A civic tech company, BudgIT which is committed to promoting transparency and accountability in Nigeria and three other African countries, has released the 2020 edition of its annual States of States report entitled Fiscal Options for Building Back Better.
This report is BudgIT’s signature analysis that provides citizens, CSOs, stakeholders, and policymakers with solid insights into ways to implement financial and institutional reforms that improve state budget performance and levels of sustainability.
Gabriel Okeowo, the CEO, BudgIT, stated the four metrics with which performances were measured.
“For this year’s report, we examined states’ fiscal health using four metrics namely; the ability of states to meet their operating expenses with IGR and VAT, states’ ability to cover their operating expenses and loan repayment with their total revenue, how much fiscal room states have to borrow more, and the degree to which each state prioritises capital expenditure with respect to their operating expenses.”
According to the report, Rivers State once again topped the overall ranking for fiscal performance in 2021, suggesting that the state’s fiscal fundamentals are being managed more prudently compared to other states in the country.
In the overall ranking, two states, Ebonyi and Kebbi, made new additions to the top 5 categories.
This was primarily driven by IGR growth in both states, as recorded by the NBS. Ebonyi State increased its IGR by 82.3 per cent, from N 7.5 billion in 2019 to N 13.6 billion in 2020, while Kebbi State increased its revenue by 87.02 per cent from N 7.4 billion in 2019 to N13.8 billion in 2020.
Ogun state currently 19th and Kano state currently 22nd fell out of the top 5 category due to a sharp drop in their IGR in 2020.
Abel Akeni, Head, Research and Policy Advisory at BudgIT, in his speech on fiscal sustainability of states, stated that only three states in the country could meet their business spending obligations with a combination of IGR and Value Added Tax measured in the “A-Index” rating; these states include; Lagos, Rivers and Anambra.
In total, the 36 states’ total debt burden increased by N472.63 billion (or 8.78 per cent) from N5.39 trillion in 2019 to N5.86trillion in 2020. This was largely based on the exchange rate volatility which led to the fall of the Naira from N305.9/$1 in 2019 to N380/$1 as of December 31, 2020.
“States with the highest foreign debt were significantly hit due to negative exposure to exchange rate volatility. These states include Lagos, Kaduna, Edo, Cross River and Bauchi.
Furthermore, five states accounted for more than half (that is 63.63 per cent or N300.7billion) of the net year-on-year subnational debt increase of N472.63billion for all the states between 2019 and 2020: the states are Lagos, Kaduna, Anambra, Benue and Zamfara,” said Abel Akeni.
