wait and see whether the factors that can guarantee predictable and sustainable investments will finally be available.”

He added that the twin factors of a good investment climate as well as a good perception of that climate would have to be present for investors to develop the confidence to bring investments into the country.

In its December 2022 edition of the Nigeria Development Update, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023.

The report read, “Debt levels for an average state are estimated to increase from 154.6 per cent of revenues in 2021 to above 200 per cent of revenues in both 2022 and 2023.”

According to the Washington-based bank, the increase in debts will be due to low allocation from the Federation Account, which will likely weaken the fiscal condition of the states.

A development economist, Aliyu Ilias, said that the states were yet to fully develop themselves as industrialised and marketable to attract investors.

Ilias urged the states to develop an area of strength they could leverage to attract foreign investments.

He said, “Going forward, what they could do is to identify one area of strength. For instance, Bayelsa has oil and should be able to attract. I think it is about policy. They should give the policy a chance that would allow people to come and invest. They should also create an attraction and develop an economic summit that will make sure they showcase and attract investors.”

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, stressed the need for better reforms to strengthen investors’ interest.

He also emphasised the need to address the issue of insecurity plaguing the country. (The PUNCH)

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