Coronanomics (18) - Selected Sub-Nationals: The Different Faces of Trouble and Redemption

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Wednesday, June 24, 2020 / 05:20 AM / by Proshare Content/ Header Image Credit:  EcoGraphics


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Lagos State: Tracking Excellence

Lagos state's economy is service-driven. Economic activities in the state can be classified in an unconventional manner of a Night economy, Marine economy, Service Economy and Faith-based economy. Lagos State derives a majority of its revenue from sub-national taxes.  The biggest piece of the state's revenue pie is its PAYE (Pay As You Earn) Tax.

 

The Night Economy

Lagos is an amalgam of activities stitched together in kaleidoscope of contrasts. The complex nature of its economy represents both a weakness and a strength. The strength derives from reinforcing revenue streams from activities ranging from commerce and trade to finance and manufacturing and ICT. But in this mix, the state loses tonnes of money from under-exploiting the potentials of its silent but massive night economy.

 

The state could potentially run a 24-hour economic cycle that would perhaps double its annual internally generated revenue (IGR) to about N798bn from its 2019 figure of just under N400bn. To move the night economy forward some steps need to be taken:


  • Improve around the clock security. The state must install 24-hour surveillance CCTV Cameras in all areas of business concentration starting from Ikeja, the state capital. The state's neighbourhood watch patrol in collaboration with the Nigerian police can provide security coverage for night trading activity with Ikeja used as a pilot project

  • LAWMA should be retooled and reorganized. The state's environmental sanitation body should have a night squad, responsible for cleaning up trading centres at night. The night team would go around markets and clear refuse after certain schedules have been agreed with market associations.

  • Cinemas and Shopping Malls should be allowed to run night schedules. Cinemas and shopping malls should be given special protection at night with at least two Neighbourhood  Watch/Police squad cars attached to each location. CCTV Cameras should be located around each premise with 24-hour surveillance.

  • Lagos is called the land of aquatic splendour, but where is its night fish market? Lagos needs to leverage its marine status by building a night fish market that would eventually be continentally renowned for the quality of its fish and the acquatic design of its infrastructure would would include a 'sushi' bar and 'bukkas' which sell fish pepper soup amongst other fish delicacies.  How does the state finance the building of the market? With April 2020 Federal Bond issues being oversubscribed by 459%, the domestic capital market is sufficiently liquid to meet such aspirations.

 

The Marine Economy

The other side of Lagos that disappears into a sinkhole of political talk with little action is its marine economy. Lagos State is essentially a collection of small Islands but so far successive governments of the state have not been able to leverage its riverine nature to upscale IGR and the state's GDP per Capita. The last best effort at developing commercial water transportation in the state was during the government of governor Lateef Jakande between 1979 and 1983. The second nest attempt was under governor Babatunde Fashola, between 2007 and 2015. The Fashola marine transport effort that took life in his second term between 2011 and 2015. The project got stumped as a result of weak follow-through. Lagos state's marine economy is critical to its post-COVID-19 future for the following reasons:


  • Water transportation would decongest the number of people that use bus services, thereby, reducing vehicle congestion and interpersonal physical contact. Water transportation would also reduce the time it takes workers, traders, and other individuals to get to different locations, especially between Ikorodu, Epe, Badagry and Lagos Island and Mainland.

  • The marine economy also builds on the state's many fishing ports spread from Badagry to Ikorodu and Epe and the Island. The ports could be upgraded to mini-fish markets with fish processing facilities and financing options that provide micro-credit, micro-insurance and micro-leasing. The state's various seashores are well-known for their crabs, shrimps and prawns and so its seafood economy could be supported to generate at least three times its current earnings. With seafood clusters constructed across the state with 24-hour security and power, this part of the state's marine life could ride a wave of double-digit growth with twelve months. The clusters would be COVID-19 compliant by ensuring the required codes of cleanliness and social distancing. Indeed, digital tech applications could be used to order fish or other seafoods while live streaming of market prices and quantity of fish types could enable fish buyers to experience new types of digital-based commercial transactions using mobile phone apps. Digital TV could cover markets across the states and give buyers and sellers opportunities for continuous daily engagement by remote interaction.

