…as states, FG’s total debts hit N11.4trn
The Federal Government, the 36 states, and their local government areas’ allocations have increased from N1.2trillion as at the end of the fourth quarter of 2016, to N1.65trn by the same period in 2017; a difference of over N400 billion.
This, it was learnt, was a special concession in favour of the states, many of which are financially ham-strung.
The breakdown is contained in the quarterly report obtained by our correspondent, over the weekend.
The key agencies that remit funds into the federation account are the Nigerian National Petroleum Corporation, the Federal Inland Revenue Service, and the Nigerian Customs Service, among others.
While the Federal Government took N979.05 billion, the states and local governments got N578.05 billion and N344.21 billion, respectively.
The allocation was made, using the revenue sharing formula: Federal Government, 52.68 per cent; states, 26.72 per cent: and local governments, 20.60 per cent.
The report also showed that before distribution, states’ liabilities were deducted.
Sources at the Debt Management Office, however, revealed that concerted efforts were being made at increasing allocations to the states because many of them were currently servicing huge foreign debts, a situation that had strained their finances.
For instance, about 20 states are owing workers between eight and nine months salaries.
concerted efforts were being made at increasing allocations to the states because many of them are currently servicing huge foreign debts, a situation that has strained their finances
STATES’ DEBTS
A document obtained from the Debt Management Office revealed that most of the states were either indebted to foreign or local institutions.
Lagos State, which has the highest domestic and foreign debt among all 36 states, recorded over $1.38 billion.
Other states with high foreign debts include Kaduna, Edo, Cross River and Ogun, among others.
While Kaduna recorded over $222.8 million debt, Edo has $183.6 million foreign debts, while Cross River and Ogun states were among the top debtors with $114.9 million and $103.4 million foreign debts, respectively.
The debt record, which had three components – Multilateral, Bilateral, and Eurobond – showed that Borno, Taraba, Yobe and Plateau states were the least indebted states in terms of foreign debts.
Borno, according to the figures, is indebted (foreign) to the tune of $22.068 million; Taraba, $21.9 million; Yobe, $28.5 million; and Plateau, $29.1 million.
The DMO also noted that the Federal Government was indebted to the tune of over $7.838 billion as at June, 2017.
The DMO, therefore, put the total debts owed by the states and the FG as at June, 2017 at $11.406 billion.
Further analysis of the statutory allocation as shared in the last quarter of 2017 showed that the estimated Federal Government expenditure was N979.05 billion. This was below the proportionate quarterly budget estimate of N1, 937.98 billion, by 49.5 per cent; and the level of the preceding quarter’s by 30.4 per cent.
A breakdown of the total expenditure also showed that the recurrent component accounted for 81.7 per cent, while capital and statutory transfers accounted for 9.6 and 8.7 per cent, respectively. The recurrent expenditure showed that the non-debt component accounted for 44.4 per cent, while debt service payments were 55.6 per cent.
But a total of N2, 040.59 trillion, however, accrued to the federation account from various traditional sources between October and December 2017. It was observed that the figure was lower than the proportionate quarterly budget estimate of N2, 684.28 trillion by 24.0 per cent, and also fell below the receipts in the preceding quarter, by 11.9 per cent.
The Central Bank of Nigeria attributed the decline in federally-collected revenue (gross), relative to the quarterly budget estimate, to the shortfall in receipts from both oil and non-oil revenue during the review quarter.
Gross oil receipt, which closed at N1, 226.04 billion or 60.1 per cent of the total revenue, was lower than both the proportionate quarterly budget estimate and the receipts in the preceding quarter by 9.1 per cent and 3.5 per cent, respectively.
BOOST IGR, REDUCE DEBT PROFILE – EXPERTS
Reacting to the development, some analysts and financial commentators said all the 36 states of the federation must face the obligation of revenue generation, if Nigeria must move forward in a growth trajectory.
A professor of economics, Mr. Johnson Durojaiye, said the culture of going to Abuja every month, cap-in-hand, to collect federal allocations only spelt doom for the country and must stop with immediate effect.
“This is an act of laziness; the state governors should look inwards to boost their personal state revenue growth.
“Every state in Nigeria is blessed with one mineral resource or the other. Concentrating wholly on the central government is an outdated style of leadership. Each state governor must look inwards to harness these natural resources, such as agriculture, for revenue generation and job creation,” he said.
The Managing Director and Chief Executive, Heritage Securities, Mr. Osaze Peters, said that Nigeria could not shy away from economic diversification.
“I believe if we continue and move on the right path to diversify the economy, Nigeria will rise and fulfill its potential and role as Africa’s financial hub. We must embrace hard work and do less talk. We have to adjust, and I want to also encourage those who are yet to join the train to do so.
“So for this economy to grow the right way, every state and local government must be able to meet their obligations of sustainability,” he said.
He, however, admonished all stakeholders to work hard in building a visionary economy that would be devoid of declining revenue and growth.
“The shout that Nigeria is technically out of recession has not yet impacted positively on Nigerians. There are no federal people anywhere; everyone lives either in the states or local government areas,” he added.
A fund manager, Mr. Mike Onuoha, said the recession that had bedeviled the country struck both the oil and the non-oil producing states, adding that a major contributor to the recession was the Niger Delta restiveness and the militant’s vandalisation of oil pipelines, which also dragged down economic
indices.
“There is an urgent need to restructure Nigeria into regional zones. This will enable states to work hard for competitiveness. We have noticed that this colonial master’s ideology is no longer beneficial for our coexistence; it is not working. How can a whole country depend on just one resource which is oil? This is the major problem that we are facing now,”
he said.
Onuoha urged the Federal Government to find a lasting solution to the several agitations across the country and to encourage restructuring, diversification and resource control, which will put the country on a right track.
