A BudgIT’s report, titled ‘State of States, 2021 edition: Fiscal Options for Building Back Better,’ released on Tuesday showed that it is only Lagos, Rivers, and Anambra States that can survive without the Federal Government support in Nigeria.
The report showed that “It is only the three states that can meet their operating expenses obligations with a combination of their IGR and Value Added Tax as measured in the ‘Index A.
It added 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.
While Lagos, Rivers, and Anambra occupy the top three spots, Benue, Taraba, and Bayelsa states are the bottom three states.
According to the report, all Nigerian states 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.
The organisation added that all 36 states saw a 3.43% decline in their 2020 IGRs (N1.21tn) from (N1.26tn) in 2019.
It said that 18 states saw a decline in their year-on-year revenues, while the remaining 18 states grew their revenues and in some cases by as high as 87.02%.
According to BudgIT, the total debt burden of the states increased by N472.63bn (or 8.78%) from N5.39tn in 2019 to N5.86tn in 2020.
It revealed that the increase in total subnational debt was as a result of exchange rate volatility, with the value of the naira jumping from 305.9/$1 in 2019 to 380/$1 as of December 31, 2020.
It also noted 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% or N300.7bn) of the net year-on-year subnational debt increase of N472.63bn.
According to BudgIT, only seven states in Nigeria have functioning Treasury Single Accounts, and about 24 states and 27 states respectively have introduced ‘biometric use in payroll management’ and ‘bank verification number use in payroll management’.
It added that only 16 states published details of their contracts online for public scrutiny, while 20 states do not.
Only five states (Ebonyi, Rivers, Anambra, Cross River, and Kaduna) prioritised investment in infrastructure by spending more on capital expenditure than operating expenses, BudgIT added.
On the other hand, Benue, Kogi, and Taraba have higher operating expenses than their respective investments in capital expenditure.