  • The state's marine economy should tie into a medium-term energy strategy where its water resources also serve as a means of energy generation to supply industrial clusters across the state with at least 10MW of light per cluster. This would improve business activity, reduce the cost of doing business in the state and increase the state's GDP and IGR.

Service Economy

Lagos state is the financial hub of the country, just as London is the business epicentre of the United Kingdom (UK) and New York the financial hub of the United States of America (USA). Lagos shares the blessings and curses of both cities. In light of the complexities of major business hubs globally, the Lagos state government needs to transition into a more efficient ecosystem to ensure that service delivery excellence is provided to support expanding private enterprise. Some key options are available to the state which could include, but may not be limited to, the following:


  • Building a G2B and G2C service delivery platform that makes the interaction between enterprises and citizens less cumbersome. Businesses and citizens should be able to process documents and get approvals digitally rather than engage in physical interfaces with public officers.

  • Public governance protocols must be elevated to ensure that transparency is elevated to a routine rather than a hit-and-miss occasional achievement of execution. The transparency question once resolved should lead to public service efficiency and effectiveness. In post-COVID-19 reality obscurity is a foe rather than a friend as investible funds will flow to markets that are cost-competitive, yield-superior and governance transparent. The debacle that happened with the Lagos State Government Municipality Bond Issue in 2019 should not be allowed to repeat itself. 

  • To support a 24-hour economy agenda, a 24-hour public service must be in place to provide the regulatory and operational public service support needed to drive an economy without boundaries. Time should be a resource, not a constraint. A Lagos that defies time limitations will rapidly ramp up GDP and IGR thereby improving the standard of living of state households.

Faith-Based Economy

After Ogun state, Lagos state may have the largest faith-based economy with large Christian and Muslim congregants, this allows for the state to collaborate with faith-based institutions to improve the well-being of state households through FPPs or faith and public projects. The FPP model integrates faith-based resources into providing services to societies most vulnerable, enabling the government to partner churches and mosques in schemes that help congregants grow micro-businesses, access micro-insurance and leverage micro-mortgages while also providing improved protection to the socially vulnerable people such as aged and the physically and mentally challenged.

 

The state with faith-based partnerships can build purpose-fit facilities where these individuals can get help and live meaningful lives rather than depend on informal structures that could be dangerous or simply unsustainable.

 

The various types of economies of Lagos would require or contribute to robust state revenues and expect efficient cost management. 

 

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Lagos State Revenue

The state's total revenue grew by 3.07% in 2019, leveraging its night and marine economy alone the state could triple this growth rate in eigthteen months. Its total revenue in 2019 was N516.62bn from N501.21bn in 2018.  Its total IGR was 77.18% of total revenue while its FAAC was 22.82% of total revenue. A firmer harnessing of state resources and a realignment of its strategy could see IGR rise to 97% of total revenue and FAAC fall to about 3% of the state's total annual earnings (see chart 55).


Chart 55: Lagos State Total Revenue (N'bn) 2019

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Source: NBS, Proshare Research 

 

Lagos State IGR

In understanding the state's current revenue structure its is noteworthy to realize that the state's major source of internally generated revenue is its PAYE which accounts for about 68% of the state's IGR, while revenue generated from other taxes as well as from MDAs (Ministries, Departments and Agencies) accounts for 16% and 10% of IGR respectively (see Chart 56). For the state to position properly for a post-COVID-19 world, its must rethink IGR composition by reducing PAYE to roughly 30% of IGR and increasing the proportion of IGR from taxes, levies, fines and fees to about 70% of state IGR. 


Chart 56: Lagos State IGR (N'bn) 2019

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Source: NBS, Proshare Research 

 

Lagos State Domestic Debt

Lagos state's domestic debt stood at N444.23bn as of December 2019, a reduction from N530.24bn as of December 2018.

 

Chart 57: Lagos State Domestic Debt (N'bn) 2015-2019

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Source: NBS, Proshare Research

 

Despite the drop in its domestic debt from N530.24bn in December 2018 to N444.23bn in December 2019, the size of the was worrisome as it poses a potential burden for future administrations/generations (see Chart 55).

 

Lagos State External Debt

Lagos state's external debt declined to $1.4bn in December 2019 from $1.43bn in December 2018. The fall in the debt may be considered desirable but it still leaves the state with a major foreign exchange exposure. The fact that most of the state's revenue is naira denominated, the large foreign debt exposure threatens the state's fiscal balance with foreign exchange translation risks and could result in a downgrade of its credit rating and a rise in its cost of finance.


