In an obvious mismatch between revenue and expenditure, the cumulative expenditure of the 36 states of Nigeria increased by 26.60 per cent to N6.62 trillion in 2021, up from N5.23 trillion in 2020.
But in the period under review, the aggregated Internally Generated Revenue (IGR) of the 36 states stood at N1.59 trillion; though a 32.38 per cent improvement over N1.2 trillion in 2020, it highlights unsustainable reliance on shrinking federally distributed revenues to implement their budgets.
In its yearly State of States report launched in Abuja on Thursday, BudgIT Foundation disclosed that while 30 states increased their total expenditure from the previous year, 6 States reduced their expenditure—with Ebonyi having the highest decline of 16.87 per cent.
According to the report, at least 50 per cent of the total revenue of 33 states were federal transfers. In the same vein, 13 states relied on federal transfers for at least 70 per cent of their total revenues.
“Being faced with declining revenues owing to Nigeria’s subsidy regime and the volatile price of crude oil, states’ over-reliance on federal transfers is becoming increasingly unsustainable,” BudgiT noted.
While giving the opening address during the launching monitored by our correspondent, BudgIT’s Country Director, Gabsyn Great, emphasised the need for state governments to harness the natural resources in their states, block corruption loopholes and leverage several designed programs to boost their economies.
The country director of the Lagos-based data firm advised all the tiers of government to look beyond taxation, and explore endowments within their jurisdiction to improve revenue.
“There is a need to increase IGR but this should not be at the risk of hurting the governed with tax. The collection of tax proceeds should be followed up with tax projects across the power, education and health industries. This will engender greater tax compliance,” Great advised.
Despite implementing reforms to weed out ghost workers and eliminate payroll fraud, leading to a decline in the year-on-year growth of the personnel cost of 7 states, the cumulative personnel cost of the 36 States grew by 5.38 per cent to N1.54 trillion, up from N1.46trillion.
While nine states reduced their overhead cost from the previous year, signalling a reduction in the cost of governance, 11 states increased their overhead cost from the previous year by more than 40 per cent, with Akwa Ibom having the highest overhead growth of 424.60 per cent.
On capital expenditure, 36 states spent N2.7 trillion in 2021 up by 52.52 per cent from N1.77 trillion in 2020.
Only eight states increased their capital expenditure year-on-year by more than 100 per cent while five 5 states including Anambra, Ebonyi, Cross River, Kaduna, and Rivers, prioritised capital expenditure over operational expenses.
Regarding critical sectors, 24 states spent below the subnational average of N1977.07 on health spending per capita.
Similarly, the education spending per capita of 22 States was below the subnational average of N3954.99.
With an education spending per capita of N380.65 and N365.30 respectively, Imo and Ondo had the least investments in education per capita in 2021.
While launching the State of States report, the Foundation pointed out that there is a need to increase IGR but this should not be at the risk of hurting the governed with tax, stressing that the collection of tax proceeds should be followed up with tax projects across the power, education and health industries. According to BudgiT, this would engender greater tax compliance among the governed.
It called for reform of governance ecosystems at the state level, saying that the influence of the political class should be minimal in making decisions at the state level. BudgiT stressed that the legal instrument should be supported with implementation structures that enable disclosures, preferably in digital formats.
“This process should have feedback loops (public expenditure tracking survey, community monitoring and citizen report cards),” the Foundation noted.
According to BudgiT, widespread insecurity, massive unemployment and rocketing cost of living, among others, define Nigerian states today, threatening the survival of the people.
“We must remind ourselves that the states make up the federation and whatever they do affects the nation,” the Foundation concluded.
Stressing that it is important to have open government data, uploaded on designated websites and portals in reusable formats which must be accessible to citizens also.
