Findings from The Eyewitness9ja News reveal that approximately 25 states in Nigeria experienced a decline in internally generated revenue (IGR) and faced financial difficulties in the first quarter of 2023. According to state budget implementation reports, these 25 states earned a total of N182.26bn in Q1 2023, reflecting a 3.07% or N5.77bn decrease compared to the N188.03bn earned in Q4 2022.
It should be noted that Rivers and Sokoto have yet to provide data for Q1 2023, Akwa Ibom has no data for Q1 2022, and Kwara, Edo, Kaduna, Lagos, Bauchi, Zamfara, Yobe, and Ogun have no data for Q4 2022. Consequently, the IGR figures are limited to 25 out of the 36 states in the country.
The investigation reveals that the 25 states had projected an IGR of N219.56bn for Q1 2023 but only managed to generate around N182.26bn, resulting in a revenue performance of 83.01%. This indicates a 16.99% underperformance, as the revenue fell short of the states’ targets. However, compared to Q1 2022, the states did experience a 30.34% increase in revenue from N139.83bn.
Among the 25 states, Delta recorded the highest IGR of N40.51bn in Q1 2023, followed by Anambra (N13.03bn), Oyo (N13.01bn), Ondo (N10.79bn), and Osun (N9.06bn). On the other hand, Enugu had the lowest IGR of N2.32bn, followed by Niger (N3.04bn), Taraba (N3.08bn), Imo (N3.16bn), and Katsina (N3.22bn).
The investigation also revealed that these 25 states collectively had a domestic debt totaling N3.12tn in Q1 2023, which increased by N130bn within three months, according to the Debt Management Office. Delta had the highest domestic debt of approximately N421.78bn as of March 31, 2023, followed by Imo (N202.55bn), Cross River (N196.27bn), Oyo (N161.73bn), and Plateau (N148.12bn). Conversely, Jigawa had the lowest domestic debt of N43.59bn as of March 31, 2023, followed by Kebbi (N60.94bn), Katsina (N62.37bn), Nasarawa (N71.45bn), and Ondo (N75.51bn).
Additionally, reports from the Federation Accounts Allocation Committee indicate that the 36 states collectively received at least N713.57bn in Q1 2023, marking a 20.85% increase from N590.45bn in Q1 2022. The breakdown for 2023 reveals that the states received N244.98bn in January, N236.46bn in February, and N232.13bn in March. In 2022, the states received N221.19bn in January, N179.25bn in February, and N190.01bn in March.
Based on data from the National Bureau of Statistics, states in Nigeria generate their internally generated revenue (IGR) through various sources, including revenues from MDAs (Ministries, Departments, and Agencies), direct assessment (income tax), Pay-As-You-Earn, road taxes, and other taxes such as levies on market traders and land registration.
On the other hand, the Federation Accounts Allocation Committee (FAAC) obtains funds through oil revenues and related taxes, revenues generated from trade facilitation activities by the Nigerian Customs Service, company income tax, proceeds from the sale of national assets, as well as surplus and dividends from State-Owned Enterprises.
Earlier, political economist Prof Pat Utomi emphasized the importance for states to foster an environment conducive to wealth creation rather than relying solely on federal allocation.
He said, “States must focus more on creating the environment for wealth creation. If you go back to the late 50s and early 60s, most of the developments that took place in Nigeria are from the subnational governments. They collected the revenues and sent 50 percent of it to the center, but the military ruined all of that.
“So, Nigeria became more focused on sharing revenues than on the fundamental way of governing, which is the production and taxing earned revenue. Whenever there is no revenue to share, the States are in complete trouble, and they become bureaucracies that are unable to manage themselves because they are dependent. This is not the way they should function.”