Chart 58: Lagos State External Debt ($'bn) 2015-2019

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Source: NBS, Proshare Research

 

Illustration 16: Lagos State-Growing A Post COVID-19 Economy

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The State of Osun

Osun state is on the opposite side of the revenue pendulum from Lagos state. The state recorded the lowest IGR and the lowest revenue in the South-West region in 2019. It posted an IGR of  N17.92bn in 2019, while its total FAAC received in 2019 was N24.2bn in 2019.


The State of Osun is a dark horse on a white canvass. The opportunities of the state well outstrip its challenges, but its present fiscal structure robs it of development, growth and human well-being. Its large public sector (over 2.2m people) relative to the overall population (around 5.5m people) suggests heavy recurrent public sector payments by way of salaries and other emoluments and large monthly pension and gratuity outflows. 


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Low Hanging Fruits

To kick off an aggressive rebuilding of the Osun economy with limited public financial outflows the government may need to do the following:

  • Take inventory of all idle state government enterprise assets and prepare them for private-sector acquisition
  • Convert the states cultural and faith-based advantages into economic opportunities through tourism
  • Upgrade the states Aso Oke industry into a medium-sized private sector-led joint venture that involves clothing design, manufacturing, fashion fairs and export. Patents and copyrights would be obtained by the government and kept as contingent assets.
  • The cola nut business of Ede would be upgraded and will form the basis of a major exportable colanut trade

 

The real potential of Osun State follows from a clear vision to achieving the following:

  • Building a State with a strong AgriTech framework that integrates agriculture and technology in a manner that brings about "Green Economy" efficiency, effectiveness and innovation. Producing agricultural throughputs at globally competitive prices and quality will bring revenue streams that reduce State Debt -to-Revenue ratios and Improve IGR-to-Total Revenue numbers.
  • Improving specialized human capital skills in the areas of AgriTech, Mining and Commodities, including expertise in commodities trading, product derivatives and forward and futures contracts trading. The economy of the future is knowledge-based and reliance on raw commodities and minerals would push the State to the least rewarding end of the future production and service value chains. The State of Osun must prepare itself for 4IR. The fourth Industrial Revolution (4IR) is technology and science-driven requiring education in the State of Osun to be remodelled in a way that is fit-for-purpose in an era of disruptive economic competition. Roadshows about the State's agricultural resources and mining potential are only as useful as they feed into a narrative that shows how these resources can support a new technological paradigm that creates uncommon value by way of technology.
  • Leveraging Religious/Spiritual Tourism is the 'soft' aspect of the Osun economy that has been either intentionally or unintentionally been ignored. The State of Osun is known to have the largest number of hills in the South West associated with, allegedly efficacious, spiritual essence and power. The various 'Okes' known as magnets for religious faithful seeking communion with God possess an underlying value that is yet to be explored. Also, festivals such as the 'Osun Osogbo' and other annual traditional fiestas need to be harnessed in a way that attracts a global tourist audience beyond the present numbers. Religious/Spiritual tourism could ignite cash flows well beyond past conservative calculations. 
  • Creating Industrial Clusters/Parks with Tech Incubators that leverage the verdant agricultural landscape of Osun to build digital businesses that scale agricultural marketing, sales and production. The AgriTech valley would collaborate with coastal economies to build agricultural export pipelines that are both virtual and physical that merge into a helix-like interchange of economic value. If structured and implemented properly, the attendant Agricultural Tourism would create a unique stream of investing and operational cash flows that could organically increase the State's GDP by at least another 10% or N147.5bn based on available National Bureau of Statistics (NBS) 2018 data.

 

State GDP and Its Imperatives

Accelerating Industrial Development and Increased Industrial Activities are linked to economic growth, trade and market development. As a component of the States GDP trade has been largely consistent in its rising trend of contribution to the economic size of the State of Osun. This stands at 5.8% in 2017, from 5.55 in 2014. Trade alone is the third-largest contributor to State GDP (estimated at N1.47trn in 2018) and the second-largest contributor to the monetary value of service sector output in 2017

 

The GDP numbers open up a myriad of potential opportunities to investors in the areas of:

  • Modern Farming
  • Manufacturing
  • Logistics
  • Storage
  • Warehousing
  • Value Chain Management
  • Tech Conference Centres
  • Infrastructure Development et al.

