Rivers Tops Fiscal Performance Index As Poor IGR Pushes Ogun, Kano Down

Rivers State has emerged the best sub-national in the overall 2021 fiscal performance ranking according to a BudgIT annual report on the state of states.

According to the report, “The fiscal fundamentals of this state [Rivers] compared to others in the country are more prudently managed.”

In the overall ranking, two states—Ebonyi and Kebbi made it as new entrants to the top five category.

This was driven largely by growth in the internally Generated Revenue (IGR) of both states as recorded by the NBS.

Ebonyi State grew its IGR by 82.3 per cent from N7.5bn in 2019 to N13.6bn in 2020, while Kebbi State grew its revenue by 87.02 per cent from N7.4bn in 2019 to N13.8bn in 2020.

The NGO said in reaching its conclusion, it examined states’ fiscal health using four key metrics.

The metrics are the ability of states to meet their operating expenses with IGR and VAT; states’ ability to cover their operating expenses and loan repayment with their total revenue; how much fiscal room states have to borrow more; and the degree to which each state prioritises capital expenditure with respect to their operating expenses.

Meanwhile, Ogun State (now 19th) and Kano state (now 22nd), dropped out of the top five category due to a sharp decline in their IGR in 2020.

Only three states in the country could meet their operating expenses obligations with a combination of their IGR and Value Added Tax (VAT) as measured in BudgIT’s ‘Index A’ ranking. They are Lagos, Rivers, and Anambra.

Cumulatively, the 36 states total debt burden increased by N472.63bn (or 8.78 per cent) from N5.39trn in 2019 to N5.86trn in 2020.

This was driven largely by exchange rate volatility which saw the value of the naira jump from N305.9/$1 in 2019 to N380/$1 as of December 31st 2020.

States with the highest foreign debt were significantly hit due to negative exposure to exchange rate volatility.

The report identified the states as: Lagos, Kaduna, Edo, Cross River and Bauchi.