Lagos, two others lead in fiscal sustainability index

Moses Emorinken, Abuja

Lagos, Rivers, Akwa Ibom states on Wednesday emerged the best states in the 2019 fiscal sustainability index ranking of a civic technology organisation, BudgIT.

Ogun, Kano, and Cross River states came forth, fifth, and sixth, respectively.

Taraba, Adamawa, and Kogi led the least states on the ranking released by the organisation.

BudgIT’s Research Lead, Orji Uche, disclosed these at the unveiling of a document tagged: “State of States” in Abuja.

The documents look at the fiscal sustainability of the states in terms of their finances.

Uche explained that 33 states would be in financial crisis if there were to be drastic oil price fluctuation and production or a reduction of Federal allocation.

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Uche said: “The BudgIT data, which takes into consideration the Internally Generated Revenue (IGR), Value Added Tax (VAT) and 13 per cent oil derivation going to oil-producing states, found that Lagos is the only state that is able to spend about half of its IGR on recurrent expenditure at 0.48 per cent. Rivers and Akwa Ibom are 0.73 per cent and 0.91 per cent, respectively.

“The implication of looking into this index is to understand that without broad Federal allocation, how many states can sustain themselves; by sustaining themselves we mean looking into their recurrent expenditure – being able to meet operating obligations, pay salaries etc. This way, anything coming from the Federal allocations will be going into investments – human capital, key sectors etc.

“Only Lagos, Rivers and Akwa Ibom can do this. This means that if there were to be drastic oil price fluctuation and production, and the allocation from the centre were to reduce, many states will be in jeopardy. 33 states of the country will be in crisis.”

On the ability of states to meet recurrent obligations with their IGR and FAAC allocations, the report says that nineteen states are able to meet their recurrent expenditures using their IGR and gross FAAC allocations.

Among them are oil-producing states like Lagos, Rivers, Akwa Ibom, Imo, and Edo.

“Not only is it important for states to increase their IGR, but they need to do it aggressively and with the mindset that they need to have surplus money to invest in other areas. The bottom three states are Plateau, Adamawa, and Kogi states, in descending order,” he added.

With regards to the debt burden of states, and how long it would take states to pay off their debts with available revenue, the report revealed that states like Anambra, Sokoto, and Jigawa are among those with the lowest debt burden, with Anambra topping the rank.

It also notes that states like Ekiti, Cross River, and Osun are more indebted and are without the requisite IGR; Osun State being the most debt burdened.