States’ IGR

Much as state governments have spoken in the past three years of the need to focus more attention on growing their Internally Generated Revenues (IGR), there is unfortunately no evidence as yet to suggest the preparedness of most states to embrace the challenge. As reported in The Punch, four states, – Lagos, Rivers, Ogun and Delta-   collectively account for N2.71trn (60.22 per cent) of the N4.5tn IGR raked in by the 36 states, leaving the remaining 32 states with a paltry N1.79tn. (39.78 per cent) in the period between 2013 and 2017.

Lagos, with N1.72tn (38.22 per cent) of the entire IGR generated came top followed by Rivers State which came a distant second with N433.9bn (9.64 per cent).It is followed by Ogun State with N286.67bn (6.37 per cent), while Delta State is in the fourth position with N273.84bn (6.09 per cent).

On the bottom rung are Yobe with N18.48bn, Borno with N18.76bn and Ekiti, N20.05bn.

We must admit that the figures are not particularly surprising. If they are any revealing, it is of the ingrained culture of dependence on the distributable pool by the states and the lack of innovation by those charged with running their affairs. The situation is what has reduced those states to a little more than leeches on the federation account. It explains why most of the states are practically insolvent to the point that the Federal Government has had to bail them out on such routine matters as paying salaries of workers and pensions of their retirees in the last three years.

We just might well state the matter upfront: the current situation is neither desirable nor can it be sustained. In fact, the culture of the indolence and the lack of fiscal responsibility that the monthly conclave for revenue sharing has bred, which is at the heart of citizen alienation, should be dispensed with forthwith. In any case, with production caps as set by the Organisation of Petroleum Exporting Countries (OPEC) to contend with, and disruptions associated with militancy and sabotage in the Niger Delta also a constant factor, not to talk of the continuing volatility in oil prices itself an ever present danger, these are by themselves enough to make any further thought of counting upon the central source tantamount to living in fool’s paradise.

Of course, the deficit gaps created by the dwindling oil receipts can only mean that those states which fail to shore up their IGRs risk further insolvency, or in the extreme case, fiscal collapse.

That is the point where majority of the states are today. It is precisely the reason the states need to do something urgent about their IGRs. After all, making citizens to pay their fair share of the cost of delivering basic services and keeping their government running is as old as modern governments. In fact, there is abundant evidence to show that the first republic not only thrived on tax revenues, most of iconic landmarks of that era were funded from tax revenues. It is about time state governors found the wisdom to return to that era.

They should also come together to fight for states’ control of resources in their domain. Many states are sitting on valuable resources yet they are complaining of lack of funds. This should not be.

Moreover, the fact that some states are already achieving modest results in IGR performances would seem to underscore the vast possibilities if only the leadership of the laggard states will put their minds to work.

We urge the latter to enlist the technical support from a state like Lagos and others that have proven their mettle in this regard, just as the Federal Government should come up with measures to help build their capacities to collect their tax revenues. At this time, the Federal Government should send the message out that bailout cannot be substitute for sound fiscal strategy.