However, these potential business growth areas depend on new frameworks and not ageing fiscal and business growth models of the past. These traditional businesses will need to be reworked within a 4IR mindset. The State of Osun will need to Rethink the past, Reconsider the present and Reimagine its Future if it is going to make a success of the transformation of the State's economy between 2020 and 2023 (see illustration 17).

 

Illustration 17: The State of Osun Economy; Rethinking Fiscal Strategy

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The State's fiscal condition must inspire the confidence of private investors who need to buy into a strong fiscal narrative so that they can match the fiscal discipline and foresight of the State government with the experience and cash of their own, as they align their local business plans with that of the State Government. Hard data tell the best stories of future business opportunities and outlook, government speeches are good but they are crafted to inspire hope and as American Army General, Gordon R. Sullivan (Rtd.), once noted, "hope is not a method".

 

A critical component of the growth strategy for the State of Osun over the next few months should be to drive a rapid socio-economic data gathering, collation, organization and analysis process that provides investors with broad and deep data upon which they can base their investment decisions.

 

Indeed, with credible data available for interrogation and review, the business case becomes easier to establish and the cost of attracting foreign and local investors would decline sizably. It must be observed that Investors are not philanthropists they expect to make reasonable returns on their investments and so, the data upon which critical investment decisions are made is fundamental to attracting their money

 

With the data available and registration and licensing of businesses made easy, The State of Osun should see investments in the following areas if the 4IR mindset is adopted:

  • Industrial Parks/Estates
  • Shopping Malls
  • International Conference Centres
  • Warehousing Facilities
  • Commodity Storage Silos
  • Inland Container Ports
  • Housing Estates
  • Health /Religious Resorts

 

The benefit of the limitations of the State of Osun economy in hindsight should strategically spark the required action plans for the new economy with the benefit of foresight (see illustration 18)

 

Illustration 18: The Benefits of Hindsight and Foresight Based on Insight

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Osun State Revenue

Osun states total revenue grew by 26.87% in 2019. Osun recorded total revenue of N42.14bn in 2019, an improvement from total revenue of N33.22bn in 2018. It mainly relies on revenue derived from its FAAC. In 2019, its total FAAC received was N24.2bn while its IGR was N17.92bn.


Chart 59: Osun State Total Revenue (N'bn)

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Source: NBS, Proshare Research

 

Osun State IGR

Osun State recorded a total IGR of N17.92bn in 2019. The breakdown of Osun states' IGR reveals that its major source of revenue comes from its MDA's while PAYE was its second main source of revenue. Its MDA's generated a total of N8.75bn in 2019 while it generated a total of N7.85bn from PAYE.

 

Chart 60: Osun State IGR (N'bn) Breakdown

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Source: NBS, Proshare Research 

 

Osun State Domestic Debt

The state's domestic debt declined to N138.65bn in December 2019 from N148.1bn in December 2018. Given its low level of total revenue, it is expected that its domestic debt might continue to rise in the future.


Chart 61: Osun State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research


Osun State External Debt

Osun state's external debt declined to $95.45m in December 2019 from $103.26bn in December 2018.


Chart 62: Osun State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research

 

FCT

The FCT is known for a large number of commercial activities that take place in its territory. It had the highest total revenue of N146.47bn in the North-Central region. But for sustainability, the territory needs to turn itself into a conference and public policy mecca on the African continent. The federal capital needs to be more than a public service showpiece and more of a 21st-century community prepared to be the hotbed of policy and ideas for the African continent. The capital needs to be a city choke-full of think tanks and world-class libraries and schools.  To support this the following would be required:

  • The city's urban mass transit system needs to be upgraded. Abuja's transport system is currently less than is required for a first-class continental conference and research hub.
  • The city requires a network of CCTVs in major areas that serve as gathering destinations for large crowds. A post-COVID-19 era would see buses carrying 20 people with sufficient distancing in compliance with the new social ethos. This means a larger number of crowd 'pockets' would need to be handled around the clock.
  • Abuja needs to transmute into a 24-hour city. The city would require around the clock bus transport services, pharmacies, cinemas, theatres, restaurants, and retail markets. The 24-hour economy never sleeps so security in the capital would have to be top-notch.
  • The FCT administration would have to leverage the domestic capital market to provide the necessary structures to build the city into the strategic go-to policy and research destination of the continent.

