36 States Generate N1.8trn IGR Against N5.72trn Received From FAAC

Bayelsa, Kebbi., Katsina, Akwa-Ibom, Taraba and Yobe States are insolvent and may not be able to survive without the monthly revenue allocation from the Federation Account Allocations Committee (FAAC). New report shows that the six states failed to generate up to 10 per cent of the cumulative revenue they received from the federation account in 2022 due to their extremely poor internal revenue generation of less than 10 percent compared to their federal allocations.

Bayelsa, Katsina and Akwa Ibom States are the home states of former Presidents Goodluck Jonathan, Muhammadu Buhari and the current Senate President Godswill Akpabio respectively.

The seventh Annual States Viability Index (ASVI) report that was released by Economic Confidential yesterday, showed that without the monthly disbursement from the FAAC account, many states remain unviable, and cannot survive without the federally collected revenue, mostly from the oil sector.

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 report also showed that the IGR of the 36 states of the federation amounted to N1.8 trillion in 2022 aboveN1.76trn they raked in from IGR in 2021. 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 extremely low, and poor compared to their allocations from the Federation Account.

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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 which translate to 176 percent in the twelve months of 2022. Ogun State which generated IGR of N120bn compared to its FAA of N113bn representing 106 percent, followed by Rivers with generated N172bn IGR compared to FAA of N363bn representing 48 percent.

Kaduna State with N58 billion compared to FAA of N155bn representing 37 per cent; Kwara with IGR of N35 billion compared to FAAC of N99bn representing 36 per cent and Oyo generated N62 billion compared to FAA of N181bn representing 34 percent and Edo generated N47bn IGR compared to N147bn FAA representing 32 percent.

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 that merely generated about N650bn.

Others with impressive IGR include Anambra with IGR of N33bn compared to FAAC of N127bn representing 27 percent; Enugu with IGR of N28bn compared to FAA of N111bn representing 26 percent; Ondo with IGR of N32bn compared to FAAC of N135 billion representing 24 per cent while Nasarawa State earned N19 billion IGR against FAAC of N92 billion representing 21 percent. And Delta generated N85 billion IGR against its receipt of N428 billin from FAAC representing 20 percent. And Osun with IGR of 24bn compared to its FAA of N122 bllion representing 20 per cent. 

The six states with impressive IGR generated N225bn in total, while the remaining 23 states generated a total of N426bn in 2022.

“While some states have improved their IGR compared to previous years, others performed poorly. In 2022, six states generated less than 10 percent IGR compared to two states in 2021,” managing editor at Economic Confidential, Abdulrahman Abdulraheem said at a press conference to unveil the report yesterday.

Adamawa narrowly escaped as it generated N13.1 billion compared to FAAC of N116 representing 11.29 per cent in 2022 which was less than two percent over its 13 per cent last year.

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent in comparison 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 percent 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 revenues of less than 10 percent compared to their FAA in 2022.

The other poorest IGR states are Katsina and Kebbi in North-West; Yobe and Taraba in the North-East.

“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,” Abdulraheem stated.

The poor states with lower IGR may not stay afloat outside the monthly allocations from the federation account due to lack of initiatives for revenue generation drive coupled with arm-chair governance. Some of the states cannot attract investors due to socio-political and economic crises including insurgency, kidnapping, armed banditry, and herdsmen-farmers clashes.