The Nigeria Governors Forum (NGF) has cried out that the 36 states of the federation and the Federal Capital Territory (FCT) lost N28.15 billion or 2.1 per cent of Internally Generated Revenue between 2019 and 2020.
Senior Programme Manager, NGF/SFTAS Mr. Lanre Ajogbasile made this disclosure in Abuja over the weekend at a Media Workshop For Members of Finance Correspondents Association of Nigeria (FICAN) organised by the States Fiscal Transparency Accountability and Sustainability (SFTAS)
Ajogbasile disclosed that the “total states IGR and FCT shrunk by 2.1 percent (NGN28.15 billion) between 2019 and 2020”.
The decline in IGR he said has put serious fiscal pressure on the state governments. He attributed the fiscal pressure to “over dependence on FAAC transfers which is constantly threatened by the increasing volatility in oil prices and mounting subsidy payments”.
“The impact of this has been exacerbated by long years of increases in government permanent expenditures arising from increased cost of governance, new minimum wage and rising debt service.
“The COVID-19 pandemic also impacted government spending, economic activities and invariably governments internally generated revenue.
“Total number of registered taxpayers (States and FCT) was estimated to reach 35 million persons 2019/2020. This is about 50 per cent of total labour force of 70 million persons (NBS, 2020).
“Over 25 collectable items for state governments under the Taxes and Levies (Approved list of collection) as amended, 2015, while average tax effort (tax-to-GDP) of states stood at approximately 2 per cent (NGF, 2018).”
However, things may be picking up for the states’ internal revenue generating efforts. According to Ajogbasile, “a total of 34 per cent annual growth rate between 2020HY and 2021 HY was recorded with Ministries, Departments and Agencies (MDA) revenues, Other Taxes and Direct Assessment recording the highest growth year-on-year at 82 per cent, 74 per cent and 71 per cent respectively”.
Some states have started recording IGR growth. For instance, Sokoto State recorded a 6,824 per cent growth from, N7.5million to N519.5million in Direct Assessment, Niger State 1,951 per cent growth from, N1million to N2.07billion in MDA revenue.
Others are, Jigawa State 157 per cent growth from, N1.4billion to N3.8billion), Kogi State 728 per cent, from N444.8million to N3.6billion in Other Taxes, Osun State 376 per cent growth, N53.3million to N253.7million in other taxes and the FCT 604 per cent growth from N2.6billion to N19.4billion in Other Taxes.
Ajogbasile stated that “the structure of the Nigeria economy reflects a predominance of the services sector which accounts for nearly 55 per cent of the GDP for Q4 2021. Unfortunately, economic activities under this sector still suffer low productivity and wages.
“According to the 2017 GDP record for 22 states, service sector accounted for 54 per cent while Agriculture and Industry accounted for 23 per cent each, respectively.
“The poor employment record (33 per cent unemployment rate for Q4 FY20 and estimated 35 per cent for FY21) reflects low productivity and the absence of a strong manufacturing base.
“According to the 2017 data, only three and four States out of the twenty-two States that reported data on gross domestic product had an agriculture and industrial base that accounted for up to 20 percent of economic activities in their States.”
The National Programme Coordinator of SFTAS Mr. Stephen Okon identified one of the achievements of the SFTAS programme which the states keyed into in order to access the $1.5 billion World Bank grant.
According to him, states “strengthened their legal framework for debt management and fiscal responsibility by enacting a State Public Debt Legislation, improved timely and accurate debt reporting and debt sustainability analyses”.
“towards reducing the stock of domestic expenditure arrears and established a fiscally sustainable response to COVID-19.”
