News - Oil & Gas - July 11, 2019

No state govt. funded 2018 budget with own revenue, says NEITI

MEDIATRACNET

None of the 36 states of the federation could fund their budgets from total revenue received in 2018, the Nigerian Extractive Industries Transparency Initiative (NEITI) has reported.

The transparency agency said, in the latest edition of its Quarterly Review, that the total revenues received by the states for the year stood at about N3.95 trillion.

In the publication titled: “Insights from states’ 2018 total revenue profiles”, NEITI said the gap between total revenues and budgets among the states ranged between N28 billion and N1.2 trillion.

The publication compared the revenues received by the states against their internally generated revenues (IGRs), Federation Accounts and Allocation Committee (FAAC) receipts and the implications on their budgets for the year under review.

While Enugu State’s budget recorded the least deficit, the Cross River State’s N1.3 trillion ‘Budget of Kinetic Crystallisation’ recorded the highest deficit.

The report said total revenues to all the states came from federal allocations the as well as internally generated revenue.

Details of the revenue receipts showed that out of a total N3.9 trillion collected during the year, about N2.8 trillion was from FAAC allocations, while N1.1 trillion was from IGR by the states.

Total deductions from FAAC allocation was about N355.8 billion bringing the actual net FAAC disbursements to the states during the year to about N2.5 trillion.

The report said the deductions were due to external and domestic debts by the states, including outstanding standing orders against them.

Further analysis based on data obtained from the National Bureau of Statistics, Office of the Accountant General of the Federation and the Fiscal Disbursement Unit of NEITI revealed that Lagos State had the highest revenue receipts of N501 billion. Osun had the lowest (N33billion).

The review showed that Lagos State’s revenue was higher than Osun State’s by over 1,518 per cent.

A comparative analysis of revenues by the six geo-political zones showed the South-south zone recorded the highest combined revenue of N1.1 trillion, followed by the South-west zone (N887.8billion) and the North-west (N546.5 billion)

The North-central region came fourth (N378.7billion), followed by North-east and South-east zones with N351.5 billion and N340.1 billion respectively.

On IGR, the NEITI report showed that only four states received revenues above N50 billion. The states are Delta, Lagos, Ogun and Rivers.

However, 13 states, namely Adamawa, Bauchi, Borno, Ebonyi, Ekiti, Gombe, Jigawa, Katsina, Kebbi, Nasarawa, Taraba, Yobe, and Zamfara received IGRs below N10 billion.

Also, 11 states, namely Abia, Anambra, Bayelsa, Benue, Cross River, Imo, Kogi, Niger, Osun, Plateau, and Sokoto States received IGRs between N10 billion and N20 billion.

Eight states, including Akwa Ibom, Edo, Enugu, Kaduna, Kano, Kwara, Ondo and Oyo, had IGRs between N20 billion and N50 billion.

The NEITI publication said apart from Lagos and Ogun, all other states have continued to depend on “FAAC disbursements”, to the neglect of their IGRs.

On annual budgets, the report said the fact that states had significantly lower total revenues than their budgets means they either do not fully implement their budgets, or they resort to borrowing to finance their budgets.

On the debt profiles of the states, the NEITI report showed that all the 36 states have varying degrees of debt overhangs, from about N36 billion and N45 billion (Yobe and Jigawa) to about N436.6 billion by Lagos.

The report said the South-south and South-west zones, which had had the largest budgets and budget deficits, also had the largest debt burden. The South-east had the lowest debt level.

“Considering the high levels of budget deficits and debts, it would be advisable for states to strategize and develop innovative ways of generating revenue in order to reduce their budget deficits and deter excessive borrowing, before expenditure on critical developmental and investment projects can be embarked upon,” the report added.

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