Urgent Need to Bolster States' IGR


Friday, January 10, 2020 / 09:12 AM / FBNQuest Research / Header Image Credit: New Telegraph


The National Bureau of Statistics (NBS) has published its internally generated revenue at state level report for H1 2019. According to the report, in the first of half 2019 aggregate IGR for the 36 states and FCT was N694bn compared with N597bn in the corresponding period of the previous year. The data show that 31 states and the FCT recorded growth in IGR while the remaining five states recorded declines during the period under review. Our default source of this data is the CBN. However, the CBN series is dated.


According to the NBS, Lagos emerged as the leading state, accounting for 30% of total IGR in H1 2019. Rivers was next in line, representing 11% while Delta, Ogun and Kaduna accounted for 5%, 4% and 3% respectively.


The breakdown of the IGR shows that aggregate PAY As You Earn (PAYE) income tax accounted for 62% of total internally generated revenue. The weakest links with regarded to revenue generated from the PAYE system were Gombe and Yobe states. Both accounted for less than 1% of total aggregate PAYE revenue.


The poor attitude towards tax payment in these states (as well as several other states) could be linked to a lack of structure as most businesses are not captured in the formal economy.


Additionally, the lack of knowledge of tax payment mechanisms is a factor as the literacy level is lower in many other states when compared to Lagos.


The FGN's primary objective should be to create a conducive business environment as IGR sustainability is a by-product of an enabling environment.


We note the recent move by the Presidential Enabling Business Environment Council (PEBEC) to kick off a sub-national tour geared towards engaging business owners. We expect the series of engagements on the back of this tour to positively impact ease of doing business metrics.


Most state governments have come to rely heavily on the monthly payout from the Federation Allocation Account Committee (FAAC) as their major source of revenue. The NBS data show that aggregate net FAAC allocation totalled N1.2trn in H1 2019, almost double the aggregate IGR.


Only three states were able to generate more revenue internally than their inflow from FAAC during the period. These states are Lagos, Ogun and Rivers.


To conclude with a statistical point, we have to note that the CBN and the NBS data on state governments' finances are not always consistent.

Proshare Nigeria Pvt. Ltd.


Related News

  1. Onerous Debt Burden For Most States
  2. Kwara State Recovers N4.8bn Tax Refunds from Previous Administration
  3. Lagos; A Nightmare For Expatriates, But A Place To Make Friends
  4. Infrastructure, Education and Works Get Priority in Makinde's N208bn 2020 Oyo State Budget
  5. Oyetola Signs Executive Order Establishing Osun Investment and Promotion Agency to Accelerate Growth
  6. Facing the Realities of Security and Development Challenges in Borno State - Zulum
  7. Ogun State: Working Past Economic Headwinds
  8. Lagos-Ogun Partnership for Economic Development - Thoughts on What Is Possible
  9. Sanwoolu, Abiodun List Benefits Of Proposed Lagos-Ogun Joint Commission
  10. Fitch Affirms Nigeria's Kaduna State at ''B''; Outlook Stable
  11. N691.11bn Generated As IGR in H1 2019
  12. Lagos State Governor Delegates Powers On Land Use Act To Commissioners
  13. Anambra Business and Investment Roundtable Holds This Week

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
Related News