A recent investigation by an Economic Intelligence Magazine revealed that 15 states may go bankrupt as their Internally Generated Revenues (IGR) in 2015 were far below 10 percent of their Federation Account Allocations (FAA) in one year from June 2015 to May 2016.
The report further indicated that the IGR of Lagos State of N268 billion was higher than that of 32 states combined together, excluding Rivers, Delta and Ogun, whose IGRs are very impressive. The report noted that 32 other states merely generated a total of N257 billion in 2015.
The magazine had published the total allocation each state in Nigeria received from the Federation Account Allocation (FAA) between June 2015 and May 2016, which signified one year of President Muhammadu Buhari’s administration.
The report provided shocking discovery that indicated that 15 states may go bankrupt and may not stay afloat outside the Federal Account Allocation due to lack of foresight in revenue generation drive coupled with arm-chair governance.
While Lagos State retains its number one position in IGR with a total revenue generation of N268.22 billion in the 12 months of last year, it is followed by Rivers State (N82.10 billion), Delta State (N40.80 billion), Ogun State (N34.59 billion) and Edo state (N19.11 billion).
The report showed that the IGR of the respective states can improve through aggressive diversifications of the economy to productive sectors rather than relying on the monthly Federation Account revenue that largely come from the oil sector.
It is no news that the dwindling federal allocations caused by the falling prices of crude oil at the international market have deeply affected finances of every state in the federation, Ogun State inclusive.
But for the financial engineering put in place by Governor Ibikunle Amosun, governance at both the state and local government levels would have been grounded.
These pragmatic steps were taken to cushion the effects of the paltry N750 million monthly internally generated revenue (IGR) he inherited in 2011 and N2 billion federal allocation per month to service about N9 billion state’s monthly wage bills apart from meeting other statutory responsibilities.
Oil wealth is receding, incapable of matching fiscal policy while there is a massive pressure on our rulers to sustain the machinery of government and to meet the yearnings of those who enabled their existence in our democratic process. So our leaders and their partners in industry are expected to move with lightning speed and walk away from oil as a base for development. We must think out of the box. Doing so means generating wealth from ideas such as countries without oil are doing and moving their societies into the league of leading nations of the world, far ahead of those with oil weapon which is now proving inadequate.
Lately, we have seen this movement of idea power put to work in Ogun State. Faced with a bleak future for oil revenue and a rush of social and economic migrants from Lagos and other peripheral states, the administration of Governor Amosun has had to initiate creative strategies to raise good money to fund gigantic projects and meet the needs of the state’s burgeoning population. He is beating a retreat from resting on the rickety base of oil economy.
Governor Amosun, had in 2014, set a target of N10 billion as the state’s monthly IGR, up from the then N6 billion.
Amosun while speaking during a town hall meeting on the 2015 budget held at Kuto, Abeokuta, explained that it was the only way the state government could survive the dwindling allocation from the Federation Account.
The Amosun administration believes strongly in participatory democracy and has always carried the people along in the process of preparing the state’s annual budget.
According to the 2014 World Bank Report on Doing Business in Nigeria, Ogun State was listed as one of the five most improved states in the country.
The same World Bank in its 2008 and 2010 reports had ranked the state as one of the lowest performers among the 36 states in Nigeria. No doubt, this is a significant progress.
To increase the revenue of the state, Governor Amosun had constituted a Revenue Committee chaired by the governor himself where issues on businesses and internally generated revenue are sorted out.
Amosun has repeatedly promised not to rest on his oars, as all hands will be on deck to ensure that he delivers on all his electoral promises and continue to spread the dividends of democracy across the State.
The positive impacts from the faithful implementation of his campaign promises have continued to receive accolades from both within and outside the shores of the country.
Ogun State has continued to witness tremendous transformations in all aspects of life, and this is due to Governor Amosun’s excellent performance.
- Durojaiye is Special Adviser on Information and Strategy to Governor Amosun.