*Rivers, Anambra, Ogun Top 2020 Ranking *Bayelsa, Osun, Ekiti Lowest.
BudgIT, a civic advocacy society that uses technology to intersect citizen-engagement with improved governance, on Thursday announced the launch of the 2020 edition of its annual signature analysis titled Fiscal Sustainability and Epidemic Preparedness Financing at the State level.
The report, which provides policy makers with insights on ways to implement financial and institutional reforms and improve states’ fiscal performance and sustainability level, ranked Rivers state first position on the index, followed by Anambra, Ogun and Lagos. Conversely, among states that are not fiscally sustainable, Bayelsa, Osun, Ekiti and Plateau occupy the least positions.
According to the report, the cumulative debt of Nigeria’s 36 states surged by N3.34tr or 162.87% from N2.05tn in 2014 to N5.39tr in 2019, with 10 states accounting for approximately half of the amount, or N1.68tr of the increase.
A further breakdown showed that seven of them are in the South while three are from the North, following which Damilola Ogundipe, BudgIT’s Communications Lead noted the need for the sub-nationals to grow their Internally Generated Revenue (IGR) to achieve fiscal sustainability.
This, he said, is because “options for borrowing are reduced due to debt ceilings put in place by the Federal Government to prevent states from slipping into a debt crisis. There has to be a shift from the culture of states’ overdependence on FAAC.
“On subnational epidemic preparedness, it is important for states to prioritize health financing especially on Water, Sanitation and Hygiene (WASH). While COVID19 has garnered major attention in the last few months, it is worthy of note that states are currently battling at least six other deadly diseases which already have vaccines or known treatment. In 2019, all 36 states recorded 94,500 cases of the deadly Cerebrospinal meningitis (CSM), measles, lassa fever, yellow fever, monkey-pox and cholera combined. It is in the self interests of State Governments to grow their IGR and also invest in appropriate health systems through their budgets and other sustainable methods.”
The statement also quoted BudgIT’s Principal Lead,Gabriel Okeowo, as saying that though some States have seen some improvement in their IGR between 2014 and 2019, there is still a need to put systems in place for aggressive IGR growth within the subnational economies, especially as falling crude oil prices, OPEC production cuts and other COVID-19 induced headwinds are set to impact Federal Allocations over the next two years.
This paints a bleak outlook for Nigerian states who depend on FAAC allocation for their survival, even though dwindling revenue will affect all states differently.
Three states – Bayelsa, Borno and Katsina – will be worst hit by dwindling revenue as they relied on Net FAAC for 89.56%, 88.30% and 88.16% of their total revenues, respectively in 2019, while Lagos, Ogun and Rivers state will be least affected as they relied on Federal Allocation (Net FAAC) for only 22.82%, 35.31% and 53.02% of their total revenues, respectively.
The report noted that “without doubt, soaring debt burden, imprudent fiscal planning, and nearly a decade of misplaced expenditure priorities have beaten a clear path to fiscal crisis for many Nigerian states.
“This is veritably evident in our just released 2020 Fiscal Sustainability Index where some states rank higher than others and most are still below the sustainability point,” it added.
A breakdown of the 2020 State of States analysis, according to the statement, showed that 13 states were unable to fund their recurrent expenditure obligations together with their loan repayment schedules due in 2019 with their respective total revenues.
The worst hit of these 13 states, it said, are Oyo, Kogi, Osun, Ekiti States, Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia.
“Furthermore, of the remaining 23 states that can meet recurrent expenditure and loan repayment schedules with their total revenue, eight of those states had really low (less than N6bn) excess revenue, that they had to borrow heavily to fund their capital projects.”
The worst hit, the report stressed, are Zamfara, Ondo and Kwara, with N782.45m, N788.22m and N1.48bn left, respectively.
Based on their fiscal analysis, it continued, only five states of Rivers, Kaduna, Akwa Ibom, Ebonyi, and Kebbi, prioritised capital expenditure over recurrent obligations, while 31 states prioritised recurrent expenditure. “Recurrent expenditures are not necessarily a bad thing, especially when skewed towards sectors like Health and Education. However, 9 of the states in this category had overhead costs that were larger than their capital expenditures. These states are: Ekiti, Kogi, Kano, Plateau, Kwara, Nasarawa, Taraba, Adamawa, and Benue” Said Abel Akeni, BudgIT’s Research Lead.
