Six states have been deemed bankrupt by Economic Confidential’s eighth Annual States Viability Index (ASVI) study because of their low internal revenue generation.
The declaration’s foundation is the fact that, in 2022, their Internally Generated Revenues (IGR) fell short of 10% of their Federation Account Allocations (FAA) receipts for the same year.
According to the survey, some states have seen an increase in their IGR over the previous year, while others saw declines. Compared to two states in 2021, six states in 2022 produced less than 10% IGR.
Six states—Bayelsa, Katsina, Akwa Ibom, Taraba, Yobe, and Kebbi states—may not be able to exist without the federation account allocation (FAA), according to the research. Adamawa barely made it out, generating N13.1 billion in 2022 compared to the FAA’s N116 billion, or 11.29 percent, which was less than 2 percent above its 13 percent in the previous year.
According to the research, several states would not be able to support themselves without the monthly distribution from the Federation Account Allocation Committee (FAAC), which is partially funded by sales of crude oil and other non-oil sources. Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes, and Revenues from Ministries, Departments, and Agencies (MDAs) are how the states produce the IGR.
Lagos remained steadfast in its number one position in IGR among the states with a total revenue generation of N651 billion compared to FAA of N370 billion which translated to 176 per cent in the twelve months of 2022. Ogun State, which generated IGR of N120 billion, compared to its FAA of N113 billion representing 106 per cent, followed by Rivers with generated N172 billion IGR compared to FAA of N363 billion representing 48 per cent; Kaduna State with N58 billion compared to FAA of N155 billion representing 37 per cent; Kwara with IGR of N35 billion compared to FAA of N99 billion representing 36 per cent and Oyo generated N62 billion compared to FAA of N181billion representing 34 per cent and Edo generated N47 billion IGR compared to N147 billion FAA representing 32%.
The report noted that the IGR of the 36 states of the federation totalled N1.8 trillion in 2022 was above that of 2021 which was N1.76 trillion.
The report by the Economic Confidential, an intelligence magazine, further indicates that the IGR of Lagos State of N651 billion is higher than that of 30 other States put together whose Internally Generated Revenues are extremely low and poor compared to their allocations from the federation account.
The total internally generated revenues of N1.15 trillion from the seven most viable states in 2022 was almost twice the total IGR of 29 remaining states put together that merely generated about N650 billion.
Others with impressive IGR include Anambra with IGR of N33 billion compared to FAA of N127 billion representing 27%; Enugu with IGR of N28 billion compared to FAA of N111 billion representing 26%; Ondo with IGR of N32 billion compared to FAA of N135 billion representing 24% while Nasarawa State earned N19 billion IGR against FAA of N92 billion representing 21%. Delta generated N85 billion IGR against its receipt of N428 billion from FAA representing 20%. And Osun with IGR of 24 billion compared to its FAA of N122 billion representing 20%.
The six states with impressive IGR generated N225bn in total, while the remaining 23 states generated a total of N426bn in 2022.
The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20% in comparison to their respective allocations from the Federation Account. They are Kaduna, Kwara and Nasarawa States in that order.
Meanwhile, eight states in the South recorded over 20% IGR in 2022. They are Lagos, Ogun, Rivers, Oyo, Edo, Anambra, Enugu and Ondo.
The oil producing Bayelsa and Akwa ibom are the only states in the South with the poorest Internally Generated Revenue of less than 10% compared to their FAA in 2022.
The other poorest IGR states are Katsina and Kebbi in North-West; Yobe and Taraba in the North-East.
