IN 2020, 36 states of the federation and the Federal Capital Territory (FCT) shared 2.29 trillion naira as federal allocation, data from the National Bureau of Statistics (NBS) has shown.
The allocation shared among the states in 2020 was 7.25 percent lower than that of 2019 (2.47 trillion naira). The COVID-19 pandemic and dwindling oil revenue could have been responsible for this reduction, experts say.
The data also show that Delta and Akwa Ibom got the biggest shares of the allocation. While Delta received 186.83 billion naira, Akwa Ibom got 146.27 billion naira. On the other hand, Rivers received 141.19 billion naira as Bayelsa got 116.4 billion naira. Lagos, Nigeria’s economic capital, got 115.93 billion naira, making it one of the top five states to get the highest allocations in 2020. These states received about 31 percent of the total allocation and were also beneficiaries of the 13 percent derivation of oil-producing states.
Further analysis of the data reveals that approximately 30 percent (682 billion naira) of the allocated funds was directed to the six states in South-South: Delta- 186. 83 billion naira; Akwa Ibom- 146.27 billion naira; Rivers- 141.19 billion naira; Bayelsa- 116.4 billion naira; Edo- 58.41 billion naira; and Cross River- 32.89 billion naira. It must be noted that Akwa Ibom and Rivers are among the top states with highest unemployment rates in Nigeria, according to the NBS.
The least five states with the lowest allocations from the bottom were Osun- 30 billion naira; Cross River- 32 billion naira; Plateau- 35 billion naira; Ogun- 37 billion naira; and Ekiti- 39 billion naira.
Fiscal Sustainability of States
Fiscal sustainability is states’ ability to meet up with their financial obligations with little or no reliance on federal allocation and loans.
According to the FAAC and Internally Generated Revenue (IGR) data available from the NBS, as of mid-year 2020, only Lagos, Ogun and the FCT were states that showed potential fiscal independence, as their IGRs were higher than the allocations they received.
Total revenue data (FAAC+IGR) showed that these three states’ IGR accounted for more than 50 percent of their total revenue as of mid-year 2020. Lagos- 80 percent, Ogun- 58 percent and the FCT- 52 percent.
The State of State report of 2020 (analysis of 2019 fiscal data) by BudgIT also shows how Ogun State was reported to have third highest IGR, accounting for 64.69 percent (70.92 billion naira) of its total revenue (109.63 billion naira); Federal Allocation to the state only accounts for 35.31 percent (N 38.71 bn) coming after Lagos with IGR accounting for about 77 percent (398.73 billion naira) of its revenue in 2019 while federal allocation accounted for about 29.56 percent of its total revenue (117.88 billion naira).