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FCT Total Revenue

FCT total revenue grew by 5.61% in 2019. Its revenue rose to  N146.47bn in 2019 from N138.69 in 2018. The major source of its revenue was from its IGR which amounted to N74.56bn (50.91% of total revenue) in 2019 while its allocated FAAC in 2019 was N71.91bn (49.09% of total revenue).

 

Chart 63: FCT Total Revenue (N'bn) 2019

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Source: NBS, Proshare Research 

 

FCT State IGR

The FCT gets all its IGR from taxes levied by the states. The major chunk of the tax income comes from PAYE accounting for N65.75bn of the total IGR recorded in 2019 (see Chart 64).


Chart 64: FCT IGR (N'bn) 2019

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Source: NBS, Proshare Research

 

FCT Domestic Debt

FCT's domestic debt declined by 34.1% in 2019. FCT domestic debt as of December 2019 stood at N108.17bn a decline from a domestic debt of N164.25bn in December 2018.

 

Chart 65: FCT Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

FCT External Debt

FCT's external debt declined by -4.43% in 2019. FCT's external debt declined to $30.44m in December 2019 from $31.85m in December 2018 (see Chart 66).


Chart 66: FCT External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research 

 

Niger State

Niger state recorded a sum of N69.21bn as revenue in 2019, which was the third in its region. The state relies mainly on its FAAC allocation as its source of revenue.

 

Niger State Total Revenue

Niger state revenue grew by 1.85% in 2019. Its total revenue in 2019 was N69.21bn, an increase from N67.95bn in 2018. Its allocated FAAC accounted for 81.56% (N56.45bn) of its total revenue while its IGR accounted for 18.44% (N12.77bn) of its total revenue (see Chart 67).

 

Chart 67: Niger State Total Revenue (N'bn) 2019

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Source: NBS, Proshare Research 

 

Niger State IGR

Niger State's major source of IGR comes from the taxes it levied, with a major chunk from 'other taxes'. It earned N7.07bn from other taxes while it earned N4.8bn from PAYE (see Chart 68).

 

Chart 68: Niger State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research 

 

Niger State Domestic Debt

Niger state domestic debt grew by 45% in 2019. Its domestic debt recorded an upward trend from 2015 to 2019. Niger state domestic debt has continuously been on the rise since December 2015. Its domestic debt peaked at N60.61bn in December 2019 from N41.8bn in December 2018 (see Chart 69).

 

Chart 69: Niger State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research 

 

Niger State External Debt

Niger State's external debt peaked at $69.99m in December 2019 from $61.35m in December 2018. Its external debt has continuously been on the rise since December 2015 (see Chart 70).

 

Chart 70: Niger State External Debt (N'm) 2015-2019

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Source: DMO, Proshare Research 

 

Borno State

Borno state is characterized by a low level of commercial activity as well as its high level of insecurity which has impeded the growth of its economy.


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Borno State Total Revenue

Borno state's major source of revenue in 2019 was its FAAC. Its FAAC accounted for 88.30% of its total revenue while its IGR accounted for 11.70% of total revenue.

 

Chart 71: Borno State Total Revenue

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Source: NBS, Proshare Research 

 

Borno State IGR

The major source of Borno state IGR is gotten from its PAYE. In 2019, its PAYE accounted for N4.19bn while the revenue generated from the MDA's was N2.3bn (see Chart 72).

 

Chart 72: Borno State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Borno State Domestic Debt

Borno state domestic debt grew by 22.1% in 2019. Its domestic debt peaked at its highest in December 2019. Its debt increased to N83.6bn in December 2019 from N68.38bn in December 2018 (see Chart 73).


Chart 73: Borno State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Borno State External Debt

Borno state external debt declined by 20.86% in 2019. Its external debt has a downward trend. Its external debt declined from $21.62m in 2018 to $17.11 Borno state recorded its lowest external debt of $17.11m in December 2019 (see Chart 74).

