States IGR shrinks by 11.7% as debt portfolio nears ₦34tn

By Philip Clement and Joy Obakeye

The Internally Generated Revenue (IGR) of 36 states and the Federal Capital Territory shrank by 11.7 per cent in the first half of 2020.

According to the National Bureau of Statistics (NBS) which disclosed this in a report released in Abuja, the IGR in the first half-year of 2020 was ₦612.87 billion.

This figure is lower when compared to ₦693.91 billion recorded in 2019.

“The 36 states and FCT IGR figure hits ₦612.87bn in H1 2020 compared to ₦693.91 billion recorded in 2019. This indicates a negative growth of -11.7%, year on year,” the report states.

The data was aggregated by the NBS in collaboration with the joint tax board headed by the Federal Inland Revenue Service (FIRS).

The report notes that Lagos has the highest internally generated revenue of ₦204.5 billion; representing 33.37% of the total IGR figure.

Despite recording the largest share, the IGR of south-west states dropped marginally by 0.3% as states recorded ₦205.1 billion in H1 2019.

Lagos is followed by Rivers with ₦64.58 billion (10.54%); FCT ₦35.2 billion (5.74%); Delta with ₦30.8 billion (5.03%); and Ogun with ₦28.6 billion (3.86%). Oyo, Kano, Akwa Ibom, Kaduna and Edo ranked sixth, seventh, eighth, ninth and tenth respectively.

Jigawa generated the least IGR (₦3 billion) in the first half-year of 2020, followed by Ekiti with ₦3.2 billion, Adamawa with ₦3.75 billion and Gombe with ₦3.78 billion.

The report also noted that a decline was recorded in the 2020 second quarter revenue generated internally across the states.

The IGR recorded in the second quarter was less than what was generated in the first quarter. According to the report, states generated ₦353.14 billion in the first quarter and ₦259.73 billion in the second quarter.

This came as the Lagos Chamber of Commerce and Industry (LCCI) expressed concern on the unsustainable status of Nigeria’s rising debt stock, stressing that the figure may hit ₦34 trillion by year-end, given the economic challenges facing the country.

“We note the increase in public debt stock was fueled by fresh domestic and external borrowings required to plug the wider fiscal deficit in the revised 2020 budget given the impact of the pandemic on oil and non-oil sources of revenue.

We also note the impact of recent exchange rate depreciation on the country’s level of external indebtedness,” said LCCI President, Mrs Toki Mabogunje, during a quarterly press conference in Lagos on the state of the economy.

She said: “According to official statistics from the Debt Management Office, public debt stock grew by eight per cent to ₦31 trillion at the end of the second quarter, equivalent to 21 per cent of GDP.”

She noted that at the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4 billion and $288.5 million from the International Monetary Fund (IMF) and African Development Bank (AfDB) respectively, while negotiations are also ongoing for a cumulative $1.8 billion credit support from the World Bank, African Development Bank (second tranche) and Islamic Development Bank.

“Adding this to prospective domestic issuances could possibly push the country’s public debt stock to around ₦34 trillion by year-end, equivalent to 23 percent of GDP.

“The growing level of the country’s debt is fast becoming unsustainable in the light of dwindling oil prices and production.

Our position is reinforced by the uptrend in debt-service to revenue ratio from 60 percent by year end 2019 to 72 percent as of May 2020.

The high level of debt servicing continues to hinder robust investments in hard and soft infrastructures which are key to stimulating productivity and improving living standards.”

According to her, “It is our collective responsibility to ensure a better investment environment for the advancement of the Nigerian economy and the good of all investors and economic players.

“However, to have this achieved, it is critically important to have the right fiscal, monetary, and regulatory framework.

There is a need for our policymakers to formulate and implement policies that facilitate business continuity particularly this time when business operators are grappling with the devastating impact of the pandemic.”

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She explained further: “Policies that harm businesses and scare investors should be discouraged. Our policies must foster economic competitiveness at the national and sub-national level, support businesses, protect jobs and preserve investment.

“As the advocacy voice of the organised private sector, we shall continue to engage relevant government agencies where and when necessary, on evolving policy issues that may affect the business environment.”