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States depend on FG for more than 70% of their revenue —Report

Nigerian states depend on the federal government for over 70 per cent of their survival, raising fears of their stand-alone potential without intervention from the centre, intelligence data showed on Sunday.

Federal allocation to states in last year came to N4.4 trillion relative to internally generated revenue across the 36 states including the Federal Capital Territory (FCT), which stood at N1.3 trillion in 2019, reflecting a dependency ratio of 70.5% by states, according to 2019 Annual States Viability Index by Abuja-based Economic Confidential.

Seven states are insolvent given that their 2019 IGRs fell well below 10 per cent of their receipts from the Federation Account Allocations (FAA).

“The index carefully and painstakingly computed proved that without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states remain unviable, and cannot survive without the federally collected revenue, mostly from the oil sector,” the report said.

States’ IGRs derive from fiscal sources, comprising Pay-As-You-Earn Tax, Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies.

Year on year, states’ total IGR climbed by 18.2% from N1.1 trillion to N1.3 trillion in 2019.

READ ALSO: FG, states, LGAs share N606.196b as April allocation

Lagos’s IGR exceeded the IGRs of 20 other states, whose internally generated incomes are extremely low relative to their federal allocations, put together.

Lagos was Nigeria’s richest state by IGR at N398 billion, with its IGR surpassing its allocation from the federal government by 147%.

Ogun State came next, its total IGR of N70.92 billion representing 77% of its FAA, which was N92 billion.

Rivers State was third with a N140 billion IGR and a N219 billion FAA, meaning its IGR represented 64% of its FAA.

“There are seven states that may not survive without the Federation Account due to their extremely poor internal revenue generation of less than 10% compared to their federal allocations,” the report said.

They are Katsina, Kebbi, Borno, Taraba, Bayelsa, Yobe and Gombe.

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