 

Chart 74: Borno State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research

 

Adamawa State

Adamawa in most recent times has been overwhelmed by banditry. The state relies significantly on revenue from FAAC allocation. The state's huge dependence on FAAC is abnormally large. The state is potentially one of the country's breadbaskets. With rich and verdant land and a strong farming culture, the state has massive potential to drive an agricultural revolution in the country.

 

Thinking Strategically

Adamawa State can attract large scale agricultural companies into the state if its philosophy is private sector-led. The COVID-19 period provides a great opportunity for the state to upscale agriculture through the use of technology a major factor in breaking poverty cycles according to the late Professor Clayton Christensen, Efosa Ojomo, and Karen Dillon in their award-winning book the "Prosperity Paradox".

 

Adamawa may need to do the following:

  • Shift to more mechanized modes of farming
  • Adopt cattle ranching as a system of nurturing animal protein and providing leather as inputs for the fashion, automobile, and furniture industries. The cattle reared could also provide milk and yogurt as in-puts to other businesses such as confectionary.
  • Mining activities should be formalized with artisanal activities eased out as larger and better-equipped corporations are encouraged to mine. 

 

Adamawa State Revenue

Adamawa state derived 83.28% of its total revenue from FAAC while 16.72% of its revenue was derived from its IGR in 2019. Its total revenue earned in 2019 was N58.04bn. Its allocated FAAC in 2019 was N48.34bn while its IGR was N9.7bn (see Chart 75).

 

Chart 75: Adamawa State Total Revenue (N'bn) 2019

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Source:NBS, Proshare Research 

 

Adamawa State IGR

The major source of its IGR is its PAYE. In 2019, Adamawa state recorded a PAYE of N5.75bn while its MDA's generated a total of N3.03bn (see Chart 76).

 

Chart 76: Adamawa State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Adamawa State Domestic Debt

Adamawa state's domestic debt has consistently risen since December 2015. Adamawa state recorded its highest domestic debt of N102.41bn in December 2019. Its domestic debt rose from N89.66bn in December 2018 to N102.41bn in December 2019.

 

Chart 77: Adamawa State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Adamawa State External Debt

Adamawa state's external debt has an upward trend. Its external debt rose consistently each year and peaked at $108.76m in December 2019. Its external debt rose from $97.79m in December 2018 to $108.76m in December 2018 (see Chart 78).


Chart 78: Adamawa State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Researchn 2019, its FAAC allocated accounted for 77.89% of its total revenue while its IGR was 22.11% of its total revenue.

 

Abia State Total Revenue

Abia state's total revenue declined by -4.78%  to N66.81bn in 2019 from N70.16bn in 2018. Its FAAC accounted for 77.89% of total revenue while its IGR accounted for 22.11% (see Chart 79).

 

Chart 79: Abia State Total Revenue (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Abia State IGR

Its two major sources of IGR in 2019 were its PAYE and revenue derived from its MDA's. Revenue derived from PAYE and MDAs in 2019 were N5.91bn and N5.8bn respectively.


Chart 80: Abia State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Abia State Domestic Debt

Abia state had an upward trending domestic debt, as its domestic debt increased yearly. Its highest domestic debt recorded was N68.76bn in December 2019. Its domestic debt increased from N67.02bn in December 2018 to N68.76bn in December 2019 (see Chart 81).

 

Chart 81: Abia State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Abia State External Debt

Abia state external debt declined by -2.02% in December 2019. Its external debt declined from $98.58m in December 2018 to $96.59m in December 2019 (see Chart 82).

 

Chart 82: Abia State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research 

 

Anambra State

Anambra state recorded an increase in its debts and revenue in 2019. Its total revenue increased by 7.66% in 2019. Its main source of its IGR is its PAYE.

 

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Anambra State Total Revenue

Anambra state's total revenue increased by 7.66% in 2019. Its total revenue increased from N74.56bn in 2018 to N80.26bn in 2019. The major source of its revenue in 2019 was from its FAAC. Its FAAC in 2019 was N53.89bn (67.15% of total revenue) while its IGR was N26.37bn (32.85% of total revenue).

 

Chart 83: Anambra State Total Revenue (N'bn) Breakdown 2019

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Source: NBS, Proshare Research 

 

Anambra State IGR

Anambra state's two major sources of its revenues are its PAYE and MDAs revenue. In 2019, its PAYE accounted for N11.19bn of total revenue while its MDAs revenue accounted for N10.24bn of total revenue (see Chart 84).

