The Chief Executive Officer of Nigerian Economic Summit Group, Mr Laoye Jaiyeola says the inability to generate internally generate funds has led to State Governments over-dependence on funds from the Federation Accounts Allocation Committee FAAC, on their inability to internally generate funds.
Mr Jaiyeola, who stated this in Abuja at the official launch of BudgIT’s 2021 State of States report, said the act has contributed immensely to the high rate of unemployment in the country.
According to him, “Our weak public financial institutions which contribute to the limited fiscal space experienced earlier, showed the lack of shared philosophy on sovereign wealth generation as a nation. The time has come for the nation to shift focus towards exploring the factors and resource endowments of states as the primary driver of economic growth in the country. This therefore imposes a critical burden on States to immediately accelerate efforts towards exploring innovative fiscal options to build back better economy”
Mr Jaiyeola, urged states to improve their tax administration, assuring this would contribute greatly to expanding the tax net, and with efficient spending, the tax base could be further widened, while much attention should be focused on alleviating the plight of the vulnerable.
Presenting the 2021 BudgIT report by the Head Policy and Advisory Unit of the Organization, Mr Abel Akeni, showed that Economic shocks from the COVID-19 pandemic took a toll on states’ IGR and their share of federally collected revenue in 2020, Cumulatively, all 36 states saw a 3.43% decline in their IGR from N1.26 trillion in 2019 to N1.21 trillion in the year 2020 under review.
“In total, 18 states saw a decline in their year-on-year IGR, while 18 other states were not affected by the pandemic, thereby growing their revenue as high as 87.02%. Rivers State topped the overall 2021 Fiscal Performance Ranking despite COVID-19 induced fiscal shocks to its IGR, indicating that the fiscal fundamentals of this state, compared to others in the country, are more prudently managed”.
“In the 2021 Performance Ranking, two states dropped out of the Top 5 in overall ranking; they are Ogun and Kano States, due to a sharp decline in their IGR in 2020 and on States comparative viability, only three States in the country can meet their operating expenses obligations with a combination of their IGR and Value Added Tax VAT, these states are Lagos, Rivers, and Anambra”.
“In contrast, states at the bottom of the ranking which includes Jigawa, Delta, Benue, Taraba and Bayelsa.”need to do more to rapidly consolidate on any available strategies to improve their Internally Generated Revenue and by extension, their viability as federating entities”.