Ibrahim Apekhade Yusuf in this report reviews outcome of a survey conducted by the National Bureau of Statistics which shows that some states across the federation namely Rivers, Lagos, Niger, among others, have recorded significant growth in terms of their gross domestic product
Nigeria, is ranked 30th (40th in 2005, 52nd in 2000), in the world in terms of Gross Domestic Product as of 2012, and 3rd largest within Africa (behind South Africa and Egypt), on track to becoming one of the 20 largest economies in the world by 2020.
Like the Federal Government, many states of the federation as well as all the 774 local government councils in the country have comparative advantages in terms of the raw materials such as agricultural, solid minerals and petroleum resources, which have placed them shoulder high above their counterparts, in terms of GDP.
Determinants of GDP growth
The GDP can be determined using three different approaches: the product, the income, and the expenditure technique, which should give the same result. In sum, the product technique sums the outputs of every class of enterprise. The expenditure technique works on the principle that every product must be bought by somebody, therefore the value of the total product must be equal to people’s total expenditures in buying products and services. The income technique works on the principle that the incomes of the productive factors must be equal to the value of their product, and determines GDP by finding the sum of all producers’ incomes.
Road to State GDP computation
Before now, there have been dearths of record on the appropriate State GDP, a development, which made it practically impossible to measure states’ performance scorecard in diverse sectors.
However, a document obtained exclusively by The Nation from the National Bureau of Statistics (NBS) shows that some across the federation have been able to grow their economic base in such a way that they have leveraged on their God-given resources among others.
The Nation learnt that the process leading to the States’ GDP computation programme was initiated by the National Planning Commission in 2010 in collaboration with the National Bureau of Statistics.
This was in response, to the need to further disaggregate the GDP data series for enhanced management of the national and subnational economies.
To carry out the survey, seven states namely: Lagos, Niger, Rivers, Cross River, Anambra, Kano, Gombe and FCT were part of the pilot study.
In the survey conducted from December 2011 to August 2013, the NBS discovered that Niger, Anambra and Kano have agricultural activity to be very dominant while Rivers and Cross River have considerable dominance of crude petroleum and natural gas industry. Besides, Kano, Anambra and Lagos are states with considerable dominance of wholesale and retail activity.
A cursory review of the State GDP table, however, showed that Rivers state like many others involved in the pilot study may have increased their revenue base through improvement of their resources.
Lagos, Rivers, Delta, Edo, and Akwa Ibom States recorded the highest internally generated revenue (IGR) in three years spanning 2010 to 2012.
Data made available by the National Bureau of Statistics (NBS) and Joint Tax Board (JTB) showed that Lagos dominated the other 35 states, raking in a total of N607.7 billion in three years. Rivers followed with N173.1 billion, while Delta realised N106.4 billion. Edo raked in N53.53 billion, just as Akwa Ibom made N35.6 billion.
On the other hand, Jigawa, Zamfara, Nasarawa, Borno and Taraba States dominated the bottom of the table having collected the lowest IGR among the 36 states of the federation.
Jigawa recorded only N2.725 billion, while Zamfara accounted for N6.374 billion. Nasarawa, Borno, Taraba generated N5.982 billion, N6.83 billion and N7.571 billion respectively.
The IGR was realised from Pay-As-You- Earn (PAYE), direct assessment, road taxes and other revenue with PAYE accounting for the highest amount.
A breakdown of the Lagos IGR in three years showed that the state recorded N185.9 billion in 2010, which increased to N202.76 billion in 2011 and rose further to N219.2 billion in 2012.
Of the N219.2 billion in 2012, Lagos realised the highest revenue of N172.44 billion from workers through the PAYE. A total of N4.36 billion came from road taxes, N1.89 billion from direct assessment of companies doing business while N40.513 billion was from other revenue sources.
Lagos State realised about N120.25 billion from PAYE in 2011; N7.97 billion from direct assessment, and N74.54 billion from other sources, while N104.681 billion came from PAYE in 2010; N7.51 billion from direct sources, and N73.704 billion from other sources.
