Rivers State has ranked first in overall fiscal performance of states in Nigeria.
It ranked first in 2020 and 2021 among the 36 states.
This was disclosed by a report by BudgIT, a foremost civic-tech organisation leading the advocacy for fiscal transparency and accountability in Nigeria.
In the 2022 edition of its annual states of states report, BudgIT disclosed that Kaduna and Cross River states were in the top five.
The Lead Research and Policy Advisory of BudgIT, Iniobong Usen, said the report assesses and ranks the fiscal performance of all 36 states, from the most sustainable to the least sustainable.
Usen noted that for the 2022 edition, all 36 states were ranked using five metrics including Index A, which examines states’ ability to meet Operating Expenses (Recurrent Expenditure) with only their Internally Generated Revenue and Index A1, which looks at the percentage year-on- year growth of each state’s Internally Generated Revenue.
According to the report, only two states, Lagos and Rivers, generated enough revenues internally to take care of their operating expenses in Index A.
“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. A. Debt as a % of GDP, B. Debt as a % of Revenue, C. Debt service as a % of Revenue, D. Personnel Cost as a % of Revenue. Index D evaluates the degree to which each state is prioritising capital expenditure with respect to their operating expenses (recurrent expenditure).”
BudgIT stated that the cumulative spending on capital expenditure by the 36 states grew by 52.52 per cent from N1.77 trillion in 2020 to N2.70 trillion in 2021.
It added that eight states increased the capital expenditure year-on-year by more than 100 per cent.
BudgIT, however, noted that only five states including Anambra, Cross River, Ebonyi, Kaduna, and Rivers prioritised capital expenditure over operation expenses, which indicated the prioritisation of investments in infrastructure, job creation and human capital development.
The firm also revealed that the operating expenses of Yobe and Bayelsa (the least ranked states on index A) was 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, BudgIT said three states, Anambra, Kogi and Kebbi ranked the least while 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 – fifth respectively while Cross River, Ogun, Imo, Osun, Plateau were the bottom five states on Index C which assessed the debt sustainability of the 36 states.
It said Lagos State, with a capital importation of $31.78 billion between 2019 and 2021, received 99.19 per cent of the cumulative capital importation for 36 states of the federation while 11 states received no capital importation between 2019 and 2021.
On debt sustainability, BudgIT said the cumulative debt stock of the 36 states grew by 8.68 per cent from N5.86 trillion in 2020 to N6.37 trillion in 2021.
A more disaggregated view of the sub-national debt shows that 11 states reduced their total debt liability, with Delta State having the most impressive decline of 33.84 per cent.
It stated that 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. And the four states with the highest dollar-denominated debt ($250 million and above)—Lagos, Kaduna, Cross River and Edo—are the most susceptible to exchange rate volatility.
“The cumulative expenditure of the 36 states increased by 27 per cent from N5.23 trillion in 2020 to N6.64 trillion 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.”
BudgIT said the cumulative personnel cost of the 36 states grew by 5.38 per cent from N1.46 trillion in 2020 to N1.54 trillion in 2021.
It said nine states reduced their overhead cost from the previous year, signalling a reduction in the cost of governance while 11 states increased their overhead cost from the previous year by more than 40 per cent, with Akwa Ibom having the highest growth.
“On fiscal transparency, the 36 states of the federation currently publish in a timely manner their proposed budgets, approved budgets, budget implementation reports, 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,” the report added.
