States’ Viability Index: Matters Arising


Since May 27, 1967 when regions paved way for states in the evolution of Nigeria’s political history, following military intervention, the second tier of government has remained a dominant feature in governance and public administration in the past 52 years of our nationhood. From 12 states in 1967 to 36 in 1998, the issue of state creation, a brain-child of the military has continued to dominate national discourse, and may remain so except for a serious re-structuring of the country.
Up till the administration of President Goodluck Jonathan, some ethnic nationalities and federating units still feel marginalized in the Nigerian project as evident during the defunct National Constitutional Conference where persons from certain parts of the country virtually staged walkouts in protest while demanding for new states.
While the clamour for states continues, though the agitation has dropped in the past four years of President Muhammadu Buhari’s administration, advocates for states perhaps have resolved to adopt the waiting game while strategising on the next line of action.
In what appears to be a twist in states creation and their viability, a recent report entitled: Annual States Viability Index (ASVI) showed that 17 out of 36 States in Nigeria are insolvent, unviable in 2018, as their Internally Generated Revenue (IGR) was far below 10 per cent of their receipts from the Federation Account Allocation in the year under review.
By implication, more than half of the federating states will be bankrupt, if revenue from the central fund dwindles at any time or period as the economy of such unviable states cannot sustain them.
A report released by the National Bureau of Statistics (NBS) revealed that only Lagos and Rivers States can stay afloat if federally-shared revenue were to cease, in case of unforeseen circumstances. This scenario, indeed, portends grave, clear and present danger in the socio-political and economic well-being of the federating states.
Whereas the simple option may be to merge some states to make them viable as the way forward, The Tide thinks that such path may not be readily achievable in the present political reality of the country.
As uncomfortable as that reality may look, the way forward is for the states to diversify their economy and explore ways and means of boosting their revenue base through Internally Generated Revenue (IGR). The truth is that the financial obligations of States keep increasing in geometrical proportion while their revenue generation profile remains virtually static. Infact, in some cases, their revenue dwindles year in, year out. The right path to follow is to explore and exploit the natural and human endowments within their domains.
It is unbelievable and indeed, unacceptable that going by the NBS report, States like Kebbi, Taraba, Adamawa, Bornu, Ekiti, Nasarawa, Katsina, Ebonyi and Gombe oscillate between N4 billion and N6 billion monthly as their IGR whereas their financial obligations range between N15 billion and N25 billion per month.
It is, therefore, advisable and imperative that states must overhaul their sources of IGR through Pay-As-You Earn (PAYE) Direct Tax Assessment, road taxes, and other revenue generating Ministries, Departments and Agencies (MDAs) to remain afloat, especially in this era of the new National Minimum Wage regime.
Any state worth the name should be able to raise its revenue profile and stop lamenting its poor revenue base. While we subscribe to an urgent review of the national revenue sharing formula in favour of states and local government councils, it is our candid opinion that the second and third tiers of government are not just doing enough to shore up their IGR as the current reality demands.
The Tide is of the view that the states must learn to depend less on the central government or go cap in hand begging for internal or external loan facilities to run their affairs. The era of insolvency and bankruptcy should be over for good.
The unviable states should discover the winning formula in IGR generation as evidenced in Lagos, Rivers and probably Delta States. They should not just exist in paying salaries of civil servants and other political office holders who merely constitute an infinitesimal percentage of their citizenry.
Other basic amenities such as potable water, basic education, affordable health services, good roads, electricity, security and decent housing should as well be given due priority as dividends of democracy to the electorate who gave the public office holders at the state level their mandate in trust.
In all, no state in Nigeria should be bankrupt.