Rivers State, which came second on the table, realised about N49.59 billion in 2010; N57.19 billion in 2011 and N66.28 billion in 2012. The state raked in N55.1 billion through PAYE in 2012; N485.9 million through road taxes; N22.075 million through direct tax assessment and N10.668 million through other revenue sources during the year.
Delta State realised N106.4 billion within the three years under review. It realised N26.1 billion in 2010, N34.75 billion in 2011 and N45.57 billion on 2012. PAYE fetched Delta State over N42.565 billion in 2012. Also, N244.195million was realised from road taxes, N123.4million from direct assessment, while N2.635billion came from other sources.
Edo State realised N10.651 billion in 2010, which increased to N14.764 billion in 2011 and to N18.88 billion in 2012. Similarly, Akwa Ibom raked in N10.133 billion in 2010, N11.678 billion in 2011 and N13.517 billion in 2012.
In the area of hotel development, The Rezidor Hotel Group, in a bid to further strengthen its presence in Africa, will build three new hotels in Nigeria. The Radisson Blu Hotel, Victoria Island Lagos (250 rooms), the Radisson Blu Hotel Abuja (200 rooms) and the Park Inn Abuja (125 rooms) opened in 2012.
South Africa-based golf course developer, Pinnacle Point Group, has also announced it will invest in the ambitious Lagos Keys development. The development will feature a private golf and residential estate, marina and waterfront complex, hotels and a 18-storey pyramid, among other facilities.
American company Jack Rouse Associates has signed an agreement to design and plan a world class theme park in Cross River State. The theme park will be situated on a 100 hectare piece of land opposite the Tinapa Business and Leisure Resort and is expected to cost N100 billion (US$680 million). Also in the Niger Delta, SarnerPFM, part of the United Kingdom-based Sarner Group, has signed a memorandum of understanding with the Delta State government to construct two leisure parks.
But agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, neglect and the lack of basic infrastructure.
Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,000 tons.
An even more dramatic decline in groundnut and palm oil production also has taken place. Once the biggest poultry producer in Africa, corporate poultry output has been slashed from 40 million birds annually to about 18 million. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Fisheries are poorly managed. Most critical for the country’s future, Nigeria’s land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.
Commenting on the development, Mr. Sunday Adebola, Managing Director, BGL Securities, observed that: “Many states across the country have one comparative advantage or the other which can help boost the individual GDP of those states. Take agriculture for instance, we concentrate just on the primary market whereas the secondary, and tertiary market is also massive as huge industries can be built around them. Agric has the potential to contribute immensely to the nation’s GDP overall. In Benue, other states like Ondo, Kwara, Anambra, can harness their agric resource.
Expatiating, “When you look at government income, it is either through taxes which come in various forms like VAT. There is also the company tax, which goes directly to the Federal Government. Personal income tax goes to the state government while tariffs go to the local government councils and federal allocations.
“Lagos for instance, generates bulk of its IGR from taxes mainly. There is the personal income tax, VAT and other tax programmes such as big market mall, etc. there is nothing stopping other states from doing the same.
Another area through which revenue generation is guaranteed is through the public private partnerships.
PPP has potential to increase IGR. What it takes for the idea to succeed is for the government to ask the private sector to develop certain areas of the state, and build a huge capital around it. The government can also generate direct investment.”
Adebola observed that southwest states like Lagos, Ogun, Oyo among others, have investment vehicles such as Ibile Holdings, Gateway Investment, Odua Investment, etc, through which massive investments have been pulled to the states.
“I recalled that during Bola Ige regime as governor of Oyo State, he made big boost agric produce with investment in government farms, where it employed able-bodied youths and the elderly to cultivate hectares of farm lands. The implication is that it created employment opportunities among other benefits.”
While giving his perspective on GDP growth, Mr. Henry Boyo, an economist said it was wrong to confuse cosmetic changes for reality.
Specifically, he said, most of the permutations about GDP growth whether at the state or national level, neds to be properly reexamined.
According to him, “You can’t have a successful economy when the level of unemployment. GDP growth rate is not reflected in the level of employment. When there is no industrial consolidation. It is true that the country may have achieved 6-7 per cent GDP growth but when you consider the untapped socio-economic potentials which can possibly make us get an excess of 15 per cent GDP every year, then you can say we still have a long way to go.”
