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The Nigerian Governors’ Forum (NGF), an umbrella body of the 36 state governors in the country, recently loathed the growing insecurity in the country, and said it posed the greatest obstacle to efforts of the states to increase their Internally Generated Revenue (IGR). According to the NGF, the over-dependence of the state governments on the federal monthly allocation, which is dwindling due to volatility in global oil prices, contributes to their poor internally generated revenue.
Director General of NGF, Asishana Okauru, disclosed this in Abuja at a workshop organised by the States’ Fiscal Transparency Accountability and Sustainability (SFTAS) Programme Coordination Unit of the Federal Ministry of Finance Budget and National Planning under the theme: “Improving IGR, Trends and Emerging Reforms.” Undoubtedly, the workshop was timely and should serve as a wake-up call for states to think outside the box and creatively broaden their revenue base. Henceforth, states must strive to depend so much on the revenue they can generate instead of rushing to Abuja every month to share oil money. It is sad that oil revenue has made many states to be lazy. Available statistics show that states’ IGR has been on a steady decline in the last three years largely on account of the outbreak of the COVID-19 pandemic and poor revenue drive. According to figures from the NGF, most of the states’ IGR has declined by N28.15billion.
Besides, the state governments should equally reduce the cost of governance at the sub-national level and give priority attention to key projects can enhance the living standard of the people. Let them do more to ensure steady water supply, electricity and good roads for their people as well as provision of quality healthcare services and education. Unfortunately, most of the state governments are paying lip service to health and education. In some states, functional healthcare delivery system is non-existent in many rural communities. The state of their primary and secondary schools are highly deplorable while some of their universities are nothing more than glorified secondary schools.
These are some of the critical issues the governors should muster the economic and political will to quickly address and not rushing to collect senatorial and presidential nomination forms. It is obvious that the federal revenue is fast dwindling and no one can predict when the situation will improve. In April 2022, the three tiers of government shared a total of N725.571 billion from the federation account. This was only N135billion higher than the N590.546billion shared in March. Of the N725.571billion shared in April, the Federal Government received N272.104billion. States N227.201 billion and the 774 Local government areas received N167.9billion. For states with poor IGR, and they are many, this is grossly inadequate. Last year, reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) and the National Bureau of Statistics (NBS) revealed that no fewer than 15 states face imminent bankruptcy as a result of high debt portfolio and poor revenue generation and investment inflow.
The NBS report specifically stated that the total revenue of the 36 states in the last five years had been at record lows, with only N1.3trillion as IGR between 2017 and 2018. Lagos State IGR within the period under review surpassed that of 24 states combined. This means that 35 states could only generate about 15 per cent of their budgeted revenues, and look up for 85 per cent of their financial needs from the federation account. With increasing debts and poor IGR, most states are in for hard times. Data from the Debt Management Office (DMO) puts the debt-to-revenue of the states at above 50 per cent. This may increase further if their exposure to domestic debt market is not substantially curtailed. Frontally tackling the general insecurity across the country can attract foreign investment and improve the states’ IGR. A recent report from the NBS revealed that 24 states did not attract any investment at all in 2020 as a result of insecurity and COVID-19 pandemic.
We believe that diversification of the economy, especially through agriculture and exploitation of solid minerals will put the states on the path of economic growth and development. Moreover, empowering small businesses is a veritable means to broaden the tax-to-GDP ratio. Beyond this, the situation the states are passing through makes fiscal federalism imperative. This calls for amendment of certain provisions in the 1999 Constitution. For instance, some of the items on the Exclusive Legislative list, put at 68, should be domiciled in the states. Above all, let state governors deploy uncommon vision and imagination to grow their IGR instead of depending on monthly federal allocation.
