Thirteen states including Oyo, Osun, Ekiti and Taraba are finding it difficult to fund their recurrent expenditure and loan repayment schedules due in 2019.
According to a report released by BudgIT, the worst-hit are Oyo, Kogi, Osun and Ekiti states while the other states on this pendulum are Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia.
The report said Bayelsa, Borno and Katsina would be worst hit by dwindling revenue as they relied on net FAAC for 89.56 per cent, 88.30 per cent and 88.16 per cent of their total revenues, respectively in 2019. Lagos, Ogun and Rivers states would be least affected as they relied on Federal Allocation (Net FAAC) for only 22.82 per cent, 35.31 per cent and 53.02 per cent of their total revenues, respectively.
The new report was launched yesterday at a virtual programme put together by the civic organisation.
BudgIT is a civic advocacy organisation that uses technology to intersect citizen-engagement with improved governance.
Details of the revelation were contained in the 2020 edition of BudgIT’s annual states report titled ‘Fiscal Sustainability and Epidemic Preparedness Financing at the State level.’
The report is BudgIT’s signature analysis that provides policymakers with robust insights on ways to implement financial and institutional reforms that will improve states’ fiscal performance and sustainability level.
“Without a doubt, soaring debt burden, imprudent fiscal planning, and nearly a decade of misplaced expenditure priorities have beaten a clear path to fiscal crisis for many Nigerian states
“This is veritably evident in our just released 2020 Fiscal Sustainability Index where some states rank higher than others and most are still below the sustainability point.”
The report showed that Rivers State occupies the first position on the sustainability index, followed by Anambra, Ogun and Lagos. Among the states that are not fiscally sustainable, Bayelsa, Osun, Ekiti and Plateau occupy the least positions, the report showed.
Furthermore, of the remaining 23 states that can meet recurrent expenditure and loan repayment schedules with their total revenue, the report showed that eight of those states had really low (less than N6 billion) excess revenue that they had to borrow heavily to fund their capital projects.
The worst-hit in that category are Zamfara, Ondo and Kwara who had N782.45 million, N788.22 million and N1.48 billion left, respectively.
Based on their fiscal analysis, only Rivers, Kaduna, Akwa Ibom, Ebonyi and Kebbi states, prioritised capital expenditure over recurrent obligations, while 31 states prioritised recurrent expenditure according to their 2019 financial statements.
“Recurrent expenditures are not necessarily a bad thing, especially when skewed towards sectors like health and education. However, nine of the states in this category had overhead costs that were larger than their capital expenditures. These states are: Ekiti, Kogi, Kano, Plateau, Kwara, Nasarawa, Taraba, Adamawa and Benue” Said Abel Akeni, BudgIT’s Research Lead.
Meanwhile, all 36 states’ debts surged by 162.87 per cent (N3.34trillion), from N2.05 trillion in 2014 to N5.39 trillion in 2019, with 10 states accounting for approximately half or N1.68 trillion of this increase. Seven of these states are from the South while three are from the North,” it said.
In 2019, all 36 states recorded 94,500 cases of the deadly Cerebrospinal meningitis (CSM), measles, Lassa fever, yellow fever, monkeypox and cholera combined. It is in the self-interests of state governments to grow their IGR and also invest in appropriate health systems through their budgets and other sustainable methods.”
BudgIT’s Principal Lead, Gabriel Okeowo, said though some states have seen some improvement in their IGR between 2014 and 2019, there was still a need to put systems in place for aggressive IGR growth within the subnational economies, especially as falling crude oil prices, OPEC production cuts and other COVID-19 induced headwinds are set to impact Federal Allocations over the next two years.