Foremost civic-tech organisation and leader of the advocacy for fiscal transparency and accountability in Nigeria, BudgIT, has ranked Rivers State the most fiscally performing state in the Federation, for maintaining its overall fiscal performance, just like it did in 2020 and 2021.
BudgIT’s research and policy advisory lead, Mr Iniobong Usen made this known during the official presentation of the states’ reports for the 2022 edition, themed “Sustainable Governance Reforms for a New Era” today (October 13, 2022) in Abuja.
The states’ report, which is BudgIT’s signature analysis, assesses and ranks the fiscal performance of all 36 states, from the most sustainable to the least sustainable.
According to Usen, all states were rated based on five metrics.
“Index ‘A’ examines states’ ability to meet operating expenses (recurrent expenditure) with only their internally generated revenue (IGR); Index ‘A1’ looks at the percentage year-on-year growth of each state’s IGR.
“Index ‘B’ reviews states’ ability to cover all operating expenses and loan repayment obligations with their total revenue (internally generated revenue + statutory transfers + aids and grants) without resorting to borrowing.
“Index ‘C’ estimates the debt sustainability of the states using four major Indicators: Debt as a per cent of GDP, debt as a per cent of revenue, debt service as a per cent of revenue and personnel cost as a per cent of revenue.
“Index ‘D’ evaluates the degree to which each state is prioritising capital expenditure concerning their operating expenses (recurrent expenditure),” he explained.
According to him, Kaduna and Cross River made it to the top five on the overall fiscal performance ranking, while Yobe State dropped to the bottom 5, having fallen 13 places from 21st in 2021 to 34th position in 2022.
Usen said that based on index ‘A’, just two states (Lagos and Rivers) generated enough revenues internally to take care of their operating expenses.
“Comparatively, the operating expenses of Yobe and Bayelsa (the least ranked states on index ‘A’) had more than seven times the revenues generated by both states internally, reinforcing the heavy reliance on federal transfers and budget support to fund their budgets.
“On index ‘A1’, save for three states which ranked the least Anambra, Kogi and Kebbi – 33 states experienced an increase in their IGR from the previous year, with 13 states growing their IGR by more than 50 per cent.
“Jigawa, Delta, Ebonyi, Akwa Ibom and Nasarawa ranked first to fifth, respectively, on index ‘C’ which assessed the debt sustainability of the 36 states,” he explained.
Furthermore, he said that Cross River, Ogun, Imo, Osun and Plateau were the bottom five states on index ‘C’.
“Lagos State, with a capital importation of $31.78bn between 2019 and 2021, received 99.19 per cent of the cumulative capital importation for 36 states of the Federation. Interestingly, 11 states received no capital importation between 2019 and 2021,” he said.
Speaking of debt sustainability, Usen said that the cumulative debt stock of the 36 states grew by 8.68 per cent from N5.86tn in 2020 to N6.37tn in 2021.
“A more disaggregated view of the subnational debt shows that 11 states reduced their total debt liability, with Delta State having the most impressive decline of 33.84 per cent.
“Four states – Oyo, Yobe, Ogun and Sokoto – grew their total debt stock by more than 40 per cent from 2020,” he said.
He listed the five most indebted states – Lagos, Kaduna, Rivers, Ogun and Cross River – as responsible for 37.09 per cent of total sub-national debt.
“Kogi State, with a foreign debt year-on-year growth of 85.65 per cent ranked first among the 17 states that grew foreign debt in 2021.
“The four states with the highest dollar-denominated debt ($250mn and above) –Lagos, Kaduna, Cross River and Edo – are the most susceptible to exchange rate volatility,” Usen explained.
He said that the cumulative expenditure of the 36 states increased by 27 per cent from N5.23tn in 2020 to N6.64tn in 2021.
“Notwithstanding, while 31 states increased their total expenditure from the previous year, five states reduced their expenditure, with Zamfara having the highest decline of 15.59 per cent.
“However, the cumulative personnel cost of the 36 States grew by 5.38 per cent from N1.46tn in 2020 to N1.54tn in 2021. Interestingly, nine states reduced their overhead cost from the previous year, signalling a reduction in the cost of governance.
“Conversely, 11 states increased their overhead cost from the previous year by more than 40 per cent, with Akwa Ibom having the highest growth,” he said.
Usen said that, commendably, cumulative spending on capital expenditure by the 36 states grew by 52.52 per cent from N1.77tn in 2020 to N2.70tn in 2021.
“Eight states increased the capital expenditure year-on-year by more than 100 per cent. However, just five states – including Anambra, Ebonyi, Cross River, Kaduna and Rivers – prioritised capital expenditure over operation expenses, signalling the prioritisation of investments in infrastructure, job creation and human capital development.
“On fiscal transparency, the 36 states of the Federation currently publish promptly their proposed budgets, approved budgets, budget implementation reports, and audited financial statements for both the states and the local governments.
“In the same vein, many states have enacted an audit law that grants operational and financial autonomy to the offices of auditors-general of the state and local governments, thereby empowering their supreme audit institutions to effectively hold governments accountable,” he said.
