Without FAAC Allocation, Bayelsa, Kebbi, Katsina, Three Others May Suffer Revenue Crisis

…IGR Drops Below 10% Of Federation Accounts Receipts

A report released by Economic Confidential has shown that six States are insolvent as their Internally Generated Revenues (IGR) in 2022 were below 10 per cent of their receipts from the Federation Account Allocations in the same year.

The index carefully and painstakingly computed proved that without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states remain unviable, and cannot survive without the federally collected revenue, mostly from the oil sector.

The IGR are generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies (MDA)s.

The IGR of the 36 states of the federation totaled N1.8trn in 2022 was above that of 2021 which was N1.76tr. The report indicates that the IGR of Lagos State of N651bn is higher than that of 30 other States put together whose Internally Generated Revenues are extremely low, and poor compared to their allocations from the Federation Account.

Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of N651bn compared to federation account allocation of N370bn which translate to 176 per cent in the twelve months of 2022.

Ogun State which generated IGR of N120bn compared to its FAAC allocation of N113bn representing 106 per cent, followed by Rivers which generated N172bn IGR compared to FAAC Allocation of N363bn representing 48 per cent.

Kaduna State generated N58bn compared to FAAC of N155bn representing 37 per cent; Kwara had IGR of N35bn compared to FAAC receipts of N99bn representing 36 per cent and Oyo generated N62bn compared to FAAC allocation of N181bn representing 34 per cent and Edo generated N47bn IGR compared to N147bn FAAC representing 32 per cent.

The total internally generated revenues of N1.15trn from the seven most viable states in 2022 was almost twice the total IGR of 29 remaining states put together that merely generated about N650bn.

The six states with impressive IGR generated N225bn in total, while the remaining 23 states generated a total of N426bn in 2022.

In the report, while some states have improved their IGR compared to previous years, others performed poorly. In 2022, six states generated less than 10 per cent IGR compared to two states in 2021.

Adamawa narrowly escaped as it generated N13.1bn compared to FAAC of N116 representing 11.29 per cent in 2022.

The six states that may not survive without the Federation Account due to their extremely poor internal revenue generation of less than 10% compared to their federal allocations are Bayelsa, Katsina and Akwa Ibom the home states of former Presidents Goodluck Jonathan, Muhammadu Buhari and the current Senate President Godswill Akpabio respectively.

Others are Taraba, Yobe and Kebbi states.

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent in comparison to their respective allocations from the Federation Account.

They are Kaduna, Kwara and Nasarawa States in that order.

Meanwhile, eight states in the South recorded over 20 per cent IGR in 2022. They are Lagos, Ogun, Rivers, Oyo, Edo, Anambra, Enugu and Ondo.

The report stated that the IGR of the respective states can improve through aggressive diversification of the economy to productive sectors rather than relying on the monthly Federation Account revenues that largely come from the oil sector.

“The poor states with lower IGR may not stay afloat outside the monthly allocations from the Federation Account due to lack of initiatives for revenue generation drive coupled with arm-chair governance.

“Some of the states cannot attract investors due to socio-political and economic crises including insurgency, kidnapping, armed banditry, and herdsmen-farmers clashes,” the report added.