Abuja – Four states and the Federal Capital Territory (FCT) recorded substantial growth in taxes and internally generated revenue between 2020HY and 2021HY, data presented by the Nigeria Governors’ Forum (NGF) has revealed.
States that showed remarkable growth include Sokoto (6,824%, N7.5m to NGN519.5 m in direct assessment), Niger (1,951%, N1m to N2.07bn in MDA revenue), Jigawa (157%, N1.4bn to N3.8bn), Kogi (728%, N444.8m to N3.6bn in Other taxes), Osun (376%, N53.3m to N253.7m in other taxes) and FCT (604%, N2.6bn to N19.4bn in other taxes).
According to NGF data, a total of 34 per cent annual growth rate between 2020HY and 2021 HY was recorded with ministries, departments and agencies’ (MDA) revenue with other taxes and direct assessment recording the highest growth year-on-year at 82 per cent, 74 per cent and 71 per cent respectively.
Total IGR of 36 states and the FCT shrank by 2.1 per cent (N28.15 billion) between 2019 and 2020.
The shrink in revenue stemmed from impacts of COVID- 19 challenges and attendant shocks.
Nigeria is still recovering from a combination of adverse fiscal and macro-economic conditions that had exerted strong pressures on the fiscal sustainability of both national and subnational governments.
NGF’s Senior Programme Manager (SPM), Mr. Olanrewaju Ajogbasile, in data presentation at a workshop organised by States Fiscal Transparency, Accountability and Sustainability Program (SFTAS) for business correspondents in Abuja over the weekend, noted that states had stepped up efforts towards enhanced taxes and internally generated revenue collection.
Olanrewaju enumerated factors that influence states’ tax potential and efforts.
Top on the list, according to him, is the structure and size of the economy, including human and natural resources.
The amount of revenue collection, he said, would depend on the tax effort of tax administrators – institutional capacity and technology adoption.
“Tax performance can also be influenced by policy decisions in adopting tax laws, tax policy/ regulations, and the level of education of tax collectors, tax morale, and the quality of government institutions (including the level of bureaucracy, skill and corruption).
“The social contract between the government and its citizens – represented by the quality of public services and the public’s willingness to pay or evade taxes,” he said.
Speaking at the event, Na-tional Program Coordinator of SFTAS, Mr. Stephen Okon, in preliminary background information, gave insight into the genesis of SFTAS.
He traced the programme to the effort by the World Bank aimed at deepening fiscal transparency at sub-national governments.
“As you may be aware, the $1.5 billion World Bank-Assisted States Fiscal Transparency Accountability and Sustainability (SFTAS) programme for result seeks to entrench accountability, transparency and maximum utilisation of funds in the citizen’s best interest across the states.
“The World Bank intervention, which is a loan to the Federal Government but a performance based grant to the states entails providing technical support for officials in the 36 states towards successful implementation of the programme,” he said.
According to him, the first financial assistance package was approved in July 2015 with no conditions attached.
“It included restructuring of existing short-term commercial bank loans into longer-term state bonds, guaranteed by the FGN with 23 states participating and financing facilities from the CBN.
“As the states’ fiscal situation continued to worsen in 2016, a second package was put in place: The Budget Support Facility (BSF), which supported all states except Lagos.
“As part of the BSF, the 22-point Fiscal Sustainability Plan (FSP) was developed and agreed to by all the states to strengthen fiscal transparency and accountability, state revenue mobilisation, efficiency of state expenditures and sustainability of state debt.
“While progress was made, the implementation of the FSP was uneven and states needed more time to implement reforms, hence the Federal Government asked the World Bank for a loan using the programme for results instrument to support the sustained implementation of the FSP as well as elements of the open government partnership commitments at the state level,” he explained.
