The Economic Confidential has released its seventh Annual States Viability Index (ASVI), which shows that six (6) States are insolvent as their Internally Generated Revenues (IGR) in 2022 were below 10% of their receipts from the 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, mainly from the oil sector.
States generate the IGR through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes, and revenues from Ministries, Departments, and Agencies (MDAs).
The IGR of the 36 states of the federation totaled N1.8 trillion in 2022 was above that of 2021 which was N1.76tr. The report by the Economic Confidential, an intelligence magazine, further indicates that the IGR of Lagos State of N651bn is higher than that of 30 other States put together, whose Internally Generated Revenues are meager and poor compared to their allocations from the Federation Account.
Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of N651bn compared to FAA of N370bn, translating to 176% in the twelve months of 2022. Ogun State generated IGR of N120bn compared to its FAA of N113bn, representing 106%, followed by Rivers with generated N172bn IGR compared to FAA of N363bn, representing 48%; Kaduna State with N58bn compared to FAA of N155bn representing 37%; Kwara with IGR of N35bn compared to FAA of N99bn representing 36% and Oyo generated N62bn compared to FAA of N181bn representing 34% and Edo generated N47bn IGR compared to N147bn FAA representing 32%.
The total internally generated revenues of N1.15tr from the seven most viable states in 2022 was almost twice the total IGR of 29 remaining states put together merely generating about N650bn.
Others with impressive IGR include Anambra with an IGR of N33bn compared to FAA of N127bn representing 27%; Enugu with an IGR of N28bn compared to FAA of N111bn representing 26%; Ondo with IGR of N32bn compared to FAA of N135bn representing 24% while Nasarawa State earned N19bn IGR against FAA of N92bn representing 21%. Delta generated N85bn IGR against its receipt of N428bn from the FAA representing 20%. Osun with IGR of 24bn compared to its FAA of N122bn representing 20%.
The six states with impressive IGR generated N225bn in total, while the remaining 23 states generated N426bn in 2022.
The report provides an amazing discovery. While some states have improved their IGR compared to previous years, others performed poorly. In 2022, six states generated less than 10% IGR compared to two states in 2021.
Adamawa narrowly escaped as it generated N13.1bn compared to FAA of N116, representing 11.29% in 2022, less than 2% over its 13% last year.
The six states that may not survive without the Federation Account due to their extremely poor internal revenue generation of less than 10% compared to their federal allocations are Bayelsa, Katsina, and Akwa Ibom, the home states of former Presidents Goodluck Jonathan, Muhammadu Buhari, and the current Senate President Godswill Akpabio respectively.
Others are Taraba, Yobe, and Kebbi states.
The Economic Confidential ASVI further showed that only three states in the Northern region have IGR above 20% compared to their respective allocations from the Federation Account. They are Kaduna, Kwara, and Nasarawa States in that order.
Meanwhile, eight states in the South recorded over 20% IGR in 2022. They are Lagos, Ogun, Rivers, Oyo, Edo, Anambra, Enugu and Ondo.
The oil-producing Bayelsa and Akwa Ibom are the only states in the South with the poorest Internally Generated Revenue of less than 10% compared to their FAA in 2022.
The other poorest IGR states are Katsina and Kebbi in the northwest; Yobe and Taraba in the northeast.
Meanwhile, the IGR of the respective states can improve through aggressive diversification of the economy to productive sectors rather than relying on the monthly Federation Account revenues that largely come from the oil sector.
The poor states with lower IGR may not stay afloat outside the monthly allocations from the Federation Account due to a lack of initiatives for revenue generation drive coupled with armchair governance. Some of the states cannot attract investors due to socio-political and economic crises, including insurgency, kidnapping, armed banditry, and herdsmen-farmers clashes.
(Economic Confidential)