 

Chart 84: Anambra State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Anambra State Domestic Debt

Anambra state's domestic debt rose significantly from N2.61bn in December 2017 to N33.92bn in December 2018. Its highest domestic debt of N33.92bn was recorded in December 2019 (see Chart 85).


Chart 85: Anambra State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Anambra State External Debt ($'m) 2015-2019

Anambra state's external debt grew slightly by 0.97% in 2019. Its external debt rose consistently from December 2015 to December 2019. Its highest external debt recorded was $108.08m in December 2019 (see Chart 86).

 

Chart 86: Anambra State External Debt ($'mn) 2015-2019

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Source: DMO, Proshare Research 

 

Rivers State

River state is characterized by large economic activities. It's the second state in Nigeria with the highest amount of total revenue earned in 2019.


Rivers State Total Revenue

Its total revenue increased by 4.71% in 2019. Its total revenue rose from N285.41bn in 2018 to N298.85bn in 2019. Rivers state recorded a total FAAC allocation of N158.45bn and an IGR of N140.4bn in 2019 (see Chart 87).

 

Chart 87: Rivers State Total Revenue (N'bn) 2019

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Source: NBS, Proshare Research 

 

Rivers State IGR

Rivers State's major source of revenue was from PAYE and other taxes.  In 2019, its PAYE earned was N101.09bn while its revenue earned from other taxes was N21.27bn.


Chart 88: Rivers State IGR (N'bn) 2019

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Source: DMO, Proshare Research

 

Rivers State Domestic Debt

Rivers state domestic debt was upward trending from December 2015 to December 2019. Its domestic debt peaked at N266.94bn in December 2019. Its domestic debt rose from N225.59bn in December 2018 to N266.94bn in December 2019 (see Chart 89).


Chart 89: Rivers State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Rivers State External Debt ($'m) 2015-2019

Rivers state had was upward trending external debt from December 2015 to December 2019. Its external debt rose slightly by 0.19% from $78.28m in December 2018 to $78.43m in December 2019 (see Chart 90).

 

Chart 90: Rivers State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research

 

Delta State

Although the state is richly endowed with various resources, especially oil, the resources are yet to be fully harnessed to significantly improve the welfare of the people. Besides abundant oil and gas, the state has a variety of other resources and facilties which gives it comparative advantage over other states in the Federation. These resources include: solid minerals such as silica, lignite and kaolin; abundant land for cropping and plantation agriculture; forest resources; water bodies for recreation and tourism; aquatic resources with vast potentials for aquaculture, several port, etc.

 

The Delta states economy is primarily dependent on its revenue derived from FAAC. Its primary source of its IGR is its PAYE

 

Delta State Total Revenue

In 2019, Delta state recorded an increase in its total revenue by 4.37%. Its total revenue increased from N272.07bn in 2018 to N283.96bn in 2019. Delta states major revenue comes from its FAAC. Its FAAC accounted for 77.22% of its total revenue while its IGR accounted for 22.78% of its total revenue in 2019.  In 2019, it recorded a total allocated FAAC of N219.28bn while its IGR was N64.68bn.

 

Chart 91:  Delta State Total Revenue (N'bn) Breakdown 2019

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Source: NBS, Proshare Research 

 

Delta State IGR Breakdown

Delta's state major source of IGR is its PAYE and its MDAs. In 2019, it derived  N47.4bn from its PAYE while N8.01bn was derived from its MDAs.

 

Chart 92: Delta State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Delta State Domestic Debt

Delta state domestic debt increased marginally by 2.22% in December 2019. Its domestic debt increased from N228.81bn in December 2018 to N233.89bn in December 2019 (see Chart 93).

 

Chart 93: Delta State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Delta State External Debt

Delta state external debt declined marginally by -1.17% in December 2019. Its external debt declined from $63.27m in December 2019 to $62.53m in December 2018 (see Chart 94).

