Thirty-three states and the Federal Capital Territory (FCT) can’t survive on their Internally Generated Revenue (IGR) and Value Added Tax (VAT) alone.
This was disclosed in a report by BudgIT, tagged ‘State of States, 2021 edition: Fiscal Options for Building Back Better.’
The report said only three states of Lagos, Rivers and Anambra can survive without support from the federal government.
It further listed Benue, Taraba, and Bayelsa as the bottom three states on the survival index.
BudgIT said only the three states can meet their operating expenses obligations with a combination of their IGR and Value Added Tax as measured in the organisation’s ‘Index A’ ranking.
It further stated that the states that rank high on its index A have comparatively limited dependence on federally distributed revenue for their operations and are more viable with the capacity to exist as independent entities.
“These states at the bottom of ‘Index A’ ranking include Jigawa, Delta, Benue, Taraba and Bayelsa.
“Nevertheless, all Nigerian states still need to work hard to build economic prosperity and create more jobs in their states to ensure that there is more money in circulation and economic activities that can be taxed to improve their IGR,” part of the report read.
It further added that all 36 states saw a 3.43 per cent decline in their 2020 IGRs (N1.21tn) from (N1.26tn) in 2019 and that 18 states saw a decline in their year-on-year revenues, while the remaining 18 states grew their revenues – in some cases by as high as 87.02 per cent.
According to BudgIT, the total debt burden of the states increased by N472.63bn (or 8.78 per cent) from N5.39tn in 2019 to N5.86tn in 2020.
It attributed the increase in total subnational debt to exchange rate volatility, with the value of the naira jumping from 305.9/$1 in 2019 to 380/$1 as of December 31, 2020.
The organisation said that the states with the highest foreign debt were Lagos, Kaduna, Edo, Cross River and Bauchi.
It added that Lagos, Kaduna, Anambra, Benue and Zamfara accounted for more than half (63.63 per cent or N300.7bn) of the net year-on-year subnational debt increase of N472.63bn.
