State Viability Index: 36 States Generate N801bn IGR Against FAAC’s N2.6trn


…. Lagos Generates More IGR Than 31 States Combined

… Economic Viable States: Lagos, Ogun, Rivers, Edo, Kwara, Delta States

… Poor IGR States:  Borno, Ebonyi, Kebbi, Jigawa

The Economic Confidential, a monthly financial magazine, has released its Annual States Viability Index (ASVI) indicating that 14 States are insolvent as their Internally Generated Revenues (IGR) in 2016 were far below 10 per cent of their 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.

The IGR are generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies (MDAs).

The magazine further indicates that the IGR of Lagos State of N302bn is higher than that of 30 States put together, excluding Lagos, Ogun, Rivers, Edo, Kwara and Delta States with impressive IGRs at more than 30 per cent each. The 30 other states merely generated a total of N258bn in 2016.

Recently, it published the total allocation received by each state from the Federation Account Allocation Committee (FAAC) between January and December 2016. The latest IGR report reveals that only Lagos and Ogun States generated more revenue than their Federation Account allocations by 169 per cent and 127 per cent respectively and no any other state has up to 100 per cent of IGR to the federal largesse.

The IGR of the 36 states of the federation stood at N801.95 billion in 2016, compared to N682.67 billion in 2015, an increase of N119.28 billion. While the report provides shocking discoveries to the effect that 14 states which have less than 10 per cent IGR may not stay afloat outside the Federation Account Allocation due to socio-political crises including insurgency, militancy and herdsmen attacks, others lack foresight in revenue generation drive coupled with arm-chair governance.

The states that may not survive without the Federation Account due to poor internal revenue generation include Borno, which realized a meager N2.6bn compared to a total of N73.8bn it received from the Federation Account Allocation (FAA) in 2016 representing about four per cent. Others are: Ebonyi with IGR of N2.3bn compared to FAA of N46.6bn representing five per cent; Kebbi N3.1bn as against FAA of N60.88bn, representing 5.14 per cent; Jigawa with N3.5bn compared to N68.52bn of FAA, representing 5.15 per cent and Yobe with IGR of N3.24nn compared to N53.93bn of FAA, representing 6.0 per cent within the period under review.

Other poor internal revenue earners are Gombe which generated N2.94bn compared to FAA of N46bn, representing 6.26 per cent; Ekiti N2.99bn as against FAA of N47.56bn representing 6.28 per cent; Katsina N5.54bn compared to FAA of N83bn representing 6.65 per cent; and Sokoto N4.54bn as against FAA of N65.97bn representing 6.88 per cent.

Meanwhile, Lagos State maintained number one position in IGR with a total revenue generation of N302bn compared to FAA of N178bn, which translate to 169 per cent in the 12 months of 2016. It is followed by Ogun State with IGR of N72.98bn as against FAA of N57bn representing 127 per cent.

Others with impressive IGR include Rivers with N85bn compared to FAA of N134bn representing 63 per cent; Edo with IGR of N23bn compared to FAA of N59bn representing 38%. Kwara State however with low receipt from the Federation Account has greatly improved in its IGR of N17bn compared to FAA of N49bn, representing 35 per cent while Delta with IGR of N44bn compared to FAA of N126bn, representing 6.88 per cent.

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent. They are Kwara, Kano, and Kaduna States. Meanwhile eight states in the South recorded over 20 per cent IGR in 2016. They are Lagos, Ogun, Rivers, Edo, Delta, Cross River, Enugu, and Oyo States State.

The states with the poorest IGR of less than 10 per cent in the South are Imo, Bayelsa, Ekiti, and Ebonyi States while in the North we have Niger, Nasarawa, Sokoto, Katsina, Gombe, Yobe, Jigawa, Kebbi and Borno States.

The states’ IGRs can improve through aggressive diversification of the economy to productive sectors rather than relying on the monthly Federation Account revenue that largely come from the oil sector.

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