Report: Despite Revenue Growth, States’ Fiscal Performance Still Unsatisfactory

*Earned N5.12trn in 2021

James Emejo in Abuja

The fiscal performance of the 36 states of the federation failed to improve to an appreciable level despite a relative boost in revenue earnings, according to BudgIT, a non-profit promoting transparency and accountability in budget and public resources.

The organisation in its 2022 State of States Report which was launched yesterday in Abuja, stated that only 25 per cent of states have comparatively limited dependence on federally distributed revenue for their operations and thus have greater viability if they were to theoretically exist as an independent entity.

These include Lagos, Rivers, Kaduna, Ebonyi and Jigawa. However, their cumulative revenues grew by 9.19 per cent to N5.12 trillion in 2021 from the N4.69 trillion earned in 2020, while there was a 33.66 per cent year-on-year growth in cumulative Internally Generated Revenue (IGR) of the 36 states, from N1.2 trillion to N1.61 trillion, representing 0.98 per cent of GDP.
According to the report, 50 per cent of the total revenue of 33 states was federal transfers, adding that 13 states relied on federal transfers for at least 70 per cent of their total revenues.

BudgIT also stated that cumulative expenditure of all the states increased by 27 per cent to N6.64 trillion in 2021 compared to N5.23 trillion in 2020.
It said the cumulative personnel cost of the 36 states grew by 5.38 per cent to N1.54 trillion from N1.46 trillion, despite the discovery and elimination of at least 15,397 ghost workers in 13 states across the federation.

The report stated that 11 states increased their overhead cost from the previous year by more than 40 per cent, with Akwa Ibom having the highest growth of 424.60 per cent.
In addition, it stated cumulative capital Expenditure (CAPEX) by all the states grew by 52.52 per cent to N2.70 trillion in 2021 compared to from N1.77 trillion in the previous year.

The report noted that while Lagos State, with capital importation of $31.78 billion between 2019 and 2021, received 99.19 per cent of capital importation into the economy, 11 states received no capital importation within the period.
The report also stressed that 35 states, excluding Taraba, have captured the biometric and BVN data of at least 70 per cent of the civil servants and pensioners on their payroll, and linked the captured data to their payroll.

It added that at least 20 states have enacted Audit laws that grant operational and financial autonomy to the Offices of Auditors-General of the State and Local Government, while only a few states have been able to establish and operationalise a Treasury Single
Account (TSA) to ensure that it covers at least 70 per cent of all its finances.

However, Benue, Taraba, Adamawa, Yobe, and Bayelsa ranked lower and needed to work harder on growing their Internally Generated Revenue (IGR), considering the size of their operating expenses, or work on pruning their operating expenses, the report added.
It further showed that 20 per cent of states had been able to significantly grow their IGR year-on-year and are progressively reducing their over-reliance on federal transfers while others had either a negative or poor growth in their domestic revenue mobilisation and thus remain heavily dependent on federally distributed revenue to implement their budgets.

Also, the report said 30 per cent of the sub-national governments have comparatively more public revenue left to implement the capital expenditure components of their budgets after fulfilling repayment obligations to lenders and their operating expenses.

Furthermore, 15 per cent of states possess more comparative fiscal bandwidth to borrow more due to their comparatively sustainable debt profiles which is determined by their debt-to-revenue ratio, debt-to-GDP ratio, debt service-to-revenue ratio, and personnel cost to revenue ratio.
Similarly, only 10 per cent of the states give comparatively higher priority to investing in capital expenditure compared to their operating expenses, the report added.

Speaking at the ceremony, Country Director, BudgIT Nigeria, Mr. Gabriel Okeowo, said the report should hopefully “help us to further nudge the sub-national government to sit up, harness the natural resources in their domain, block loopholes for fraud and corruption and take advantage of several programmes that are designed to help the states boost the sub-national economy.”