By Dr Yusuf Aliu
The ongoing clamor for creating more states has once again stirred up debates about the viability of the existing states in Nigeria. The South-East region, in particular, is pressing to create an additional state to balance the number of states across the geopolitical zones. Currently, the South-East is the only zone with five states: Abia, Anambra, Ebonyi, Enugu, and Imo. In contrast, the South-South, South-West, North Central, and North-East each have six states, while the North-West boasts seven.
However, this call for new states brings to light a pressing issue: the economic sustainability of these states. Most Nigerian states heavily rely on allocations from the Federal Accounts Allocation Committee (FAAC), showing little initiative in harnessing their internal resources to boost revenue.
A recent report by Economic Confidential, a subsidiary of PR Nigeria, underscores this reality. It identified seven states- Lagos, Ogun, Rivers, Kaduna, Kwara, Oyo, and Edo- as the most viable in Nigeria for 2022. In stark contrast, states such as Bayelsa, Kebbi, Katsina, Akwa Ibom, Taraba, and Yobe are deemed unable to survive without FAAC allocations.
Internally Generated Revenue (IGR) is a critical lifeline for states, encompassing collections from Pay-As-You-Earn Tax (PAYE), direct assessment, road taxes, and revenues from ministries, departments, and agencies. Despite the potential for significant revenue generation from these sources, many states fall short.
Experts argue that numerous states possess untapped resources, including oil, solid minerals, and rich agricultural land. Yet, state governors often overlook these assets, preferring to depend on the federal government for monthly allocations. This dependency not only hampers economic growth but also stifles innovation and self-sufficiency.
*The need for increased IGR
Increasing IGR is not merely about financial independence; it’s about fostering sustainable development and resilience. Here’s why boosting IGR is crucial:
1. Economic diversification: By focusing on internal resources, states can diversify their economies. This reduces reliance on oil revenues and federal allocations, making them more resilient to economic shocks.
2. Job creation: Harnessing local resources can lead to the establishment of new industries and businesses, creating jobs and reducing unemployment rates.
3. Improved infrastructure: With increased revenue, states can invest in infrastructure projects such as roads, schools, and hospitals, improving the quality of life for their residents.
4. Enhanced services: More revenue allows states to provide better public services, including healthcare, education, and security, thereby enhancing overall well-being.
5. Fiscal responsibility: States that generate their revenue are likely to practice better fiscal management, as they would be more accountable to their taxpayers.
6. Local empowerment: Economic self-sufficiency empowers local communities, promoting grassroots development and reducing poverty levels.
*Strategies for increasing IGR
To achieve these benefits, states need to adopt robust strategies for increasing IGR:
1. Resource management: States should conduct comprehensive audits of their natural resources and develop plans to exploit these assets sustainably.
2. Tax reforms: Implementing efficient tax collection systems and widening the tax base can significantly boost revenue. This includes addressing tax evasion and ensuring compliance.
3. Public-Private-Partnerships: Engaging the private sector in developmental projects can attract investment and expertise, driving economic growth.
4. Agricultural development: Investing in agriculture can transform the sector into a significant revenue source, especially in states with fertile land.
5. Tourism promotion: States with historical sites, cultural heritage, or natural attractions should develop tourism infrastructure to attract visitors and generate income.
6. Entrepreneurship support: Encouraging entrepreneurship and supporting small and medium enterprises (SMEs) can stimulate local economies and create employment opportunities.
Finally, the clamour for more states in Nigeria underscores a deeper issue of economic viability. While regional balance is essential, the focus should be on ensuring that existing states are economically sustainable.
By looking inward and boosting their internally generated revenue, Nigeria’s states can achieve financial independence, promote sustainable development, and improve the quality of life for their citizens.
The time has come for state governors to shift their focus from federal allocations to tapping into the wealth of resources within their borders. This approach will not only ensure the viability of existing states but also lay a solid foundation for the creation of new ones.
