A report by Economic Confidential, quoting official statistics, showing that six states of the federation are insolvent, paints the sad reality of Nigeria’s second tier of government.
It is the latest confirmation that most of the sub-nationals have become economic parasites, which cannot survive on their own without relying on federal allocations.
For the country to overcome poverty and joblessness, the states must revert to productive, self-sustaining units.
Relying on figures by the National Bureau of Statistics and the Federation Account Allocation Committee, the report listed Lagos, Ogun, Rivers, Kaduna, Kwara, Oyo and Edo as the most viable states in Nigeria for 2022. But Bayelsa, Akwa Ibom, Katsina, Taraba, Yobe, and Kebbi states failed to generate up to 10 per cent of the total allocations they received from FAAC and were declared insolvent.
The internally generated revenue of the 36 states totalled N1.8 trillion in 2022, a slight increase above the 2021 figure of N1.76 trillion. The N651 billion generated by Lagos was higher than that of 30 other states put together. From here, the picture looks grimmer as the N1.5 trillion generated internally by the seven most viable states was almost twice the total IGR of the other 29 states together, which generated about N650 billion.
The nine oil-producing states received additional allocations as their share of the 13 per cent derivation revenue to bring their total receipts to about N869.09 billion.
The stark reality is that if there are no federal allocations and oil resources, many states will be insolvent, as the states have demonstrated extreme laziness and inability to think out of the box to boost revenue generation for impactful development.
Yet, no state is inherently poor. Apart from advantages in agriculture and human capital, each state has rich lodes of some mineral types. These are resources that can be exploited to raise revenue, drive production, create jobs and improve their tax base. Agriculture and mining offer opportunities to provide raw materials for industrial take-off and investment.
The defunct regions of the First Republic were self-reliant, innovative, and productive. Separately, they made Nigeria a major global producer of groundnuts and cotton (Northern Region), palm kernels/oil (Eastern Region), cocoa (Western Region).
The regions competed among themselves and relied on IGR, especially from agricultural produce, to develop and build legacy institutions. All the states should leverage their comparative advantage in agriculture and mineral resources to run autonomous economic units.
They must improve on internal security and make their states safe and attractive for investment. They should generate and distribute power to boost and sustain economic activities. Though mining and power are on the Exclusive Legislative List, the central government has granted them forbearance to participate in both sectors. They should seize the opportunity with both hands.
To attract investors, critical infrastructure like roads, power and good transportation networks must be provided. Rural infrastructure should be top priority and the states need to become economic hubs. The era of beggar states should end in 2024.
