The non-viability of 17 states


A new report by the Economic Confidential to the effect that 17 states out of the 36 states of the federation and the Internally Generated Revenue (IGR) in 2017 were below 10 per cent of their receipts from the Federation Account Allocations (FAA) in the same year underscores the dire need to diversify the nation’s economy from its oil dependency.
The magazine’s Annual States Viability Index (ASVI) revealed that without the monthly Federation Account Allocation Committee (FAAC) disbursement many states remain unviable, and cannot survive without the federally collected revenue, mostly from the oil sector. Oil contribute about 80 per cent of Nigeria’s revenue, but this deplete after oil prices plunged from a high of $114 to about $25 per barrel in mid 2014 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 states with the poorest Internally Generated Revenue of less than 10 per cent in the South are Bayelsa, Ebonyi, Osun, Ekiti, Akwa Ibom and Imo states while in the North we have Gombe, Zamfara, Taraba, Adamawa, Jigawa, Niger, Katsina, Kebbi, Borno, Yobe and Bauchi states From the report, the states with less than 10 per cent IGR have jumped to 17 from 14 states in the previous year 2016. The poor states may not stay afloat outside the Federation Account Allocation due to socio-political crises including insurgency, militancy, armed-banditry and herdsmen attacks. Other states lack foresight in revenue generation drive coupled with armchair governance.
The states that may not survive without the Federation Account due to poor internal revenue generation are Bauchi which realised a meagre N4.3 billion compared to a total of N85 billion it received from the Federation Account Allocation (FAA) in 2017 representing about 5 per cent; Yobe with IGR of N3.59 billion compared to FAA of N67 billion representing 5.33 per cent; Borno N4.9 billion compared to FAA of N92 billion representing 5.41 per cent; Kebbi with IGR of N4.39 billion compared to N76 billion of FAA representing 5.77 per cent and Katsina with IGR of N6 billion compared to N103 billion of FAA representing 5.8 per cent within the period under review.
Other poor internal revenue earners are Niger which generated N6.5 billion compared to FAA of N87 billion representing 7.43 per cent; Jigawa N6.6 billion compared to FAA of N85 billion representing 7.75 per cent; Imo N6.8 billion compared to FAA of N85 billion representing 8.1 per cent and Akwa Ibom N15 billion compared to FAA of N197 billion representing 8.06 per cent, Ekiti N4.9 billion compared to FAA of N59 billion representing 8.38 per cent; Osun N6.4 billion compared to FAA of N76 billion representing 8.45 per cent, Adamawa N6.2 billion compared to FAA of N72.9 billion representing 8.49 per cent; Taraba N5.7 billion compared to FAA of N66 billion representing 8.70 per cent and Ebonyi N5.1 billion compared to FAA of N57.8 billion representing 8 per cent. The report further indicates that the Lagos State IGR which is about N333 billion is higher than that of 30 states. The states with impressive over 30 per cent IGR apart from Lagos are Ogun, Rivers, Edo, Kwara, Enugu and Kano states which generated N607 billion in total, while the remaining states merely generated a total of N327 billion in 2017.
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, ten states in the South recorded over 20 per cent IGR in 2017. They are Lagos, Ogun, Rivers, Edo, Enugu, Delta, Cross River, Anambra, Oyo and Abia states.
Paradoxically, while over half of Nigerian states are virtually reliant on the centre for their sustenance, mainly from oil revenue, every state is richly endowed with abundant human and natural resources on an industrial scale. For instance, Borno, Yobe, Katsina, Niger, Jigawa, among other states in the North, variously have deposits of barites, gypsum, kaolin, limestone, silica sand, columbite, marble, gum Arabic, and quatz. There is also a huge agricultural potential in these states.
Blueprint finds it scandalous and unacceptable that in spite of these natural endowments only Lagos of the 36 states is economically buoyant more to its industrial base than to any developmental blueprint or strategy. We, therefore, advise the state governments, including the federal government, to intensify their drive towards the diversification of their economies. It is now clear that given its volatility at the international market, it will be fool-hardy to rely on crude oil for economic sustenance.

 




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