The Lagos, Rivers, FCT and Delta states quartet had a combined, internally created revenue more than all the federation’s other 34 states, a National Statistics Bureau (NBS) May report shows.
The report notes that the combined N1.33 trillion revenue produced in 2019 by the 36 states and the FCT accounted for around N685 billion, an equivalent of 51.02 per cent. Other states made roughly N650 billion in total.
The state of Lagos alone accounted for about N400 billion of this amount. About one-third of all the states and Abuja ‘s overall internal revenues. The largest chunk of this was generated from taxes, particularly those of formal sector employees, with the state’s MDAs generating only about 10 per cent.
Rivers State, which received N140 billion, approximately half the amount produced by each of the Federal Capital Territory and Ogun State, is sitting in the far second. As for Rivers and the FCT, the formal sector’s taxes compensate for the year ‘s largest earnings; in Ogun, they are MDA funds.
Delta that made N64 billion are behind these states; Kaduna, N44 billion, Kano N40 billion, Akwa Ibom N32 billion; and Enugu N31 billion.
At the foot of the log are Taraba with N6.5 billion, Gombe with N6.8 billion, Kebbi N7.3 billion, Ebonyi N7.5 billion and Borno N8.2 billion — roughly the same amount that Yobe, Katsina and Ekiti have made.
Federal allocations to states
Monthly, the federal government aggregates all of its crude oil, customs, and other tax revenues. Although 13 per cent of any revenue from natural resources is returned to the states from which those resources are obtained, in line with the derivation principle.
After deduction of the associated costs, the remaining funds are thus shared across the three levels of government: 52.68 per cent for the FG, 26.72 per cent for the states, and 20.60 per cent for local governments.
On the basis of a “Horizontal Allocation Rule,” quotas are assigned to nations.
First, each state receives an equal ration of 40% of what they all due for . The remainder is determined by population (30 percent), land mass (10 percent), IGR (10 percent) and factors of social growth (10 percent), such as school enrollment, number of hospital beds, and most peculiarly, the amount of rainfall in the state.
As a federal allocation about N2.5 trillion was shared among states in 2019, the NBS report shows. The largest cut was made to the oil-repleted Delta, Akwa Ibom, Rivers, Bayelsa and Nigeria’s economic hub, Lagos.
IGR vs Federal Allocation
Most states funnel funds from federal allocations into their budgets. But because most federal revenue comes from oil, whose prices are unpredictable, a decline in prices also has rippling effects on states.
In 2017, an Economic Confidential magazine report found that, up from 14 the previous year, at least 17 states were unable to survive without federal allocations because of their low internal revenue, which was below 10% of what they received from the federal government.
This has the impact of months of unpaid salaries and pensions, as well as the widening gap in infrastructural deficits across states. Often, as it did in 2015, the federal government wade in to bail out the states.
NBS ‘2019 state-by – state earnings breakdown shows that only Lagos, Ogun and FCT provided more IGR than their FAAC allocations. Lagos has made its FAAC allocation as an IGR more than three times. Ogun doubled. FCT has added N4bn more.
Many states that performed fairly well in terms of IGR and federal earnings include Rivers, which raised approximately 89 per cent of its federal allocation as an IGR. Kwara secured the FAA as an IGR 71 per cent. Kaduna accounted for 66 per cent.
Others include Enugu and Cross River, both earning 61 per cent and Ondo earning 52 per cent.
On the other side, oil rich Akwa Ibom, Bayelsa and Delta raised N32bn, N16bn, N64bn from IGR, respectively. But, in that order, they received N171 billion from the federal treasury, N140 billion, N219 billion.
For its part, Borno State made N8 billion IGR while the federal allocation stood at N61 billion. The Katsina State generated federal allocations of N8 billion from IGR and N63 billion. Kebbi State internally earned N7 billion, and the federal government earned N52 billion.
