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Only 4 States are viable in Nigeria — Report

…says 92% depends on federal allocation

By Gabriel Ewepu – Abuja

A new report released Wednesday, by a budget tracking Civil Society Organisation, BudgIT, indicated that only four states in Nigeria are viable.

Only 4 States are viable in Nigeria —report

The report titled ‘State of States’ said Lagos State tops the table followed by Rivers, Akwa Ibom and Kano.

The report which was presented had Governors of Kaduna and Ekiti States, who were represented by the Chief of Staff to Governor of Kaduna State, Mohammed Sani, and Special Adviser, Investment, Trade & Innovations to Ekiti State Governor, Akintunde Oyebode respectively.

The report which was presented by Research and Policy Analysis Lead, BudgIT, Ojiugo Uche, pointed out weak economies of states mostly tied to informal trade and skeletal industrial output with exception of Lagos, Rivers, Delta, Ogun and Akwa Ibom.

The report reads in part, “Of a truth most Nigerian states have still not figured out how to harness their collective strengths and establish a single focus on investment products, thereby becoming a fulcrum of productivity and not just FAAC distribution centres.

“In the 2019 report, we made mild changes to our methodology, thereby using actual expenditure for the state, reducing the probability of the unreality of inflated budgeted figures especially for expenditure items. BudgIT worked with the state government on accessing the audited t\reports for the 36 states in Nigeria. We are working to ensure that our fiscal index is more governed by reality than budget figures by states.

“In this report, Lagos leads the fiscal sustainability index, followed by Rivers, Akwa Ibom and the Kano States. Access to audited statements brought out some facts on the true state of recurrent expenditure in focus states. We discovered states, such as Delta, running huge recurrent expenditure reaching N200 billion. Bayelsa, despite its size and population, has a high recurrent bill as N137 billion, compared with Ebonyi with recurrent bill of N30 billion, Sokoto (N38 billion), Jigawa (N43 billion), Yobe (N35 billion), etc. It is a recurring theme to see states in South-South Nigeria running high recurrent bills, mainly driven by the high revenues earned due to the 13 per cent derivation.

“In our analysis, it was also interesting to see states like Cross River with a bogus budget of N1.04 trillion spend less than N93 billion on an annual basis which brings them up the rank as well as Imo with its recurrent spending of N43 billion. However, we notice that Kogi lag behind due to its huge recurrent bill as of 2017, when it was still paying salaries for workers and also had repayment bills for loans.

“While we would have liked to use the 2018 audited statements for the report, less than 15 states have published the document making largely unrepresentative for the states. We are not unmindful that the 2017 audited statement might include huge recurrent bills due to the payment of backlog of salaries sourced from the Paris Club refund. However, this is a trend that we intend to observe as we continue the issuance of the State of States Report.”

Meanwhile, the Principal Lead, BudgIT, Gabriel Okeowo, disclosed that 92 per cent of states heavily depend on monthly federal allocation, hence are not viable as no investments so far on critical sectors to develop human capacity and for citizens’ welfare.

Okeowo said if the policy of fiscal federalism is applied most states’ economies will crash, but what should be of concern now is to encourage them to explore areas that would first boost their Internally Generated Revenue and plowed into critical sectors of health, education and skill acquisition.

He also said the report recommended that states should look at what is going into recurrent expenditure because the cost of governance is very high and in such a way that investment is not been done, and States should possibly bring down the cost of governance.

“What we have done is to analyse the capacity of all the 36 States to generate revenue vis a vis what they are spending on recurrent expenditure and putting that together to assess their capacity to meet their recurrent expenditure is more of the sustainability index and we do this on annual basis. This year we added two components to look at data accessibility that is states’ financial data on their websites. We then invested on health care in each state.

“23 other states have a heavy reliance on federal allocation, but it is determined by oil prices and if anything happens it affects them and even three sustainable states which are Lagos, Akwa Ibom, and Rivers are depending on 13 per cent oil derivation.

“Even with what we have now with federal government’s support they are still not able to meet up and invest properly and that is secondary to fiscal federalism. There are 92 per cent of states that still depend on federal allocation which does not have hope to survive if the shocks are removed that the federal government is giving to them”, Okeowo stated.

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