Hard Times Ahead For States As Revenue Shrinks While Wage Bills Rise

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There are strong indications that in the months ahead, state governments will face hard times with rising wage bills and dwindling revenues.

Investigations by our source showed in the last four months, states’ allocations from the Federation Account had been on the decline.

It was further learnt that efforts by state governments to shore up their internally generated revenues had not recorded the expected success as only two states were able to raise their IGRs above what they received from the federation account.

The Chartered Institute of Taxation of Nigeria, the Chartered Insurance Institute of Nigeria and the Chief Executive Officer, Economic Associates, Dr Ayo Teriba,   in separate interviews with PUNCH Newspaper said with the wage bill increase and the failure to raise   internally generated revenues, there would be difficulties in the months ahead for states.

They called on the state governments to stop their wasteful spending and reduce their appointees, in order to get enough funds for key sectors such as education and health.

Since June, states’ allocations from the federation account have been on the decline. For the allocation in June, the 36 states got N201.15bn. In July, it declined to N190.38bn.

In August, states’ allocation went down to N188.925bn. In September, they got N186.816bn.

Investigations showed that allocations fell following deductions being made from their allocations to service loans and the repayment of the bailouts.

It was learnt that besides N162m, which is being deducted monthly from 35 states’ allocations for the N614bn bailout given to them last year, further deductions were being made from their funds.

Such deductions currently being done by the Office of the Accountant-General of the Federation,  include external debts, contractual obligations, national water rehabilitation projects, the National Agricultural Technology Support Programme, payment for fertilizer, state water supply project, state agricultural project and the national FADAMA project.

Despite these deductions, most of the poor states are battling with foreign and local debts.

For example, Edo State has $277.74m foreign debts; Cross River, $192.73m; while Oyo is indebted to the tune of $136. 53m.

One of our correspondents’ analysis of figures obtained from the National Bureau of Statistics showed that in the last 18 months, states had not diversified their sources of revenues.

An analysis of the states’ IGR and their monthly allocations  indicated  that while total IGR generated by the 36 states and the Federal Capital Territory  was estimated at N1.85tn in 18 months, the net amount distributed to them from the federation account was put at N3.76tn.

This implies that the amount which the states and the FCT got from the federation account during the period exceeded what was generated internally by them with about N1.91tn.

A further analysis showed that only Lagos and Ogun states   were able to raise their IGRs above the amount given to them by the FAAC.

Based on the analysis of the revenue profile of states as obtained from the NBS, Lagos received a total of N177.1bn from the federation account for the 18 months period.

However, the state was able to realise about N587.34bn as IGR during the period. This brought the total revenue available to the state during the 18 months period to about N764.45bn.

For Ogun State, out of the total available revenue of N172.26bn, about N114.13bn was earned through the IGR, while the balance of N59.13bn was received from the federation account.

Further analysis showed that Rivers State generated N188.75bn in the IGR.

But Delta and Kano states earned N95.82bn and N62.66bn respectively as the IGR as against their respective FAAC allocations of N322.32bn and N124.97bn.

The document stated that Kaduna generated N51.8bn as IGR and received an allocation of N101.21bn in the 18 months’ period, while Edo had N43.89bn as IGR as against FAAC allocation of N101.05bn.

Oyo State generated N38.73bn IGR but got N87.4bn from the federal allocation.

Also, Enugu State generated N32.84bn as the  IGR during the 18 months period and received N78.11bn from FAAC; Akwa Ibom raised N44.66bn as IGR as against FAAC allocation of N288.65bn;  Kwara had N39.13bn IGR as against FAAC allocation of N65.12bn; while Ondo generated N43.78bn  as against N92.95bn allocated to it by FAAC.

Similarly, Anambra State was able to generate N25.37bn in 18 months but received N81.4bn from the federation account; Imo had IGR of N25.43bn as against N81.01bn it got from FAAC; Abia raised N22.74bn  as against federal allocation of N81.93bn; Bayelsa generated N19.5bn IGR as against N218.85bn it got from FAAC; while Plateau generated N22.23bn IGR compared to FAAC allocation of N65.24bn it received under the period under review.

Benue had IGR of N24.44bn as against FAAC allocation of N81.28bn;  Sokoto generated IGR of N30.84bn but got N81.26bn from FAAC; Kogi raised N18.01bn as IGR and received N78.34bn from federal allocation, Niger got N19.55bn as IGR and received N84.55bn from FAAC;  Jigawa raised N14.61bn IGR and got  FAAC’s N88.86bn; while Osun ‘s N20.59bn IGR was a far cry from the N32.92bn it got from the federation account.

But in spite of the dwindling revenues organised labour has said they will not listen to any excuse that can deny them the payment of the new minimum wage.

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