 

Chart 94: Delta State External Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Kaduna State

Kaduna state is an industrial centre of Northern Nigeria and the Middle Belt, Manufacturing products like textiles, machinery, steel,  aluminum, petroleum products and bearings

 

Kaduna State Total Revenue

Kaduna states total revenue grew by 14%  in 2019. Its total revenue increased to N112.06bn in 2019 from N98.3bn in 2018. Its major source of revenue was revenue derived from FAAC allocation. In 2019, its total FAAC allocated was N67.1bn (59.88% of total revenue) while its IGR was N44.96bn (40.12% of total revenue).

 

Chart 95: Kaduna State Total Revenue (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Kaduna State IGR

Kaduna state's major source of its IGR is derived from its MDAs and PAYE. In 2019, its MDAs generated revenue of N19.01bn while N11.69bn was generated from PAYE (see Chart 96).

 

Chart 96: Kaduna State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Kaduna State Domestic Debt

Kaduna state domestic debt was N78.9bn as of December 2019. Its domestic debt declined by -6.78% in 2019, its domestic debt declined from N84.64bn in December 2018 to N78.9bn in December 2019 (see Chart 97).

 

Chart 97: Kaduna State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research

 

Kaduna State External Debt

Kaduna state's external debt grew by 144.13% in December 2019. Its external debt increased from $227.25m in December 2018 to $554.78m in December 2019 (see Chart 98).

 

Chart 98: Kaduna State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research

 

Sokoto State

 

Sokoto State Total Revenue

Sokoto state's total revenue increased slightly in 2019. Its total revenue increased by 1.72% in 2019. Its total revenue increased from N73.2bn in 2018 to N74.48bn in 2019. The major source of its revenue was its FAAC, which accounted for 74.48% of the state's total revenue and 25.52% of its total revenue was generated from its FAAC. In 2019, its total FAAC allocated was N55.48bn while its IGR was N19.01bn (see Chart 99).


Chart 99: Sokoto State Total Revenue (N'bn) Breakdown 2019

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Source: NBS, Proshare Research 

 

Sokoto State IGR

Sokoto state's major source of its revenue was derived from Other taxes and PAYE. In 2019, revenue derived from other taxes was N11.61bn while revenue derived from PAYE was N5.95bn (see Chart 100).


Chart 100: Sokoto State IGR (N'bn) Breakdown 2019

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Source: NBS, Proshare Research

 

Sokoto State Domestic Debt

Sokoto state domestic debt increased significantly by 23.58% in December 2019. Its domestic debt had an upward trend and increased consistently yearly, its domestic debt increased from N38.6bn in December 2018 to N47.7bn in December 2019 (see Chart 101)


Chart 101: Sokoto State Domestic Debt (N'bn) 2015-2019

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Source: DMO, Proshare Research 

 

Sokoto State External Debt

Its external debt declined slightly by -3.60% in December 2019. Its external debt declined from $39.22m in December 2018 to $37.81m in December 2019 (see Chart 102).


Chart 102: Sokoto State External Debt ($'m) 2015-2019

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Source: DMO, Proshare Research

 

Table 20: Debt to Revenue Per State-A "COVID" chill

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The high debt to revenue ratio across the various states of the federation is another source of concern. According to the DMO guidelines on borrowing, no state should have outstanding loans that are more than 50% of their total revenues in the previous 12 months.

However, statistics provided by the FRC in its 2018 Annual Report show that all the states had debts beyond 50% of their previous 12-month revenues. Lagos State recorded the highest debt to revenue ratio. It had net revenue of N119.02bn, with a total debt of N968.16bn. This left the state with a debt to revenue ratio of 813.41%. It also means that the state had gone beyond the DMO limit by 763.41%. Lagos was quickly followed by Osun State with a debt to revenue ratio of 781.7%. While it had net revenue of N22.84bn, its total public debt stood at N178.52bn.

This means that the state had a debt to revenue ratio of 781.71% and had gone beyond the limit set by the DMO by 731.71%. Other top states in terms of high debt to revenue ratios include Cross River, Ekiti, Ogun, Plateau, Edo, Bauchi, Adamawa, Kaduna, Nasarawa, Imo and Oyo states. The spread of the coronavirus is projected to worsen the state's debt to revenue ratio in 2020 (see Table 20). 

Illustration 19: Understanding the Challenges, Mining the Opportunities

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Related Reports (PDF)

1.     Download the Full PDF Report - Coronanomics and the Nigerian Economy, June 06, 2020

2.     Executive Summary PDF - Proshare, June 06, 2020

 

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