BudgIT, a civic-tech organisation leading the advocacy for transparency and accountability in Nigeria and three other African countries, has launched 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 robust insights on ways to implement financial and institutional reforms that will improve states’ fiscal performance and sustainability levels.

“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.” said Gabriel Okeowo, CEO,  BudgIT.

According to our report, Rivers State, once again, topped the overall 2021 Fiscal Performance Ranking, indicating that the fiscal fundamentals of this state, compared to others in the country, are more prudently managed. In the overall ranking, two states – Ebonyi and Kebbi –  made it as new entrants to the top five category. This was driven largely by growth in both states’ IGR as recorded by the NBS. Ebonyi State grew its IGR by 82.3 per cent from N7.5billion in 2019 to N13.6bn in 2020, while Kebbi State grew its revenue by 87.02 per cent from N7.4 billion in 2019 to N13.8 billion in 2020. Meanwhile, Ogun State (now 19th) and Kano State (now 22nd), dropped out of the top five category due to a sharp decline in their IGR in 2020.

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While speaking on states’ fiscal viability, Abel Akeni, BudgIT’s Research & Policy Advisory Lead, noted that only three states in the country could meet their operating expenses obligations with a combination of their IGR and Value Added Tax (VAT) as measured in our ‘Index A’ ranking; these states are Lagos, Rivers, and Anambra.

Cumulatively, 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 driven largely by exchange rate volatility which saw the value of the Naira jump from N305.9/$1 in 2019 to N380/$1 as at 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.