The 2019 State of States report has placed Lagos as the most fiscally sustainable state in the country with Kogi as the least.
The report presented in Abuja, on Wednesday, also showed that only 18 of the 36 states are able to meet their monthly recurrent revenues without recourse to borrowings.
Also, only Lagos and Ogun States in the South West are able to meet their monthly recurrent bills while in the North West, Zamfara, Sokoto, Katsina, Kebbi, Kaduna and Kano are able to meet this obligation leaving out only Jigawa.
In the South-South, Akwa Ibom, Cross River, Edo, are able to meet their monthly recurrent expenditures while giants in federation account allocation like Delta, Rivers and Bayelsa are not able to meet their obligations.
In the South East, only Abia State is not able to meet this obligation while no state in the North Central is able to also meet its monthly recurrent expenditures.
“While Nigerian states are not out of the woods due to the sub-optimal federalism system that Nigeria practices, the recent one-off payments such as the Paris Club refund, refund for federal road projects to states, budget support funds as well as loans by the Central Bank of Nigeria have helped many states with fiscal challenge to mildly recover.
“However, the issues continue to persist around the weak economies of states mostly tied to informal trade and skeletal industrial output with exception of Lagos, Rivers, Delta, Ogun and Akwa Ibom State”, it noted.
For fiscal sustainability, Lagos is followed by Rivers, Akwa Ibom and Kano states.
And despite being ravaged by terrorism, Yobe and Borno states ranked higher in fiscal sustainability at numbers 22 and 26 than Oyo, Osun, Ekiti and many of their relatively peaceful counterparts.
“It is a recurring theme to see states in South-South Nigeria running high recurrent bills, mainly driven by the high revenues earned due to the 13% derivation.
“We discovered states, such as Delta, running huge recurrent expenditure reaching N200bn.
“Bayelsa, despite its size and population, has a high recurrent bill as high as N137bn, compared with Ebonyi with a recurrent bill of N30bn, Sokoto (N38bn), Jigawa (N43bn), Yobe (N35bn), etc.”
The report also noted the tendency of Cross River State to present an annual unrealistic budget which was never realized.
“In our analysis, it was also interesting to see states like Cross River with a bogus budget of N1.04tn spend less than N93bn on an annual basis which brings them up the rank as well as Imo with its recurrent spending of N43bn.
However, we notice that Kogi lags behind due to its huge recurrent bill as at 2017 when it was still paying salaries for workers and also had high repayment bills for loans.
Speaking on the report, Senior Economist at the World Bank, Yue Man Lee observed that Nigeria’s total public expenditure was the lowest among its peers globally.
According to her, the implications of having low revenue was that the amount Nigeria could spend on human development would be restricted.
Over the years she further noted, the fiscal capacity of states to generate the needed revenue to finance their operations had reduced.
She said, “The broader fiscal challenge that Nigeria faces is low revenue that constrains the budget envelop. This when out in plain terms is how much revenue that is available to spend on public service and investments in human capital.
“Nigeria is spending and government spending as a percentage to Gross Domestic Product is way lower than other countries at similar income per capital level. And the reason behind this is because of the exceptionally low revenues that Nigeria collects.”
Lee said with the country having revenue to Gross Domestic Product ratio of about eight per cent, there was a need to come up with measures to boost revenue.
She said the low level of government spending on capital projects contributes to low level of development outcomes.
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