Currently, the Nigerian state is struggling to meet its basic financial obligations to the citizenry. As a stop-gap measure, managers of the economy have resorted to a borrowing spree, which has seen them access money from the pension fund, China, the Central Bank of Nigeria (CBN), multilateral agencies such as the World Bank, so that the government can pay for its consumption mostly.
While observers of the nation’s borrowing spree have expressed worry over the long-term implications of these domestic and external loans, we are constrained to ask why the internally generated revenue (IGR) processes of the 36 states and the Federal Capital Territory (FCT) have not received the desired attention from the media, civil society organizations and the citizens at large, significant as it is as a revenue source.
It is instructive to note that the National Bureau of Statistics (NBS) said that in 2020, internally generated revenue of the 36 states and the Federal Capital Territory, put together, and amounted to N1.31 trillion. According to the Bureau, the 36 states and FCT IGR figure hit N1.31 trillion in 2020 compared to N1.33 trillion recorded in 2019. This indicates a negative growth of -1.93 per cent year on year. Lagos State has the highest IGR with N418.99 billion recorded, closely followed by Rivers with N117.19 billion while Yobe State recorded the least Internally Generated revenue.
In the considered opinion of this newspaper, the figures are impressive considering the low volume of economic activities in most parts of the world, due to the coronavirus pandemic, in the year (2020) under review.
However, experts contend that these figures can be higher if state governments can adopt best practices in the collection and utilization of revenue generated from their respective jurisdictions.
Sadly, across the 36 states of the country and the Federal Capital Territory (FCT), it has been observed that politicians deploy their cronies and political thugs, most of whom have no formal training in revenue collecting procedures.
LEADERSHIP findings revealed that many states use their cronies and political loyalists for revenue collection as political compensation as against the use of professionals and transparent technology-oriented systems that would report more revenue to these states. In many cases, much of the revenue collected by these political allies are un-remitted to the state coffers and where they are remitted, are grossly under-estimated. This unprofessional approach to revenue management explains in part, why the 36 states and the FCT often panic each time there is a shortfall in the revenue accruable to them from the federation account.
This observation is validated by a study which highlighted some of the challenges of internally generated revenue in Nigeria as non-remittance of income collected, poor internal control measure, bribery and corruption, lack of accountability, inadequate public awareness, amongst others.
In today’s information age, institutionalizing revenue collection, using models that have worked elsewhere shouldn’t be a hard fix. Experts contend that governments at all should be able to source more funds through taxation if they allow professionals to run the internal revenue services (IRS) rather than give the internal revenue service to political cronies who are incompetent.
In the prevailing situation, we are compelled to ask, could some of the states have deliberately left the leakages to serve as sources of slush funds to service their political and other interests? It is from these perspective that we call on state governments to urgently reform the mode of collecting revenue; disengage non-state actors and political thugs; engage professionals and give account to the citizens of how the revenue collected is utilized.
We urge the state governments to broaden the revenue net by empowering micro, small and medium scale enterprises with start-up kits, funds and training as well as provide them with guidance on how to register these enterprises, so that they can be in a position to pay revenue in the near future.
Similarly, the prevalent culture of engaging thugs who harass market women and men, shop owners, drivers and other petty traders for daily revenue must be discontinued and replaced with technology-driven measures such as tax vouchers and point-of-sale (POS) machines.
We wish to re-emphasize that IGR deserves more than the fleeting attention it has always received from Nigerians at a time the federal government is scanning the globe for more loans. If the federal and state governments can block all the leakages associated with revenue collection and re-purpose the collected revenue towards enduring infrastructure, the nation will record higher revenue figures and compliance level from the citizens will be higher.
If the 36 state governors and the minister of the FCT are genuinely committed to bolstering and repositioning their economies for sustainable economic growth ahead of a post-Covid-19 era, the reform of the IGR collection system is a sure way to go.