Business

Financial crisis: 15 states face bankruptcy, report says

FG plans to inject N350bn to enhance economy

The economic crisis in the country may be worse than most Nigerians think, as there are indications that 15 out of the 36 states in the country may be going bankrupt.

The states, according to a report by Economic Confidential, may go bankrupt as over 90 per cent of their revenues come solely from the Federation Account Allocations (FAA).

Also, the Internally- Generated Revenues (IGRs) of the states in 2015 were far below 10 per cent of their FAA in one year from June 2015 to May 2016 covering the one-year of President Muhammadu Buhari’s administration.

The report also indicates that the IGR of Lagos State of N268 billion is higher than that of 32 states combined, excluding Rivers, Delta and Ogun, whose IGRs are very impressive.

According to the study, the 32 other states merely generated a total of N257 billion in 2015. The IGR of the 36 states of the federation totalled N682.67 billion in 2015, compared to N707.85 billion in 2014, representing a drop of N25.18 billion or a minus 3.56 per cent.

Giving reason for the finacial crisis in the 15 distressed states, the report claims the “lack of foresight in revenue generation drive, coupled with arm-chair governance”, is responsible.

The states are Yobe, Zamfara, Ekiti, Borno, Kebbi, Imo, Taraba and Nassarawa.

Others are Adamawa, Gombe, Jigawa, Bauchi, Katsina, Niger and Sokoto. According to the report.

Read also: AfriJet Airlines loses assets to AMCON over N10bn debt

The latest report on IGR reveals that only Lagos State generated more revenue than its allocation from the Federation Account by 150 per cent and no other state has up to 100 per cent of IGR to the federal largesse.

Lagos State retains its number one position in IGR with a total revenue generation of N268.22 billion in the 12 months.Lagos is followed by Rivers with N82.10 billion; Delta with N40.80 billion; Ogun State with N34.59 billion and Edo generating N19.11 billion.

In a similar vein, the monthly disbursement of the N90 billion conditional loan facility to state governments announced by the Federal Government will cease any month the allocation from the Federation Account Allocation Committee exceeds N500bn.

This was disclosed by the Special Adviser on Media to the Minister of Finance, Mr. Festus Akanbi, when he said it would not be financially prudent for loans to be disbursed in any month that over N500bn was shared among the three tiers of government.

According to him, once the monthly distributable revenue was up to the threshold of N500bn, the amount that would be available to each state government that month would be enough to run its programme.

Akanbi said: “The budget support facility, which is conditional upon the implementation of the 22-point fiscal sustainability plan, is not a bailout. The implementation of the FSP is to be completed over an 18-month period. Monthly disbursements to each state will be conditional on compliance with pre-agreed FSP milestones.

“The facility will cease to be available in the next month if the distributable amount from the Federation Account is equal to or exceeds N500bn in any given month.”

He added that 35 states were in the process of submitting the required documents for the facility.

 

RipplesNigeria… without borders, without fears

 

Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
www.ripplesnigeria.com

Join the conversation

Opinions

About the author

Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
www.ripplesnigeria.com

Do NOT follow this link or you will be banned from the site!